National Treasury’s Youth Wage Subsidy could save many jobs that are at risk as a result of the new minimum wage settlement for the agriculture sector. This is because the subsidy would bring down the cost of permanent employment for young workers.

The DA calls on Finance Minister Pravin Gordhan to urgently clarify whether the Youth Wage Subsidy, as formulated by his department, will be implemented this year.

Agricultural sector estimates suggest that around 100 000 farm workers could find their jobs at risk following the 52.17% increase in the daily minimum wage for agriculture from R69 to R105.

A loss such as this would represent a massive increase in unemployment in our country, especially considering that StatsSA’s Labour Force Survey released yesterday showed that 257 000 additional South Africans had entered unemployment over the past year.  Youth unemployment is particularly high, with 4.8 million 15-34 year-old South Africans trapped in unemployment.

If the Youth Wage Subsidy were in place today, the cost of full-time employment at minimum wage for a new farm worker under twenty-nine years of age would effectively decrease from R105 to R61 per day for the first year, with government funding the rest of the wage.

In the second year of full-time employment (or for existing workers under twenty-four years of age) the cost of employment would be R83 per day, with government funding the rest of the wage.

The Youth Wage Subsidy would almost certainly reduce whatever job losses may occur in agriculture by lowering the cost of employment, while ensuring all workers are hired with full labour rights and paid at least the new minimum wage.