Treasury and Presidency must put money and political will behind the youth wage subsidy

26 February 2015

Finance Minister Nhlanhla Nene's failure to mention the youth wage subsidy in his Budget Speech yesterday was a lost opportunity and a betrayal of the youth.

With youth accounting for 67.4% of the unemployed, the wage subsidy is our best hope for job creation among the youth. We need to put money and political will behind it. 

But the Deputy Minister in the Presidency in charge of youth policy, Buti Manamela, is the same man who firmly opposed the youth wage subsidy when he was national secretary of the Young Communist League.

Minister Nene's "sin of omission" is the key defect of the draft National Youth Policy (NYP) 2014-2019, upon which the DA has today submitted its comments to the Presidency, ahead of the deadline at the end of the month.

The NYP places far too much emphasis on the state as an employer of the youth.  It does not focus enough on providing incentives and an enabling environment for the private sector to create jobs. 

Its economic policy proposals will predictably achieve nothing of consequence.

As part of our detailed written submission, the DA believes that the NYP should unequivocally support the expansion of the youth wage subsidy. The policy should also propose:

An opportunity voucher scheme for eligible young South Africans. The voucher would provide funding to young adults who would like to start their own businesses or further their education and skills development; and

A deregulation of labour markets so that youth can more easily find work. This means making it easier to hire young workers through amendments to the Labour Relations Act, enhancing temporary work, democratising labour negotiations, and easing the burden of labour regulations in the small business sector.

Finally, while the NYP is right to identify social ills - chiefly, substance abuse and the risky behaviors associated with it - as key focus areas alongside economic inclusion, it needs to provide an integrated framework for youth development. 

This will rely not just on the role of the state, but on the contributions of citizens, communities and civil society working together in a "whole-of-society" approach.

Text of the DA's submission on the Draft National Youth Policy:

Mr Goitse Kunope

Youth Desk in the Presidency

26 February 2015

COMMENTS ON THE DRAFT NATIONAL YOUTH POLICY 2014-2019

Dear Mr Kunope

Below please find comments by the Democratic Alliance on the Draft National Youth Policy 2014-2019.

Yours faithfully

Dr Michael Cardo MP

Democratic Alliance

GENERAL COMMENTS

The Democratic Alliance (DA) welcomes the release of the draft National Youth Policy (NYP) 2014-2019, whose aim is to "create an environment that enables the youth...to unleash their potential by identifying those mechanisms that will make this possible".

The NYP provides a good situational analysis and diagnostic overview of our key challenges, including unemployment and joblessness, high drop-out rates and inadequate skills development, poor health and high rates of violence and substance abuse, lack of access to sporting and cultural opportunities, and lack of social cohesion and volunteerism.

The DA's main concerns are twofold: firstly, the policy proposals put forward by the NYP on jobs are too statist, and secondly, the policy does not adequately provide a clear, strategic, seamless trajectory for youth development that is truly based on a partnership (or "whole-of-society") approach to development.

The NYP correctly recognizes that the most important mechanisms to develop youth capabilities and create and expand opportunities are education, skills development and employment.

However, despite attempts to anchor itself in the vision of the National Development Plan (NDP) by emphasizing the role of active citizens as "champions of their own development", there is a tension at the heart of the NYP.

The words used to describe youth development are commendable, but the actions proposed are not. Indeed, many of the NYP's policy proposals -- especially those to do with job creation and skills development - rely too heavily on the state as driver. 

The policy is too statist and interventionist. Despite a nod to the NDP's capabilities approach to development - which requires a shift from a passive citizenry receiving state services to an active citizenry partnering the state in development - in practice, the NYP looks to the state as a savior. 

For example, the policy trumpets public employment schemes in the form of "youth brigades", a state-run "mass youth enterprise creation programme", continued support for the hapless state-funded National Youth Development Agency (NYDA), and a variety of measures that are likely to undermine job-creating economic growth.

One such measure is a proposal for district municipalities to buy 20% of commercial agricultural land within their boundaries at 50% of its market value so that "young people living in rural areas [can] have access to productive communal land".

It is not clear how this proposal will serve youth development or job-creating economic growth.

In our view, despite the fact that South Africa's youth unemployment rate is 36% and youth account for 67.4% of the unemployed, the NYP does not adequately provide workable solutions for job creation and economic inclusion that are truly grounded in the developmental approach of the NDP.

Rather than adopting a statist approach, the final version of the NYP should put forward bold proposals to promote jobs for youth by:

Ramping up Youth Wage Subsidy;

Deregulating the labour markets so that youth can more easily find work. This means making it easier to hire young workers through amendments to the Labour Relations Act, enhancing temporary work, democratising labour negotiations, and easing the burden of labour regulations in the small business sector; and

Creating incentives for (rather than imposing penalties on) the private sector to take on first time-employees and get more involved in training.

