Figures show that unions wrong on youth jobs incentive

19 January 2015 - 02:00 By The Times Editorial
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Amid all the coverage of Islamist terror attacks, threats to disrupt President Jacob Zuma's State of the Nation speech and the power emergency, the good news did not get much of a look-in last week.

But the disclosure that 270 000 people had found jobs in the past 12 months as a result of the Employment Tax Incentive Act deserved to be shouted from the rooftops.

The act, commonly known as the youth wage subsidy, had a tumultuous birth with the ANC having to fend off ferocious criticism from its alliance partner, trade union federation Cosatu, which insisted it was a backward step that would result in employers replacing older workers with young job-seekers at far lower salaries.

These fears seem to have been misplaced and, according to Business Day, 29000 employers claimed from the incentive scheme over the past year.

Admittedly, in a country with an unemployment problem as acute as South Africa's, the fact that 270000 people have found a job as a result of the act is a drop in the ocean.

More than 50% of young South Africans between 15 and 24 are unemployed.

Millions of other people have simply given up looking for work, making unemployment the country's most pressing problem.

But the fact that so many employers are taking advantage of the tax incentive against the backdrop of pedestrian economic growth attributable to strikes, low investor confidence and power constraints is a considerable achievement.

Imagine how many jobs can be created - without jeopardising the positions of older employees - through the incentive scheme in coming years, when economic growth is expected to pick up, thanks in part to the surprise dividend of a low fuel price.

More important, the work experience gained by hundreds of thousands of young job-seekers employed because of the incentive scheme is priceless.