Johannesburg - The Treasury is intent that the Employment Tax Incentive Bill be up and running on January 1 next year and has swept aside criticism from ANC alliance partner Cosatu that the legislation should be stopped in its tracks.
Director-general Lungisa Fuzile acknowledged in no uncertain terms yesterday that the legislation had not been given the rubber stamp by Nedlac – which represents labour, business and the government – but he said the law governing this body required only that it “seeks to” find consensus on socioeconomic policy matters.
He believed the powers of Nedlac could not extend to the point where it blocked legislation emanating from the most powerful bodies in the land – the cabinet and Parliament.
Ahead of today’s medium-term budget policy statement, to be delivered by Finance Minister Pravin Gordhan, Fuzile gave clear signals that the measure would receive budgetary support. The incentive, which was originally known as a youth wage subsidy, now looks set to become law well ahead of the national election.
Fuzile was responding to DA finance spokesman Tim Harris.
“We would not be accountable for there being no report from Nedlac if there was none. On what happened at Nedlac… truthfully I went there twice myself to present on the original proposal. In fact, some of the pronouncements people would have heard in public on the original proposals were out of the consultation that occurred in Nedlac.”
The people who drafted the Nedlac Act had been careful about how they set out the different provisions in the legislation, he said.
“Before introducing something to Parliament… it must go there [Nedlac],” he said, adding that Nedlac’s “council shall seek to reach consensus and reach agreements on matters of socioeconomic policy”.
“The correct interpretation is not that there must be agreement before submitting to Parliament… you must seek to have it. Failure to have it does not amount to stopping that [legislation],” Fuzile said.
He added further: “The consultation that is envisaged there can never take away two, I will call them, original powers – the one of the executive to submit laws to Parliament and the other one… for Parliament to process legislation.
“To make it a barrier, not just a hurdle to take things beyond that… means these two powerful institutions… can be usurped by Nedlac. I would hesitate to put the kind of interpretation that has been put to that provision.”
Harris broadly supported the legislation, but he noted that the Treasury had proposed “a few tweaks” to the draft Employment Tax Incentive Bill and there remained “several fundamental problems” before a youth wage subsidy could be implemented.
“It is clear that Treasury has decided to go ahead with the passing of this bill despite opposition from Cosatu and others,” he noted.
He noted that there were two distinct views within the government. Economic Development Minister Ebrahim Patel, Cosatu members and SA Communist Party members such as ANC MP Buti Manamela believed the employment accord must be approved by all constituencies.
However, Treasury officials yesterday argued that the youth wage, the youth accord and other employment instruments were all part of the government’s fight against unemployment and the Treasury had to have the latitude to implement the youth wage subsidy.
Harris noted that the extent to which the youth subsidy had been watered down “is seen in the fact that this [the latest] version” was estimated to cost R1.3 billion to R3bn over three years. Three years ago Gordhan had projected its cost at R5bn over this period.
“This is because Treasury has removed the subsidy for existing workers, as well as those workers in entry-level, part-time jobs without sectoral determinations,” he said.
The National Union of Metalworkers of SA said if the youth wage subsidy was introduced there could be widespread strikes against it.
General secretary Irvin Jim said the legislation represented yet another example of a litany of “neo-liberal” economic policy failures of the ruling ANC. - Business Report