The Centre for Development and Enterprise (CDE) said on Wednesday that it supported the implementation of the National Treasury’s R5-billion wage subsidy for first-time job seekers.

Speaking at a media briefing in Johannesburg, CDE executive director Ann Bernstein, said that the subsidy would provide unskilled and inexperienced youth with an opportunity to get a foot in the door.

“It has been proven that once a person gets a first job, he or she was more likely to make more money over his or her life span,” said Bernstein.

South Africa has one of the highest unemployment rates in the world, with two-thirds of its unemployed being under 34.

National Treasury estimates that a wage subsidy would be able to generate 133 000 additional jobs for the country’s youth from 2012 to 2015.

The subsidy would be available to young and less skilled people aged between 18 and 29 years old who are earning below the personal income tax threshold, or R60 000 a year.

Employers would be able to receive a maximum of R24 000 back on wages for new employees at the lower end of the wage scale.

However, even with this tax benefit it is still uncertain what the uptake would be by business, said Bernstein.

CDE’s latest report found that it would be most effective if such an initiative were paired with a probationary period during which a ‘no questions asked’ dismissal policy was to be applied.

Bernstein said that this would further encourage employers to take on additional staff, as this would reduce the cost and complexities of growing one’s staff coefficient.

But, labour unions have kicked against the implementation of Treasury’s proposed wage subsidy, fearing that such a subsidy might have the effect of displacing full-time workers.

The Congress of South African Trade Unions (Cosatu) had previously said that employers would choose this new source of cheap labour over keeping on more expensive full-time workers.

It added that the initiative could result in a two-tier labour market. That is, a labour market comprised of a segment protected by labour legislation and another layer that faces the unregulated might of the employer.

Cosatu also pointed out that South Africa already has a two-tier labour market owing to the proliferation of nonstandard forms of employment like subcontracting, casual work and labour broking, which new amendments proposed by Labour Minister Mildred Oliphant aim to address.

But, Bernstein noted that such amendments would only result in a further loss of jobs in the country.

She said that South Africa needed a comprehensive framework, with a number of initiatives, including the proposed wage subsidiary to deal with the national unemployment crisis.

“Other emerging countries has lifted millions of people out of unemployment and poverty by focusing on the basics. We have to decide if it is better to have a job, any job, or be unemployed.

“If your only aim is to create ‘decent’ jobs at very high wages, you end up with the world’s highest unemployment rate.”

The CDE, which is a national policy think tank, believed that the subsidy would be implemented next year as planned and announced by Finance Minister Pravin Gordhan in his Budget speech this year.