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Zuma may launch wage subsidy for youth

Feb 06 2011 09:38
Jan de Lange
Cape Town - On Thursday evening President Jacob Zuma will probably announce the introduction of wage subsidies early this year to stimulate employment of young people.

The subsidy is aimed at encouraging employers to hire these youngsters.

Treasury has been working for months to find finance for these subsidies. Details will probably be outlined in Finance Minister Pravin Gordhan’s budget speech, which he will table on February 23.

Gordhan made this proposal in his 2010 budget speech, but it elicited such resistance from trade federation Cosatu that little was said or done about it last year.

He promised that a discussion document on the issue would be published by end-March 2010, but this was never done – in all likelihood because of Cosatu’s opposition.

Sake24 has however ascertained that this discussion document was indeed drawn up and distributed to members of cabinet and senior state officials in the economic departments in the course of 2010. It will now form the basis of Gordhan’s announcements in the budget speech.

The state will probably have to provide billions for these wage subsidies. They could be financed by tax concessions.

Measures to provide work for the youth are being frustrated by entry-level wages that are too high.

In 2010 Gordhan proposed a tax concession to be implemented through an employer’s wage taxation system. It would probably be subject to minimum labour standards that are lower than existing minimum conditions of employment.

About 500 000 school-leavers who would otherwise not find jobs could in this way find themselves employed by 2013.

-    Sake24

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