Strong take-up of youth wage subsidy - Treasury

The youth wage subsidy aims to stimulate employment of 18- to 29-year-olds in the formal sector by reducing the risks and costs associated with hiring younger workers. File photo: David Ritchie.

The youth wage subsidy aims to stimulate employment of 18- to 29-year-olds in the formal sector by reducing the risks and costs associated with hiring younger workers. File photo: David Ritchie.

Published Aug 26, 2016

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Johannesburg - Data suggests that the take-up of the Employment Tax Incentive (ETI) to get companies to hire young workers has been strong, the Treasury says.

The ETI has been claimed for 134 923 jobs in 2014 and 686 402 jobs in 2015.

“This implies the ETI supported approximately 5 percent of all jobs in the tax dataset based on individual employee tax certificates in the 2014/15 tax year,” the Treasury said on Friday.

A total of R6.06 billion had been claimed between January 1, 2014 and March 31, 2016.

In the 2014/15 financial year, 32 368 firms lodged at least one claim on the ETI. It said that although this was a large number of firms, they represented 15% of firms in the tax database with eligible employees.

The youth wage subsidy was been criticised by many, including academics, for not having much affect on youth job creation. Unions are also opposed to the incentive which they believe makes younger, inexperienced workers more attractive to hire than their members.

The incentive aims to stimulate employment of 18- to 29-year-olds in the formal sector by reducing the risks and costs associated with hiring younger workers.

In the 2011 discussion document on the incentive, it was estimated that R5bn would be spent on the youth wage subsidy over three years, supporting 423 000 jobs, of which 178 000 would be new jobs or jobs saved from loss.

“Since 2011, changes to the timing of spending, as well as slight differences in design have occurred, but broadly the estimates of jobs supported are higher than the initial 2011 projections,” the department said in a statement.

It said the ETI was legislated to continue until the end of this year and if legislative amendments were made before then, it would expire.

Parliament had requested a full review of the incentive to decide on the way forward.

Labour Bureau

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