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The subsidy compensates employers for taking on young employees and can act to offset the costs of training or risk incurred by employers - especially those running small enterprises.

Gordhan said unemployment is a serious problem in South Africa, with 41% or only two out of five people of working age in South Africa have a job.

The National Treasury believes that the subsidy will encourage youth, who believe they may more easily find work, to search for jobs more actively.

The idea is that the subsidy will run through the Pay As You Earn (PAYE) tax system operated by the South African Revenue Service (Sars).

To qualify, workers must be aged between 18 and 29 and their wages must fall below the personal income tax threshold - which for the coming tax year (2011) is set at R59750.

The subsidy is expected to cover 423,000 young workers and given that some of these workers are likely to be hired anyway, the number of new jobs is estimated at 178,000 - at a cost of R28,000.

The plan is that as Sars already uses its PAYE system to reconcile the records on employees and employers twice a year, the system will allow for Sars to corroborate information on employers and employees claiming the subsidy.

The subsidy is yet to be implemented as the proposal is being debated at National Economic Development and Labour Council where Cosatu is opposing it.

The labour federation says it opposes the subsidy because it gives employers large amounts of money for hiring young employees. That could make companies retrench older workers in a bid to make more profit.

Comments

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Fri May 24 23:34:05 SAST 2013 ::

May 16, 2012

kolobe

problem with youth employment subsidy is we already have qualified engineers, etc sitting at home wih experince.the notion that the unemplyed are not skilled is wrong. are the current unemployed getting any jobs?they are not and even after the subsidy the beneficiaries will still not be getting any jobs.

the concern here is subsidy makes labour cheap and there is no need to keep the more experienced or those earning higher. there will simply be a recycle of labour. why not use this money to payoff those who owe nfsas/tefsa?bursaries?
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May 16, 2012

mambaaai

@kolobe

its all a dynamic situation, if our industries receive subsidies it makes them more competitive internationally, and that creates a bigger demand for our products which grows the sector and the economy which grows more jobs
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May 16, 2012

kolobe

cosatu just wants guarantee those already there do not get retrenched over new way cheaper labour.even success of china will one day dwindle as labour there gets more informed about their rights.no need for us to live like slaves
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May 16, 2012

RobinH

Kolobe, It seems you do not fully grasp what is meant by the youth employment subsidie. Perhaps you should do some research. It does not go about sponsoring the acquisition of skills, but about the subsidising of wages to those that employ young people - in other words, assisting those companies that employ young people.

Mr Gordhan: "Gordhan said unemployment is a serious problem in South Africa," WOW, how very observant of you. When did this earthshaking realisation strike you?
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May 16, 2012

unobeat

unemployment is a serious issue, but in the same breath most of us the young people are lazy to look for jobs.
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May 16, 2012

tpaz

@RobinH, how will a subsidy create employment? Having cheap young labour available in the market will not guarantee that one will will get a job.

@Kolobe, you right the problem is experienced people are sitting at home. The economy is shrinking.

@DA supporters...black ones especially , why did you protest yesterday when the minister had budget for the subsidy already?

Solution,: Youth Service for 2 years......youth does Govt public works- previous tenders- they get paid from the subsidy.
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May 16, 2012

TjoVtjo

There we go again with Government trying to create more work. It's a bullshit stratergy because the job of Government is to create an enabling environment for business to grow, not create new tax loops that will be expolited by the savy. Minister Gordan, perhaps the first port of call is for Government to totally scrap tolls, then make the cost of capital cheaper for aspiring black entrepreneurs. While were on it, why don't you make the NEF work for a change? Those people are sitting there with tons of money, simply giving it to their homies, and not where it counts the most. It's a totally useless insitution, and should be re-assessed. Stop wasting our money. We sweat bullets to make it, and you guys spend it on hair brained schemes. Sies!!!!

Peeved Off!
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May 16, 2012

kutsukuyi

COSATU is only worried about its membership because if the youth is employed, the old members of COSATU will be out of the jobs because the employers will only consider young people for the jobs. We all know that young people today don't really concern themselves about politics and unions.

COSATU is merely worried about its membership and that is it. Even yesterday you would have not seen anyone unemployed on the side of COSATU.


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May 16, 2012

rasefatee

To qualify, workers must be aged between 18 and 29
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what about the poor man on the street (a parent with children) who fall between the age of 30 and 50 years of age who is unemployed and could not benefit from the subsidy this issue must be globalised it should include all age groups of uneployed people of this country
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May 16, 2012

RobinH

tpaz: The proposed subsidy, as far as I understand, is NOT creating cheap labour at all. That is a complete misnomer, even a fiction, being touted by Vavi. However, what really is the case is this. The state proposes to compensate companies employing youth by subsidising all or a portion of their wages. The youths, therefore, will NOT BE EARNING LESS, but companies employing them will be paying less for their services, with the balance being made up with the subsidy. I hope that clarifies things a bit.
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