Speaking during a debate on the contentious issue in the National Assembly yesterday, Patel said the government had during negotiations with business and labour at the National Economic Development and Labour Council proposed the creation of a youth employment committee instead.

"We cannot address joblessness through tax incentives alone, but they can play an important role. Nor can we help young people through measures that displace older workers. That approach would deepen social divisions and poverty," he said.

The idea of a youth wage subsidy was introduced by President Jacob Zuma in his State of the Nation Address in 2010.

In terms of the proposed subsidy - for which the National Treasury budgeted R5-billion - employers would receive cash incentives from the government in lieu of employing young workers.

Cosatu and the ANC Youth League have baulked at the idea, saying it would disadvantage older workers because companies would opt for cheaper younger workers .

The ANC has since proposed a job seekers' grant, which would give money to young people to help them look for work.

However, the DA, which called for yesterday's debate, has been pushing the government to implement the youth wage subsidy.

The official opposition said it had already implemented the subsidy in Western Cape, where it claimed to have achieved success in getting young people into jobs.

But Patel produced figures on youth joblessness in Western Cape, sourced from Statistics SA, that showed thousands of young people had been losing jobs in the province since it started implementing the youth wage subsidy.

According to the figures, 41000 young people in Western Cape lost their jobs in the period the province, controlled by the DA, claimed to have successfully implemented the subsidy, said Patel.

"We need consensus on how to address youth unemployment instead of a kragtige [forceful] approach to push through a single measure in the face of opposition from youth organisations and trade unions," he said.

DA parliamentary leader Lindiwe Mazibuko lambasted Zuma, saying he had allowed himself to be bullied by Cosatu into abandoning a project that would have guaranteed thousands of jobs for young people.

"Because the president allowed an unelected organisation to block the will of the people represented in this house, the youth wage subsidy never saw the light of day.

"Surely our president cares more about the young unemployed people of South Africa than he does about the vested interests of Cosatu and his re-election prospects at Mangaung?" she said.