Parliament passes youth wage subsidy Bill

Parliament adopted the Employment Tax Incentive Bill on Thursday as the Treasury prevailed in its three-year battle with Cosatu over a youth wage subsidy.

Although all opposition parties voted in favour of the Bill, they said the standoff had watered it down, let down job-seekers and undermined the National Education Development and Labour Council (Nedlac).

"While this Bill was stuck at Nedlac, 218 000 young job seekers joined the ranks of the unemployed. That is the price of [Cosatu's] delay," said Democratic Alliance finance spokesperson Tim Harris.

Harris said the cost of the ideological battle in the ruling alliance was evident in the R1.3-billion tax break the wage subsidy would give employers, down from R5-billion when it was first mooted by Finance Minister Pravin Gordhan.

"It is a good day for young people. That said, it could have been a much, much better day, because the version of the subsidy before this house is significantly watered down from the version tabled in the 2011 policy," he said.


The cost of the subsidy has been reduced by lawmakers scrapping initial plans to extend it to existing workers and to workers in entry level, part-time jobs without sectoral determinations.

Cosatu bitterly opposed the subsidy, arguing that it would encourage employers to fire experienced workers to employ younger ones to receive the tax concession.

'Policy failure'
The National Union of Metalworkers of South Africa has termed it a neoliberal economic policy failure of the ANC, and vowed to call strikes if it were implemented.

Congress of the People spokesperson Nic Koornhof said the passage of the Bill was a clear sign that Cosatu's influence within the tripartite alliance was on the wane.

Fellow opposition MP Lance Greyling said it was a victory for young DA supporters, who marched on Cosatu's headquarters last year to support the Bill.

Finance Deputy Minister Nhlanhla Nene angrily rejected Harris and Greyling's contention that the DA had not only beaten the national government to the post by successfully introducing a similar subsidy in the Western Cape, but cared more about the plight of the youth.

"Let me warn you again, stop turning the youth unemployment into a political football. It is because you have no experience. You have no experience of having an unemployed person under your roof, you have no experience of being unemployed yourself."

Reduced unemployment
Nene said figures showed that Limpopo had reduced unemployment by 4.5% compared to a 2% decline measured in the DA-governed Western Cape.

He also dismissed Harris's criticism that the finance ministry had weakened Nedlac by refusing to submit the Bill to the bargaining council, where negotiations on the subsidy in its initial form stretched for three years without consensus being reached.

The unusual step was justified by Treasury director general Lungisa Fuzile, who said last month that the government could not be hamstrung by an obligation to submit proposals to Nedlac.

Harris charged: "Here Treasury simply side-stepped. They brought the Bill straight to Parliament. Is this the final nail in the coffin for Nedlac?"

The government plans to introduce the tax incentive in January. – Sapa

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