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Private Sector Sceptical About Youth Wage Subsidy

14 January 2014   (0 Comments)
Posted by: Author: Ray Mahlaka
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Author: Ray Mahlaka (Moneyweb)

The uptake of matriculants into the job market, owing to the new youth wage subsidy, is expected to be low, largely because the private sector is still sceptical about its purpose.

The Employment Tax Incentive Act, which came into effect on January 1 and is known as the ‘youth wage subsidy’, is a government bill to incentivise employers to create jobs for young workers. This is in a bid to tackle South Africa’s significant youth unemployment, which according to Statistics South Africa’s latest indicator (Q3, 2013) is sitting at 24.7%.

Employers can claim the incentive for any employee between the ages of 18 and 29 who receives a monthly salary lower than R6 000 per month.

Some new matriculants will be the first group to benefit from the tax incentive.

However, naturally, the success in the number of matriculants who are absorbed into the job market as a result of the subsidy, depends on how well it is implemented, according to Pietman Roos, policy consultant at the South African Chamber of Commerce and Industry (Sacci). "The biggest challenge at the moment for government is to advertise the subsidy as possible. Business trusts the (National) Treasury, as it has a strong reputation,” Roos says. 

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