The youth wage subsidy is a shameless populist attempt at grabbing the youth vote, writes Agang SA's Philip Machanick.
The youth wage subsidy is a stupid idea. It does not address the fundamental bottlenecks in job creation: the skills deficit and impediments to entrepreneurship.
If an employer needs 100 carpenters and there is no one to be found with even basic carpentry skills, how does it help that it is cheaper to hire young people who can't do the job than older people who also can't do the job? How does it help someone start a new business who cannot do so because of the skills deficit?
At best, the youth wage subsidy will only marginally increase jobs and is not sustainable. This is a shameless populist attempt at grabbing the youth vote.
This is why Agang SA rejects the youth wage subsidy and instead plans to abolish the wasteful sector education and training authority (Seta) system, and free up the R6-billion a year that now mostly goes into bureaucracy to pay for skills training. If the employer who wants those 100 carpenters has to employ unskilled labour, the Agang SA scheme will give them the funding to train up the workers. Unlike an unsustainable subsidy that lowers salaries for other workers competing for the same job, the Agang SA policy puts those workers – young or old – in line for better jobs in the future.
In a country with 800 000 vacancies for skilled workers and millions unemployed, why would you not prioritise effective skills training?
Add to this policies designed to open the way for a rapid expansion of small and medium enterprise, and we have a start to solving our jobs crisis. As an example of obstructions to job creation, in the Makana municipality where I live, it is almost impossible to start a business unless you have the right political connections – and that is in addition to formal bureaucratic obstructions like Rica and Fica.
The Democratic Alliance (DA) line on the youth wage subsidy is that it is a brilliant idea that will create jobs and Cosatu is blocking a spineless ANC from implementing it. Here's a heresy for you: on this issue, Cosatu has a better grip on basic economics than the DA. We may differ with Cosatu on details of their analysis, but we agree that the basic idea is fundamentally unsound.
Of course it is not only the DA that is touting absurd populist economics with no basis in reality. That is the Economic Freedom Fighters' stock in trade. The Economic Freedom Fighters (EFF) has policies such as reducing the home-loan repayment period to 10 years with the aid of a government subsidy. This scheme can only work if the subsidy scales up with the size of the loan, a massive benefit for the rich and no benefit at all for the really poor, who have no income to support paying off any form of loan.
In this country, we have desperately hard problems to solve. If there were quick-fix easy solutions, you can bet the ANC would have found them by now. If we are to address these hard problems, we cannot start with ridiculous populist schemes that cannot work in practise. It is for this reason that I support Agang SA. We do not shy away from the hard problems and do not lie to our supporters about what it will take to get this country on its feet and working.
We are not going to resolve the jobs crisis unless we resolve the skills crisis. That means a comprehensive policy for on-the-job training, reform of our dysfunctional school system so that even the 80% of public schools that are fee-free offer quality education, free higher education and systemic rejection of corruption as a way of life.
We also need to undo the system of patronage that the ANC inherited from the apartheid regime that stifles growth of small business and creates an unhealthy dependency on government — the poorest 20% of the population derive more than half their income from social grants.
Today, as I campaign around the Eastern Cape, vistas alternate from extreme rural poverty to urban mansions occupied by the politically connected. Shovelling unearned wealth into the troughs of ANC insiders is more important to the government than creating opportunity for the poor.
I quote from Rhodes University vice-chancellor Saleem Badat's 2014 graduation address: "During the past 20 years income inequality has increased; the richest 20% have increased their share of income while the share of income of the poorest 20% has fallen. This poorest 20% receive a measly 2.7% of national income and obtain 55% of their income through social grants. The top 10% take home 52% of national income."
In a country with these statistics, political leaders who lead lives of crapulent opulence have no moral authority to urge industry leaders to cut back on the gap between worker and top management income. That includes President Jacob Zuma, in his quarter-of-a-billion-rand palace, and EFF leader Julius Malema, with his R16-million unpaid tax bill.
Finally, in an election that should be about transforming from corruptly serving a small elite to real empowerment of the excluded masses, transactional politics is a blight. The most common question I am asked while campaigning is nothing to do with policy; it is: "Where's my T-shirt?"
They give you free food once every five years, then eat your food the next five years. That is a terrible bargain.
Agang SA as a new party is spreading a new message: that voters deserve the respect of politicians, but politicians must earn the respect of voters. It is a message well received wherever we go.
The EFF may attract headlines by means of political theatre and making ludicrous statements, but Agang SA is reaching our people in the way that counts: showing them that we value them. On May 7, we will see which approach really works.
Philip Machanick is Agang SA's Eastern Cape spokesperson and policy convenor.