Johannesburg - The Draft Employment Incentives Bill, published by National Treasury on September 20, is likely to get a mixed reception from manufacturers, according Coenraad Bezuidenhout, executive director of the Manufacturintg Circle.
"While the Draft Bill is a step in a positive direction, it should in no way be viewed as a panacea to youth unemployment and we should be mindful of the uneven basis for competition it could create in its current form," warned Bezuidenhout.
The Draft Bill will in all likelihood not incentivise growth-driven employment
"Instead it wants to maximise youth employment uptake by existing employers, public entities and those who relocate to or establish new operations in Special Economic Zones (SEZs)," said Bezuidenhout.
"In addition, it may create an uneven dispensation between existing employers, who remain in their current localities and those employers who relocate or establish new operations in government’s SEZs, as well as any public entities that may be favoured for the incentives."
Factors that may hamper the Draft Bill's ability to promote employment growth in the manufacturing sector include disruptive industrial relations and mandatory remuneration structures that incentivise attendance rather than productivity, according to Bezuidenhout.
"In addition, less restrictive employment incentives being offered to SEZ-investors are unlikely to promote growth-driven employment, as incentives proposed for SEZs may be attractive enough to bring forward the tipping point for local investments, but will struggle to tip the scales in South Africa's favour when competing with international SEZ-schemes," he said.
"In order to achieve growth-driven employment, investors need to be provided with sufficient incentives to become employers first."
Bezuidenhout said in the manufacturing space, this would entail urgent action in areas such as:
* Providing the necessary bulk infrastructure investment sightlines;
* Improving municipal services and security of water and electricity supply;
* Deepening industrial policy and local procurement traction;
* Expanding market access for manufactured goods to South America, Africa and Asia;
* Addressing administered prices;
* Improving our labour dispensation to promote better outcomes in the labour market.
- Fin24
"While the Draft Bill is a step in a positive direction, it should in no way be viewed as a panacea to youth unemployment and we should be mindful of the uneven basis for competition it could create in its current form," warned Bezuidenhout.
The Draft Bill will in all likelihood not incentivise growth-driven employment
"Instead it wants to maximise youth employment uptake by existing employers, public entities and those who relocate to or establish new operations in Special Economic Zones (SEZs)," said Bezuidenhout.
"In addition, it may create an uneven dispensation between existing employers, who remain in their current localities and those employers who relocate or establish new operations in government’s SEZs, as well as any public entities that may be favoured for the incentives."
Factors that may hamper the Draft Bill's ability to promote employment growth in the manufacturing sector include disruptive industrial relations and mandatory remuneration structures that incentivise attendance rather than productivity, according to Bezuidenhout.
"In addition, less restrictive employment incentives being offered to SEZ-investors are unlikely to promote growth-driven employment, as incentives proposed for SEZs may be attractive enough to bring forward the tipping point for local investments, but will struggle to tip the scales in South Africa's favour when competing with international SEZ-schemes," he said.
"In order to achieve growth-driven employment, investors need to be provided with sufficient incentives to become employers first."
Bezuidenhout said in the manufacturing space, this would entail urgent action in areas such as:
* Providing the necessary bulk infrastructure investment sightlines;
* Improving municipal services and security of water and electricity supply;
* Deepening industrial policy and local procurement traction;
* Expanding market access for manufactured goods to South America, Africa and Asia;
* Addressing administered prices;
* Improving our labour dispensation to promote better outcomes in the labour market.
- Fin24