Secondly, the policy also needs to provide a strategic framework for youth development that is seemless and integrated and that can mobilise the resources, knowledge and creativity of all role-players in government, the private sector and civil society to promote youth development.

The DA-run Western Cape Government (WCG) has developed an integrated youth development strategy that embodies this "whole-of-society" approach. It rests on five pillars.

First, the strategy provides a range of interventions to support "family foundations". The aim is to capacitate parents and caregivers with the necessary skills and networks to support positive youth development.

Second, the strategy focuses on education and training, and includes both an after-school programme and a youth service programme for high-performing matriculants and graduates.

Third, there is a major emphasis on economic opportunities, with a range of employment and internship opportunities for first-time job-seeking youth with matric or a secondary qualification. These include both the Premier's Advancement of Youth (PAY) Project and the Work and Skills Programme, as well as support for similar private sector programmes.

Fourth, the strategy promotes "belonging" as an integral part of youth identity. To this end, the WCG is busy launching "youth cafes" - physical spaces where young people can meet to form supportive peer groups, learn productive skills, and access information and services.

Finally, the strategy targets at-risk youth between the ages of 17 and 25, through, among other interventions, the Chrysalis programme. This is a residential programme that diverts participants from a life of crime, substance abuse and gangsterism. Chrysalis graduates are exposed to internship opportunities to help them transition into work or further education.

Although the NYP is right to identify substance abuse and the risky behaviors associated with it as key focus areas alongside economic inclusion, it needs to provide an integrated framework for youth development and prioritise its policy proposals accordingly.

In this way, the policy should articulate a clear, strategic, seamless trajectory for youth development that encompasses both social and economic development.

SPECIFIC COMMENTS

Economic inclusion and employment

The NYP places far too much emphasis on the state as an employer of the youth, and does not focus sufficiently on providing incentives and an enabling environment for the private sector to create jobs. Its proposals are, by and large, statist and interventionist.

The NYP's goals for employment and work experience are only concretely spelled out in terms of 60 000 internships that would be provided for youth in the public service.

Indeed, the majority of its policy proposals call on different government departments to embark on well meaning but predictably inconsequential actions and to reach broad and often ill-defined goals. For example, the Departments of Labour and Economic Development are to "spearhead a national drive of Job Fairs" and convene an "Indaba on work placement services". The Department of Small Business Development is to develop a "mass youth enterprise creation programme" that includes national road shows to share information.

Up to 1 million youth are to be employed in ‘Youth Brigades', that are to be coordinated by the National Youth Service (NYS) over a two-year period, and more broadly in public works programmes.

Yet the NYP fails to specify how such ‘Youth Brigades' will actually operate. Additionally, as the NYS is primarily tasked with engaging youth in voluntarism, it is not clear if ‘Youth Brigades' will provide actual employment, and if they don't, what benefit or purpose they will serve. In addition, while public works programmes offer temporary employment solutions they do not guarantee long-term employment and often do not result in the development of transferable skills. The result is short-term stopgap employment, which does little to set those involved on a positive trajectory.

The NYP's major sin of omission on jobs is its remarkable reticence on the youth wage subsidy (YWS). After protracted opposition from Cosatu and the SACP, the YWS was eventually introduced as a watered-down Employment Tax Incentive (ETI) last year.

The NYP announces that the ETI "should go a long way to encourage private sector employment of new entrants into the labour market". Unfortunately, it stops right there.

There is no attempt to capitalise on the idea, or to explore the potential for expansion, only a vague undertaking that the scheme will be "refined" on the basis of an impact study by Treasury, the NYDA and the Department of Economic Development.

Yet, the Department of Economic Development is more interested in driving a second phase of the Youth Employment Accord with its "youth target set-asides" and interventionist, public-sector-led, distortionary proposals.

The NYP lauds the signing of the original Youth Employment Accord in 2013 as "an important milestone which added further impetus and focus in youth empowerment". Yet, there is no evidence to back up this claim. Indeed, the first phase of the Accord seems to have yielded nothing of consequence. The original Accord also omitted any reference to the YWS.

Quite what expertise the NYDA will bring to an impact study on the ETI is unclear. Its own record on jobs is woeful. According to its 2013/14 Annual Report, the NYDA underachieved by 42% its target of supporting 100 000 young people through job-preparedness programmes. And it purported to have created 3 370 jobs through grant funding and business development services, but offered no evidence of what these jobs were, in which sector they were created, and the duration of employment.

