Minister of Finance's reply reveals no firm timetable for wage subsidy - despite earlier pledge for early 2011 rollout
Backtracking shows Zuma administration beholden to union interests, at the expense of job creation
DA will question administration's backtracking at tabling of Medium Term Budget Policy statement





In response to a Democratic Alliance (DA) question to the Minister of Finance on the deadline for a policy to be implemented with regard to the implementation of a subsidy to employers to lower the cost of hiring young people without experience, the Minister has stated that a policy has not been implemented and that it is "still under discussion in government". The Zuma administration is clearly backtracking on this crucial issue.

In his budget speech in February, the Minister stated that young people would begin benefiting from the initiative by early next year, 2011. He now says that the implementation date will depend on agreement and approval within government regarding the design of the subsidy. Although we agree that the approval of a policy in principle and its eventual design requires different processes, it appears that the problem is with the policy and not its design.

There is no agreement within the ANC-tripartite alliance on a wage subsidy, because it exposes some uncomfortable truths about unemployment in South Africa. It exposes the fact that young workers have been crowded out of an overpriced and inflexible market. Entry level wages and employment conditions are not flexible enough to encourage employers to hire this category of job seeker. By adjusting the cost of youth employment through a wage subsidy, this problem can be alleviated.

It is highly unlikely that the trade union partners in the alliance will agree to a subsidy because it erodes their political power over a labour market that benefits only those already in employment and ignores the needs of the growing millions who are not. Ironically, this approach perpetuates economic contraction and leads to further job losses - a far cry from the virtuous economic cycle that the DA believes is possible to construct by making sensible policy decisions.

The DA's concern over whether the Minister has sufficient political support from President Zuma and within the ANC-tripartite alliance to implement this promised policy is growing and we will question the Minister on this apparent backtrack at the first available opportunity - most likely when he tables the next Medium Term Budget Policy statement.