Finance Minister Pravin Gordhan is to present a discussion paper on the youth wage subsidy to trade unions and business on February 25 at the National Economic Development and Labour Council (Nedlac) in Johannesburg.
The subsidy has been roundly condemned even by organisations whose members may benefit from it, such as the Young Communist League and the National Youth Development Agency.
In his budget speech on Wednesday this week, he said the details of a R5-billion youth employment subsidy would be further considered by Parliament and at Nedlac.
Speaking to the Mail & Guardian on Thursday, Gordhan was at pains to explain that the R5-billion proposal is not cast in stone and the money could be used for any initiative that leads to job creation.
“The key thing is not the youth wage subsidy it is how we tackle youth unemployment. We want to get the best possible ideas,” he said. “The question is what government needs to do to incentivise businesses to take the youth off the streets and put them somewhere they can get experience and put something on their CVs.”
Job creation
Preliminary calculations by the treasury show that a R5-billion youth wage subsidy could create up to 400 000 jobs for young people. “If every [small] business takes on one or two extra people, we would solve the problem in no time,” Gordhan said.
But the subsidy has drawn the ire of Cosatu, which says such a system will create a two-tier labour system in which workers will be abused by employers because employing young people by means of the subsidy would be cheaper than giving them permanent jobs.
“Unscrupulous employers will keep an army of young workers permanently and replace secure and better-paying full-time jobs currently held by older workers,” the trade union federation said in a statement released by the People’s Budget Coalition on Thursday.
Cosatu could find that its workers will not sacrifice a day’s wages to strike against such a subsidy, said Steven Friedman, director of the Centre for the Study of Democracy.
“If the government goes ahead with the youth wage subsidy it won’t be a dealbreaker for Cosatu, but the trade union federation’s anxiety about it is justified,” he said.
“[The youth wage subsidy] is moving dangerously close to an area of the relaxation of labour laws, but the ANC has not threatened the protection of workers. If that had to happen, it might be a different story,” Friedman said.