Employment Tax Incentive Bill comes under attack

Posted 23 September 2013 Written by Karl Gernetzky
Category Labour

THE Democratic Alliance (DA) has expressed disappointment that the new version of the Employment Tax Incentive Bill, which introduces a youth wage subsidy, "waters down the benefits of the youth wage subsidy proposed three years ago," according to Business Day.

DA Finance spokesman Tim Harris said that the new version failed to cover existing workers, and excluded benefits for many youth hired in sectors without minimum wages.

The Treasury called for public comment on the draft legislation that will introduce a long-awaited youth wage subsidy, announcing on Friday that tax incentives sharing the cost of employing inexperienced youth between the government and employers could be implemented next year.

The government has made promises since 2010 that some sort of subsidy is in the works to help address a youth unemployment nearing 50%, described by many as a "ticking time bomb".

The employment incentive was first announced by President Jacob Zuma in the 2010 state of the nation address, but has seen strong opposition from the Congress of South African Trade Unions (Cosatu) which has maintained that subsidies to business would simply allow them to replace older workers.

The Treasury said on Friday that the Cabinet had approved the Draft Employment Tax Incentive Bill, which would "stimulate demand for young workers".

The public has until October 11 to make submissions, with a revised bill being presented to Parliament by the end of next month.

It is proposed that the incentive will be introduced on January 1 and run until the end of 2016.

Businesses will qualify by employing new staff between the ages of 19 and 29, with the incentive decreasing the amount of tax owed by an employer through the pay-as-you-earn system.

But Mr Harris said this version would negatively affect small and labour-intensive business, which would not be able to claim the full benefit, he said. "These changes raise questions about whether the tabling of a watered-down bill seven months before an election — with talk of a ‘sunset clause’ — might be a cynical election ploy by the ANC to win votes, not create jobs," he said.

The DA would work in Parliament to ensure the bill was passed as soon as possible, however "it is not clear that Cosatu will allow this bill to be passed given that Minister (Ebrahim) Patel’s Youth Employment Accord requires that any incentive needs to be approved by all (Nedlac) constituencies," Mr Harris said.

Cosatu spokesman Patrick Craven said on Friday the federation had not yet studied the proposed bill. "We are in opposition in principle (to the) youth wage subsidy, which represents an advance by the DA," he said. Speaking at the National Economic Development and Labour Council (Nedlac) on Friday, Cosatu acting general secretary Bheki Ntshalintshali said "young men and women are disproportionately hit by unemployment, and when they find a job, it is often precarious and not matching their skills".

He called for "new types of engagement" to find consensus on radical economic and social transformation to address poverty, inequality and unemployment.

The Treasury had previously maintained there would be protection, and said on Friday employers found to be unfairly dismissing employees to take advantage of the incentive would be excluded.

The views expressed herein are those of the author and do not necessarily reflect those of Acts Online. Acts Online accepts no responsibility for the accuracy, completeness or fairness of the article, nor does the information contained herein constitute advice, legal or otherwise.