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City Press reports that Finance Minister Pravin Gordhan promised on Tuesday that the controversial employment tax incentive (ETI), colloquially known as the ‘youth wage subsidy’, would be renewed next year.
In reply to a request for clarity at a breakfast event, Gordhan confirmed that the ETI would be extended, but said its effects were being studied with a view to possibly changing how it worked. The ETI provides a subsidy of up to R1,000 a month to employers of people aged between 18 and 29 earning less than R6,000 in their first formal jobs. This falls to R500 in their second year on the job and falls away in the third. Yet, there still is not any reliable evidence that the ETI has affected the labour market much, other than that it has padded the profits of employers in the low-wages service sectors.
Peter Walsh of Servest defended the ETI, saying it has “absolutely” changed the hiring practices at the company, which employs people mostly in cleaning, security and landscaping services. He said there was no doubt his workforce has become younger as a result of ETI targets.
- Read this report by Dewald van Rensburg in full at City Press
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