The Democratic Alliance is committed to our “Youth Wage Subsidy Now!” Campaign. We want to make sure that everyone understands the significant job creation and economic growth potential that the Youth Wage Subsidy holds and why its implementation is being blocked.
The DA in the Northern Cape has hosted a Youth Wage Subsidy march in Kimberley. The aim of the march was to protest against COSATU’s blocking of the Youth Wage Subsidy. Furthermore, we have, and continue, to promote the subsidy within communities throughout the province.
If we are to fight for the unemployed, we need a government that demonstrates absolute dedication to the cause of upliftment through the creation of opportunity. In this regard, the DA fully supports the implementation of the Youth Wage Subsidy, as outlined by National Treasury. National treasury has budgeted R5 billion for this. however, it is now stagnating in the budget despite record levels of youth unemployment. This is because COASTU is opposed to the Youth Wage Subsidy because they know it will be difficult to unionise workers who are benefitting from the subsidy. This said, COSATU’s primary objective is to increase union membership, not to increase the number of employed people. That is why they are fighting against an excellent proposal that is clearly in the national interest.
In contrast, the DA has been calling for the implementation of the Youth Wage Subsidy for ten years already and it is now supported by business, government and FEDUSA, the second largest trade federation.
The DA stands up for the unemployed, unlike COSATU who in reality opposes the interests of the unemployed whilst masquerading as a champion of the unemployed.
The DA is more resolute than ever to mobilise all South Africans for the immediate implementation of the Youth Wage Subsidy. The Youth Wage Subsidy will benefit more than 178 000 people in the first three years of the programme. Beneficiaries will be young, first-time job seekers, many of whom have completed matric or have tertiary qualifications but who cannot find that crucial first job. This is critical, as young unemployed people who have some work experience are over three times more likely to find a job than young people who have no experience.
Employers who grow their labour force by employing people between the ages of 18 and 29 will be eligible to receive the wage subsidy. The subsidy will be paid over to complying businesses in the form of a tax credit, and will therefore be administered by the SARS.
The programme has had resounding success elsewhere in the world. Unemployment was literally halved in Singapore between 2003 and 2007, in part due to the implementation of a youth wage subsidy. Several middle-income countries have also adopted wage subsidy programmes including Korea, Mexico, the Slovak Republic, Chile and Turkey. The latter two have deliberately targeted young workers in their programmes.
Closer to home, the DA run-government of the Western Cape also has two working examples of how a wage subsidy can be implemented. In this regard, the Western Cape government has launched two programmes, similar to a Youth Wage Subsidy. These are the Work and Skills Programme and the Premier’s Advancement of Youth programme.
The Work and Skills Programme recruits young people, who are placed with a “host employer” for a year, with a minimum of 12 weeks dedicated to skills development. They are each assigned a mentor for the 12-month period where they are paid a stipend of R1000 a month, which employers are encouraged to top up, and they learn practical skills. While working, they can apply for permanent positions that become available at the host employer. Since 2009, 2500 young people have benefitted from this programme and a further 750 will benefit next year. Furthermore, most of those on the programme go on to permanent employment.
Regarding the Premier’s Advancement of Youth programme, young people from disadvantaged areas who are unable to go to university, are employed in provincial government. They are provided with an income and are also given the skills and experience needed to get a permanent job.
The DA is of the firm view that all in all, the Youth Wage Subsidy would deal a destructive first blow to the wall that still divides South Africa’s economy between the employed and the unemployed. This said, the Youth Wage Subsidy is by no means the be-all and end-all of the DA’s solution to youth unemployment. There are millions of unemployed youth and the Youth Wage Subsidy will only create several hundred thousand jobs, but it will nonetheless get the ball rolling. It will let hundreds of thousands of people into the economy for the first time, and kick-start growth and development.