Is youth wage subsidy a cure for jobs crisis?

The ANC’s recent lekgotla set the spotlight firmly on youth development when it gave a thumbs-up to the youth wage subsidy. The debate on the youth wage subsidy creates a space for the country to critically and honestly reflect on the current socio-economic position of our young people.

The development of the black youth in South Africa before the dawn of democracy did not extend beyond the parameters of missionary schools and Bantu education. It is no surprise that many young black people became enmeshed with the politics of the day – as witnessed in the uprisings of 1976.

The political history of the world bears testimony to the fact that young people are the most dynamic sector in any society, and their dynamism is characterised by a free-spirited attitude, radical thinking, impressionability and impatience. The Arab Spring – the violent overthrow of absolute monarchs and dictators in North Africa – comes to mind .

The heated debate on the implementation of the youth wage subsidy exposes the naked sectarian interests of all stakeholders involved. The DA attitude appears to be that it wants the youth of this country to know that it conceptualised and implemented the youth wage subsidy in the Western Cape. The ANC, on the other hand, seems most interested in defusing dissent amongst the unemployed youth. Both sides seem intent on capturing the attention of young people in next year’s general elections.

Cosatu and the ANC Youth League reject the implementation of the youth wage subsidy on the basis that the design of the subsidy is likely to introduce the substitution effect, replacement of permanent unionised workers with new entrants who are subsidised by the government, and instead proposes the implementation of the job seekers fund.

The youth wage subsidy proposes to subsidise the employment of more than 400 000 graduates who need work experience to get into the labour market. Unionised members who are affiliated to Cosatu are likely to be replaced by new entrants who might not value the importance of unionisation.

Cosatu also views the proposed youth wage subsidy within the context of neo-liberalism. The labour federation sees no difference between the youth wage subsidy and the two-tier labour system proposed during Thabo Mbeki’s era, which called for deregulation of the labour market. The common element in both the two-tier labour system and the youth wage subsidy is that employers are given more power over the workers. Remember, the two-tier labour system proposed hiring workers on an employer’s terms and conditions. It meant the employer could determine wages and the conditions of employment for new employees in isolation from labour relations legislation.

The youth wage subsidy is doing well in other countries. The policy created 115 000 permanent jobs in Chile. In Argentina 50 percent of those hired became permanent employees. In the Western Cape, which in 2009 became the only province to implement the youth wage subsidy, a total of 2 966 jobs were created and 70 percent of those employees have been retained permanently.

Although seldom discussed, a job seekers’ fund, on the other hand, is a comprehensive non-discriminatory policy proposal that seeks to provide relief to all job seekers and it covers the costs of travelling, sustenance and job applications.

I, however, believe that neither the job seekers’ fund nor the youth wage subsidy will solve the current youth unemployment crisis.

The youth wage subsidy has its own inherent flaws and positive spin-offs. Its weakness is that the policy proposal prioritises graduates – as if the problem of youth unemployment begins and ends with those who have had the privilege of acquiring a tertiary education.

At the end of the day, to tackle the scourge of youth unemployment, the government should find the means to ensure that the economy of this country grows by no less than six percent annually. The government also needs to conduct an assessment on the compatibility of the country’s labour relations policies and South Africa’s free market economy.

l Jerry Matebesi is a writer based in Mahikeng, North West.