Terms of the Youth Wage Subsidy: The national Treasury proposed that the wages of all workers aged between 18 and 29, who earned less than R60,000 a year, the current tax threshold, be subsidised for a period of two years. If the policy is implemented registered employers will receive the subsidy, which is expected to promote job creation.
The Youth Wage Subsidy policy was originally proposed in Parliament in October 2009 and was formally announced by President Jacob Zuma on 11 February 2010. Now certain political parties are calling for the immediate implementation of the policy.
But the debate concerning the subsidy which is being discussed at the National Economic Development and Labour Council is at an impasse despite the fact that these discussions have been taking place for the last two years.
Here’s what some of the country’s major role-players are saying:
AGAINST: Cosatu has rejected the proposal saying “it would enable the private sector to get cheap labour and would result in jobs losses since firms would release older people to hire less expensive labour.”
FOR: President Jacob Zuma - “Last week, President Jacob Zuma indicated his support for the subsidy”.
FOR: Democratic Alliance - "The DA is more resolute than ever to mobilise all South Africans for the immediate implementation of the Youth Wage Subsidy, structured on the model proposed by the national Treasury, which is a model we support. The treasury has budgeted R5 billion for this, which is stagnating in the budget despite record levels of youth unemployment."
FOR: The Black Business Council said “An intervention aimed at encouraging people to employ young people, such as the youth wage subsidy, should be welcomed. We therefore welcome the youth wage subsidy."
FOR: Business Unity SA (Busa) commended the policy as one of the better “short term job creation solutions”.
Will this policy truly alleviate unemployment or will it hamper economic growth in the long run?