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Encouraging employment through incentives: The case of a youth wage subsidy (March 2013)

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Encouraging employment through incentives: The case of a youth wage subsidy (March 2013)

25th March 2013

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Joblessness among South Africa’s young people aged between 15 and 34 is chronic and structural. The statistics tell it all: in 2011 almost three quarters (72%) of South Africa’s unemployed were yougner than 34.

In 2010 President Jacob Zuma proposed a subsidy to firms to employ young people. In the 2011 budget speech Finance Minister Pravin Gordhan announced a youth wage subsidy in Parliament and set aside R5-billion for its implementation. Yet since then, the final implementation of the youth wage subsidy has been delayed and labour, business and government have been trying to thrash out their differences in the National Economic Development and Labour Council (Nedlac).

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This paper will examine the youth wage subsidy proposal and how it would be implemented in South Africa. It will also briefly review the criticism levelled against the subsidy.

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Written by Kenny Pasensie, Researcher at the Southern African Catholic Bishops’ Conference Parliamentary Liaison Office (CPLO)

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