DA hits at reworked tax incentive bill

DA Finance spokesman Tim Harris said that the new version failed to cover existing workers and excluded benefits for many youth hired in sectors without minimum wages.

The Treasury called for public comment on the draft legislation that will introduce a long-awaited youth wage subsidy, announcing last week that tax incentives for sharing the cost of employing inexperienced youth could be implemented next year.

The government has made promises since 2010 that some sort of subsidy is in the works to help address youth unemployment, which is nearing 50% and has described as a "ticking time bomb".

The employment incentive was first announced by President Jacob Zuma in his 2010 state of the nation address, but has seen strong opposition from the Congress of South African Trade Unions (Cosatu), which has maintained that subsidies would allow businesses to replace older workers with subsidised younger ones.

Draft bill revised and approved

The Treasury said that the Cabinet had approved the draft Employment Tax Incentive Bill, which would stimulate demand for young workers.

The public has until 11 October to make submissions, with a revised bill being presented to Parliament by the end of next month. It is proposed that the incentive will be introduced in January next year and run until the end of 2016.

Businesses will qualify by employing new staff between the ages of 19 and 29, with the incentive decreasing the amount of tax owed by an employer through the pay-as-you-earn system.

But Harris claimed this version of the bill would negatively affect small and labour-intensive business, which would not be able to claim the full benefit.

"These changes raise questions about whether the tabling of a watered-down bill seven months before an election - with talk of a 'sunset clause' - might be a cynical election ploy by the ANC to win votes, not create jobs," he said.

Cosatu opposed to bill 'in principle'

The DA would work in Parliament to ensure the bill was passed as soon as possible. However, Harris said it is not clear that Cosatu will allow this bill to be passed given that Minister (Ebrahim) Patel's Youth Employment Accord requires that any incentive needs to be approved by all (Nedlac) constituencies," Harris said.

Cosatu spokesman Patrick Craven said the federation had not yet studied the proposed bill. "We are opposed in principle (to the) youth wage subsidy, which represents an advance by the DA," he said.

Speaking at the National Economic Development and Labour Council (Nedlac) last week, Cosatu acting general secretary Bheki Ntshalintshali said young men and women are disproportionately hit by unemployment and when they find a job, it is often precarious and not matching their skills.

He called for new types of engagement to find consensus on radical economic and social transformation to address poverty, inequality and unemployment.

The Treasury had previously maintained there would be protection and said employers found to be unfairly dismissing employees to take advantage of the incentive would be excluded.

Source: Business Day via I-Net Bridge