Parliament has a lot more work to do to introduce a real, strong Youth Wage Subsidy
National Treasury has proposed a few tweaks to the draft Employment Tax Incentive Bill to introduce a Youth Wage Subsidy, but several fundamental problems need to be fixed to ensure a real, strong Youth Wage Subsidy is implemented.
It is clear that Treasury has decided to go ahead with the passing of this Bill despite opposition from COSATU and others.
It is also clear that there are two distinct views of Economic Development Minister Ebrahim Patel's Youth Employment Accord in government: members of Cosatu (like Minister Patel) and members of the SACP (like ANC MP Buti Manamela) believe that the Accord is binds government, and the requirement that new incentives must be "approved by all constituencies" is mandatory.
The National Treasury seems to believe that the Accord is an optional extra, and that they are free to proceed with this Bill without approval.
The DA welcomes Treasury's commitment to the principle of introducing an employment incentive to create jobs for young people.
The current version of the draft Bill, however, has to be amended to make it stronger.
The extent to which the Youth Wage Subsidy has been watered down is seen in the fact that this version is estimated to cost R1.3 billion to R3 billion over three years, whereas the original version would have cost R5 billion over the same 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. These groups include some of the most vulnerable young workers in the economy - there is no logic to their exclusion.
In addition, this new version still negatively affects smaller labour intensive businesses with fewer managers who will not be able to claim the full benefit. The original version allowed cash payouts for such firms, and this provision should be re-inserted.
The DA will continue to work in Parliament's Standing Committee of Finance to ensure that a real, strong Youth Wage Subsidy is implemented.
Statement issued by Tim Harris MP, DA Shadow Minister of Finance, October 22 2013
Click here to sign up to receive our free daily headline email newsletter
