"Parliament is the only supreme body here and it approves, rejects or amends bills," Treasury deputy director general Ismail Momoniat said.
Treasury was reporting back on last week's submissions by, among others, trade unions, businesses and churches.
Both the Federation of Unions of SA and the Congress of SA Trade Unions rejected the draft Employment Tax Incentive Bill, saying there was a lack of consultation over the bill at the National Economic Development and Labour Council (Nedlac).
Momoniat said legally government did not have to table the bill at Nedlac. "It's a money bill. Therefore we were not compelled to take it to Nedlac but we have taken the idea to Nedlac anyway," he said.
"The consultation process may not be perfect but it has been done and you don't always reach consensus, but it doesn't mean government is not allowed to come up with a proposal and put it to Parliament," he said.
Unions are concerned that employers would abuse the bill by replacing existing workers with subsidised employees. Momoniat said significant penalties were in place to prevent this.
"The bill affects those who are not currently employed so perhaps if it does have some sort of economic impact it will not be on labour. It will be for those outside of the existing labour pool and may join it," he said.
Momoniat suggested the incentive scheme could benefit trade unions by boosting their membership numbers.
While many of those taking part in the public participation process had rejected the subsidy in principle, they had done little to offer as alternatives. Treasury officials conceded the incentive scheme was experimental.
"We are not saying this is a panacea but this is one of many measures government uses to deal with the problem of youth unemployment," Momoniat said.
Some of the concerns of the bill's opponents were accepted and would be included in the revised draft of the bill to be presented on Wednesday (23 October)
"We've tried to listen carefully, so we took to heart a lot of the issues on incentive design along with the whole issue abuse like displacements, detecting it and even bringing penalties. People felt that we shouldn't start it at too low an age range because you don't want young people to leave school and find work," he said.
The incentives would apply to workers earning between R4,000 and R6,000. Treasury said the incentive scheme would not lead to subsidised workers earning more than their unsubsidised colleagues.
"The wages will be the same whether you are subsidised or not subsidised. The difference is to the employer because the employer will presumably pay the same, but through the subsidy, the employer is getting something back for employing the workers," he added.
Momoniat said that union concerns on deadweight loss were also dealt with but Treasury conceded it was something it could do little to prevent.
Deadweight loss occurs when a company would have employed a person anyway, without the subsidy.
"Yes, for every incentive we have, there's deadweight loss. You try to minimise that but you can't eliminate it," Momoniat said.
Source: Sapa via I-Net Bridge
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
