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Johannesburg - The draft employment tax incentive bill was resisted on Thursday by the SA Clothing and Textile Workers' Union (Sactwu) and the Young Communists League of SA (YCLSA).
In its submission to Parliament's standing committee on finance on Wednesday, Sactwu opposed the bill in its entirety and called for its withdrawal.
It said there had been no proper consultation and approval of the bill by social partners, and that it went against the grain of the Youth Employment Accord.
"The bill is likely to lead to negative employment consequences which will outweigh any positive employment consequences which the bill is purported to bring."
Re-introduction of a youth wage subsidy
YCLSA national secretary Buti Manamela rejected the bill, and said it represented the re-introduction of a youth wage subsidy under a different name.
"The draft employment tax incentive bill is a product of consistent efforts by the Treasury, which is the highway of entry and has become the harbour of neo-liberal ideology in our government," he said.
"The Treasury has been pushing for the youth wage subsidy for a sustained period of time now."
Sactwu said that in its current form, the bill would displace older or unsubsidised workers with subsidised workers, creating a multi-tiered labour market in respect of both wages, benefits and overall employment conditions, and would cause downward pressure on wage bargaining.
False assumption
"The false assumption underlying the bill was that if employers were provided with lower wage costs, this would stimulate employment and lead to job creation," the union said.
"Our experience in this matter suggests that there are a multitude of factors which affect employment levels, and wage-levels are not high up on the list".
Therefore, a low wage-cost intervention to create youth employment, or any other employment, was likely to fail.
Unsubsidised jobs which carried a higher cost for the employer would be replaced to a large extent by subsidised jobs which carried a lower cost for the employer.
Low wage-cost intervention
"It is Sactwu's experience that a low wage-cost intervention is highly unlikely to offer positive employment consequences," the union said.
Manamela said the bill appeared to have been rushed and misleadingly appeared to ensure that older and non-qualifying employees would not be displaced.
"A mere reference to unfair and automatically unfair dismissals which the bill promises to act against through a penalty will not prevent the displacement of older and non-qualifying employees."
The bill moved from an ill-advised premise concerning minimum wages, especially those determined through collective bargaining.
Undermining skills development
In its essence, the proposal had the effect of undermining well-structured and disciplined skills development programmes such as apprenticeships, learnerships, internships and experiential training.
"The YCLSA is firmly opposed to [the] youth wage subsidy," said Manamela.
The Treasury could instead establish an incentive scheme to expand funding for apprenticeships, learnerships, internships, experiential training and assessments for recognition of prior learning as well as the National Student Financial Aid Scheme.
"This should be coupled with energy in driving the introduction of quality free education," he said.
