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Incentives for firms to employ youth

Feb 17 2013 11:44 Mandy Rossouw, City Press
Ebrahim Patel.

Ebrahim Patel. Picture: Werner Beukes/Sapa (Werner Beukes)

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Johannesburg - By the end of February, government, business and labour will announce an accord on youth unemployment that stakeholders hope will put paid to the debate around the youth wage subsidy.

There will be no blanket wage subsidy, but growth industries with young workforces will attract state support to hire the young and jobless.

Unskilled young people will also be offered a second chance to write their matric exams.

This is according to Economic Development Minister Ebrahim Patel, who is leading negotiations with industry and unions. Patel said the subsidy would only be paid in new industries like solar-geyser installations, where there will be no risk of displacing older workers.

Trade union federation Cosatu is against a national wage subsidy and, while reports last week suggested the governing ANC would go up against its union allies, President Jacob Zuma steered clear of mentioning the subsidy in his State of the Nation address on Thursday.

The accord’s key purpose will be to get those who left school without matric - more than half of the 2.5million unemployed youth – into work.

The plans to be outlined in the accord include:
  • The second-chance matric campaign;
  • To link the curriculum of further education and training colleges tolocal industries;
  • Youth hubs, especially in poor areas, to make up for the absence of networks in young people’s lives; and
  • Subsidised work opportunities to get young people into work, but without the stringent conditions of full-time work.
Cosatu president Sdumo Dlamini is happy the accord will replace the subsidy.

“The president didn’t even need to mention the youth wage subsidy in his State of the Nation speech. It is all being sorted out at Nedlac (the government, labour and business forum),” said Dlamini, who is also a member of the ANC’s national executive committee.

The youth unemployment incentives will, like the youth wage subsidy was meant to, give money to businesses to encourage them to employ young people.

So it’s the same thing, but according to Dlamini, it will be a lot more complicated than the original plan.

Dlamini told City Press the new incentive will see companies jumping through many hoops to get access to the funds.

Companies will have to show clear programmes and projects, and wait for approval by government before the funds will be handed over.

“It won’t just be open absorption of the youth into the labour market. There will have to be programmes involving training and development.”

Companies will have to show how many young people they will employ as well as how the youngsters will graduate from being interns to being properly employed once the programme is over.

“For the young people, there needs to be a bridge from being an intern to where you are eventually going to work.”

But he admits the incentives will provide “sweeteners” to businesses that will help them carry the burden of a greater workforce.

“There will be some subsidisation of the programme and sweeteners to encourage companies to participate. The state will pay subsidies to companies to take on young people.”

He added that companies will have to show that new workers will not threaten the livelihood of more established employees.

Dlamini did not want to say which government department will be put in charge of the programme.

He would only say the department of economic development, run by trade unionist-turned-minister Patel will play a key role.

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