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Gordhan impatient on youth subsidy

Feb 23 2012 17:29 Sapa

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FINANCE Minister Pravin Gordhan has voiced impatience with delays in the introduction of his proposed youth wage subsidy.

"There are unresolved issues with respect to the youth wage subsidy," he told a joint sitting of parliament's standing committees of finance and appropriations a day after tabling his annual budget.

"Our challenge over the next six months is to very quickly build some consensus around what we could do so that we talk less about what we want to do and do what we want to do."

The subsidy, in the form of a R5bn tax credit over three years, was meant to be introduced on April 1, but Gordhan announced in his budget speech that for the moment it remains before Nedlac for discussion.

In the committee, he confirmed that a major obstacle was the Congress of SA Trade Unions' fears that it would lead to employers getting rid of older workers.

"We have heard the views of the labour in this regard, that they have some design concerns. Among the primary concerns of some of the labour movement is the substitution effect -- that businesses could employ younger, inexperienced workers, get the subsidy and displace older workers."

Gordhan said it was a genuine concern and his department had undertaken to address it in the way it designed the subsidy.

"For the last few months that is a discussion that has been going on within the Nedlac forum."

He said that at a National Economic Development and Labour Council meeting early in February, members were asked for their input on the budget, but also urged to resolve the subsidy debate.

"At that meeting, we indicated that at some stage soon the talking must stop and we must decide whether we can reach agreement on a redesigned subsidy, or mechanism, or incentive which will ensure that the state incentivises employment within the private sector, but also in the social sector where that might be appropriate."

Democratic Alliance finance spokesperson Tim Harris asked the minister whether there were legal obstacles to implementing the initiative.

"No, but I think our ideal is always to find consensus with different roleplayers if we can. We will make another attempt in the short term, we will take this back into the government system and we will get some guidance on what we do with it."

He added: "We do want to repeat the message that the talking has to stop at some stage and the doing has to start at some stage."


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