Youth incentive scheme bears fruit

rp_2013_12thumbimg120_Dec_2013_063957349-ll-300x201.jpgAuthor: Siyabonga Mkhwanazi (IOL)

AT LEAST 209 000 youth have been absorbed into the labour market this year under the government’s youth employment tax incentive scheme, a significant increase from the 56 000 young people announced by then finance minister Pravin Gordhan in his Budget speech in February.

Gordhan said at the time, during the first month of the launch of the scheme, 56 000 young people were employed by different companies.

But in the medium-term budget policy statement tabled by Gordhan’s successor, Nhlanhla Nene, in Parliament yesterday the latter revealed a massive expansion of the programme.

While this was called the youth wage subsidy when Gordhan first introduced it in 2010, with a budget of R5 billion, it was changed to the youth tax incentive scheme.

This followed wrangling between Cosatu and the government over the form and shape of the incentive scheme.

The labour movement was opposed to the idea because it believed companies would use the scheme to substitute older workers with the youth.

But this was denied by the government and during public hearings in Parliament last year it was agreed that companies who were found doing this would be penalised heavily.

In the statement yesterday the scheme received support from the business sector and labour market.

“The employment tax incentive, which provides firms with incentives to hire young workers, is already supporting at least 209 000 young workers in about 23 500 firms,” it said.

DA MP and its spokesman on finance, Dion George, said they welcomed the fact that more young people were being absorbed into jobs they would otherwise not have had.

“But more could be done to break the cycle of unemployment among the youth,” he said, adding that this was reaching 40 percent.

He believed there could be more uptake by companies on the youth tax incentive scheme.

Although the scheme had been introduced by the government, it was former DA parliamentary leader Lindiwe Mazibuko who had called for its urgent implementation when the government halted plans to implement it during its wrangle with Cosatu and further consultations with various stakeholders.

Mazibuko has since left the DA to pursue studies in the US.

George said in their engagement with Sars recently the latter said that it believed more companies could take up the offer.

 

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