We don't need handouts to create jobs - Numsa
Fin24

We don't need handouts to create jobs - Numsa

2013-10-15 17:12

Cape Town - Offering tax incentives to employers will not help solve the ticking time bomb of youth unemployment, says the National Union of Metalworkers of SA (Numsa).

"We don't need incentives or handouts to create employment; we need to industrialise, we need to localise," Numsa first deputy president Andrew Chirwa told members of Parliament's finance standing committee on Tuesday.

The committee was holding public hearings on the draft employment tax incentive bill, which offers an employment tax incentive to private sector companies, encouraging them to take on more young people.

It applies to youths aged between 19 and 29 who earn less than R6 000 a month.

Youth unemployment extremely high

Earlier on Tuesday, Treasury deputy director general Ismail Momoniat told the hearings that youth unemployment in South Africa was extremely high by international standards, with 2.4 million of the country's unemployed under 30 years old.

Chirwa said Numsa was not naive about the unemployment problems facing South Africa, especially its youth.

"[We] need to move with speed to bring on board proposals that... will address this challenge."

However, the reason there was a problem was not that companies had decided they did not want to employ workers, but because there were not enough opportunities.

"If there are not enough opportunities, what is it that the incentive is meant to do?"

Employers simply not employing

In the current economic situation, employers were simply not employing people.

Chirwa offered the automotive industry as an example, noting that productivity levels in this sector were generally high, and rising.

"But the industry... is not creating jobs. Instead, the level of productivity is going up, profit margins are going up, but job opportunities are going down. Employment is dwindling, it's shrinking."

Yet the committee had heard government wanted to "throw in" money, in the form of the proposed incentive, in the hope that employers would "all of a sudden" start recruiting unemployed youths.

Numsa maintained this was a wrong basis from which to proceed. There were already many incentives and related schemes and subsidies in South Africa.

Expanding industrialisation was the key to addressing unemployment. Companies were patriotic to profit, not people.

"Why would we think that all of a sudden they are there to create jobs? They don't employ people because they like people; they employ because there are jobs to fill," Chirwa said.

We cannot turn a blind eye

Committee chairman Thaba Mufamadi warned of the enormity of the youth unemployment problem and the dangers it posed.

"The challenge we have is that of the unemployed in this country, 70% are young people. We cannot turn a blind eye to that... it is amazing that South Africa has not gone through what some refer to as the Arab Spring... These young people we are talking about, their patience is endless. We don't want to test [that] patience," he said.

In an earlier submission, the Congress of SA Trade Unions said it intended making sure the bill was not passed and implemented. The head of the union federation's parliamentary office, Prakashnee Govender, listed the reasons for their objections to the measure.

These included that employers might unfairly dismiss older workers in favour of subsidised younger ones.

Momoniat said the suggested implementation date for the scheme was January 1 next year, with young workers hired from October 1 this year being eligible.

Incentive period

It was further proposed that the incentive scheme would run to December 31 2016.

"The potential cost of the incentive, in terms of the future tax revenue foregone, is estimated to be between R1bn and R2.3bn over the two years duration."

An amount of R500m had been set aside for the current (2013/14) financial year.

Momoniat noted that the scheme was not a silver bullet designed to strike down youth unemployment, but one of many policy options.

An important point was that in designing it, Treasury had aimed to keep the process - which did not affect wages at all, but worked by setting off the incentive amount against employees' tax (PAYE) - as simple as possible.


Comments
  • Vaughan - 2013-10-15 17:16

    Considering Numsa is doing everything in their power to destroy jobs, I dont think they should have any say in how to create them.

      Alwyn van der Merwe - 2013-10-15 21:05

      Creating anything beneficial is a completely foreign concept for trade unions.

  • Lwando Barayi - 2013-10-15 17:34

    There is a strong possibility of employers keeping the salary margins below R6000 to keep this benefit and thereby leading to endless strikes for salary increase. The results of such strikes will be the crippled economy and lead to unemployment challenge again. Running around the circle.

      JMaree - 2013-10-15 18:09

      Says who? I see what you did there... You imagine something bad happening and then you make your decision based on your imaginary situasion, must be fun in your head?!?!?! An asteroid might also hit SA, killing everyone, so lets stop working, developing, living...

      Lwando Barayi - 2013-10-15 18:56

      JMaree! The main purpose of starting a business is to make money & maximise profit. Staff costs are are usually the highest in a business balance sheet and cutting staff costs plus tax reduction will be the way to maximising profit for any wise businessman/woman. It might not make news24 sense but it does make business sense.

      Robert Sidney - 2013-10-16 08:27

      @JMaree. I think Lwando has a point there. Why pay companies to employ people? You are going to employ someone anyway when you need employment in a company. And why would you want to hire someone straight out of school, without any experience, and spending a large amount of resources to train that person, when you can hire someone with, say, a decade of experience? Sure, the youth should be hired, but there should be other ways and means, like education, education, education.

  • Natalie Nefdt Pennel - 2013-10-15 17:34

    Fantastic, problem solved then.

  • Clive Toerien - 2013-10-15 17:37

    with all the striking day in and out and EFF's running there uneducated mouths unemployment will still drop to 60%

  • Deon de Lange - 2013-10-15 18:07

    Get out of the way, Cosatu/NUMSA. It's not an either/or situation. Any proposal to address unemployment should be welcomed - and tested after implimentation. Industrialise and localise, by all means. But, in the meantime, don't selfishly stand in the way of other ideas.

  • Mzukisi Swarggart TaMzu Ngxumale - 2013-10-15 18:34

    i agree with Numsa

  • Kalahari Kgalagadi Safaris - 2013-10-15 19:02

    People are lazy and want lots of money for doing nothing. Thats why unemployment is rising. We are doomed unfortunately

  • Immanuel Willemse - 2013-10-15 19:25

    NUMSA jst caused da retrenchment of 81 ppl wit their strike.DOWN WIT UNIONS DOWN WIT THEIR STUPIDITY

  • sxp - 2013-10-15 19:28

    Nothing will help us all until AA, BBEEE and sick labour laws are removed. Jobs are not created, but comes about as a business needs them. Numsa needs to realize this.

  • Mhlts Petrus - 2013-10-15 19:41

    Numsa n cosatu they hav agenda against our govt,everythings they oppose n they don't come with the solution.youth bill,Ndp,e toll n tax incentives for employer to hire youth,is time for them to get out of the allaince n form their labour party,u can't held the govt at ransom any more, we a watching u.

  • Moss Kop - 2013-10-15 21:58

    Well NUMSA must tell us what are they doing with the metal industry provident fund. Where do they invest the money?

  • melvyn.vanwyk.56 - 2013-10-15 23:47

    Hi guys I've been living in OZ for about 10 years.Business here get tax incentive for hiring apprentices etc.It does work and creates jobs for the youth

  • Sisie Indola - 2013-10-16 07:42

    So where are all these jobs you are going to or have created....One thing to talk the talk but so different to walk the walk. The only ones who don't give a rats a*** about the strikes etc are the fat cats in the unions whose jobs are secure because they are the fat cats. What they seem to forget is if people lose jobs the contributions get less, oh but then they will "bribe" the companies so that the people don't strike. Get rid of the unions once and for all. Another wasteful arena for people who say they are working but all they do is sit on their fat ar**s, and liv it up when there is a party (giving ourselves pats on the back for a job well done) what a farce.

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