The DA would like the final version of the NYP to flesh out the section on the youth wage subsidy. We believe that the YWS should be expanded as the first step in a dedicated "Youth Employment Plan" that also:

Introduces an opportunity voucher scheme for eligible young South Africans. The voucher would provide funding to young adults who would like to start their own businesses or further their education and skills development; and

Deregulates the labour markets so that youth can more easily find work. This means making it easier to hire young workers through amendments to the Labour Relations Act, enhancing temporary work, democratising labour negotiations, and easing the burden of labour regulations in the small business sector.

Finally, the NYP suggests that provincial governments should become involved in a programme to identify 20% of commercial agricultural land that can be bought by the state at 50% of its value.

While the DA recognises the need for swifter, more efficient land reform, this proposal should be treated with caution. From the way it is explained in the NYP, it is not clear how the proposal will benefit youth development or promote job-creating economic growth.

Education and skills

The NYP correctly identifies the need to improve both the school system and the current approach to skills development. However, it relies too much on the former FET colleges, now called TVETs, as the answer to South Africa's current unemployment crisis and skills shortage. It proposes strengthening and expanding the number of TVET colleges.

However, it is unlikely that the TVETs will produce quality graduates and successfully place them in the work environment if they continue to be failing institutions. In 2014, the Director-General of the Department of Higher Education and Training revealed that 8 of South Africa's 50 TVETs had been placed under administration and a further 13 were under forensic investigation. 

Many of the NYP's other policy proposals on skills development are similarly statist, such as the recommendation to "expand the role of state-owned enterprises in training artisans and technical professionals".

The DA recommends that the NYP should advocate and prioritise the following actions instead:

Focus on specialised secondary schools that emphasise science, technology, engineering and mathematics education.

Institute a nation-wide bursary scheme to assist 50 000 academically talented learners from low-income families access high quality primary and secondary school education.

Divert the NYDA's budget into an expanded National Student Financial Aid Scheme (NSFAS) that provides full funding assistance to cover tuition, books, accommodation and maintenance stipend (which may include additional loans and bursaries) to all qualifying students; and

Reimburse employers to the value of the full amount spent on approved training, including schemes administered by employers' associations. This would ensure that employees' skills are better matched with market demand. This policy would replace the bureaucratic and ineffective SETA system.

Health care and substance abuse

The section on "health care and combating substance abuse" is drawn mostly from the National Adolescent Sexual and Reproductive Health and Rights Framework Strategy 2014-2019 and focuses on bridging the "gaps that still exist in the promotion of young people's sexual and reproductive health and rights (SRHR)".

This rights-based approach to sexual health is all well and good, but the NYP should pay far greater attention to the prevalence of HIV/Aids among the youth and on policy proposals to stem its main drivers, such as the so-called "sugar daddy syndrome".

Moreover, high-risk behaviours such as unsafe sex and substance abuse are closely linked with youth violence. Adversities in early childhood (such as child maltreatment, itself a form of violence); dysfunctional and conflicted family relationships; and easy access to alcohol and firearms are among the main risk factors for becoming both a victim and perpetrator of violence later in life.

Violence is preventable. Globally, evidence-based research and scientific studies show that there are several ways to prevent violence and reduce its impact.

The NYP should give greater consideration to proven and promising violence prevention strategies which include:

Developing safe, stable and nurturing relationships between children and their parents and caregivers;

Developing life skills -social, emotional and behavioural competencies - in children and adolescents;

Reducing the availability and harmful use of alcohol;

Reducing access to lethal means including guns, knives and pesticides;

Promoting gender equality to prevent violence against women;

Changing cultural and social norms that support violence;

Identifying victims and providing care and support programmes.

Finally, this section seems a bit thin; the policy proposals on health care and combating substance abuse appear to have been tacked on as an afterthought. They are divorced and decontextualized from the NYP as a whole. They are not adequately incorporated into a framework for youth development that offers a clear, strategic, seamless trajectory truly based on a partnership or "whole-of-society" approach envisaged by the NDP.

In the "whole-of-society"  approach, the state must fulfil its role in youth development by expanding opportunities to individuals, families and communities so that they can take control of their lives, participate in the social and economic mainstream, and contribute meaningfully to society.

Society must play its part by instilling the right values, providing the right role models, and creating the right networks of affirmation, belonging and support. This means that individuals have a duty to contribute to development through the life choices they make. Parents have a responsibility to be good role models to their children, to guide them, to nurture and protect them. Fathers have a special responsibility to take care of their children. Communities as a whole have a critical role to play through the cultural and social norms they establish, as do institutions like churches, mosques and schools in the leadership and structured activities they provide.

The NYP would do well to embody the whole-of-society appproach in its policy proposals in a clearer and more meaninful way.

Issued by Dr Michael Cardo MP, DA Shadow Deputy Minister in the Presidency, February 26 2015

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