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Youth wage subsidy will not fix SA's 'broken' labour market

Sapa

Analysts have said the youth wage subsidy, which came into effect on January 1, will only bring short-term relief.

Cosatu's Patrick Craven has said federation will oppose the youth wage subsidy. (Gallo)

The youth wage subsidy will only bring temporary relief and not reduce the high number of unemployable young people, according to Sunday's Rapport newspaper.

CEO of labour broker Adcorp, Richard Pike, said the subsidy would advantage matriculants and temporarily slow the trend of replacing people with machines.

"But ultimately ability, training, productivity and flexible labour legislation are the only long-term solution."

The Employment Tax Incentive Act came into effect on January 1. Employers could, in the first year, claim back half the salary of a young employee (aged between 18 and 29) earning at least R2 000 a month.

Solidarity's CEO Flip Buys said while the trade union supported the law, it was a short-term solution. The cause of youth unemployment was because many of them were unemployable. He said that until the quality of labour being supplied was improved, it would not help to try to artificially increase demand for it with such incentives.

Buys said the labour market was "broken" because the state interfered in the economy too much.

The Congress of South African Trade Unions vowed to oppose the law in court, or, failing that, to protest. Spokesperson Patrick Craven said employers would get rid of workers who no longer qualified for the subsidy, and fire older, more costly workers to replace them with young people. - Sapa

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