The Employment Tax Incentive Act has been signed into law by Jacob Zuma and, according to treasury, aims to create jobs for young workers.
President Jacob Zuma has signed the so-called youth wage subsidy Bill into law.
"President Jacob Zuma yesterday [Wednesday] signed the Employment Tax Incentive Act No 26 of 2013, making into law an initiative that will complement government's measures ... to create jobs for young workers and those in special economic zones," the treasury said on Thursday.
The Act will take effect on January 1. The treasury said that by offering a tax incentive, employers would be encouraged to employ young people.
Government would share the costs of the employment for a maximum of two years under particular conditions.
"Government recognises that no one tool or incentive will be a panacea to solve our unemployment problem; however, the tax incentive has the potential to make a real contribution."
The treasury said checks and balances were in place to ensure the incentive would not lead to discrimination against older workers.
Any employer registered for tax and had after October 1 employed a person between the ages of 18 and 29, who had a South African ID and was earning above the minimum wage and below R6 000, was eligible.
"Domestic workers and employees connected or related to the employer are not eligible."
Trade unions have been vigorously opposed to the law, with Cosatu arguing it would encourage employers to fire experienced workers to employ younger ones to receive the tax concession.
The National Union of Metalworkers of South Africa has termed the law a neoliberal economic policy failure of the ANC, and vowed to call strikes if it was implemented. – Sapa