SA’s employment tax incentives boost jobs

16 January 2015

Some 270 000 young people had landed jobs since the implementation of the Employment Tax Incentive Act, the National Treasury said on 15 January.

National Treasury spokesperson Jabulani Sikhakhane said about 29 000 employers had made use of the incentive. It came into effect in 2014, after the law was passed in December 2013.

“Information received from the South African Revenue Service (SARS) indicates that employers have claimed the incentive for at least 270 000 employees up until the end of December 2014,” he said.

“National Treasury is working with SARS to use the data that is included in the bi- annual reporting requirements from employers to create a more detailed assessment of the impact of the Act on youth employment. This work is still progressing, but a report will be published when the analysis is complete.”

The law was passed in December 2013 after consultations with labour unions and business at the National Economic Development and Labour Council (Nedlac).

Sikhakhane said the National Treasury would continue to monitor the implementation of the incentive and may act to change it if there were unintended consequences that were not in line with the objective of creating more employment.

“As the incentive progresses and more data becomes available it will be easier to investigate these specific questions and they will be covered in any report that is published on the incentive.” The initial take up of the incentive had been “higher than expected”, which could be seen as a positive start.

“More time is required to adequately assess the overall success of the policy as it is dependent on the number of new jobs created and the future opportunities and progression of employees who were hired as a result of the incentive.

“The incentive will then be up for review in 2016, where adjustments may be made to improve its impact and effectiveness,” Sikhakhane said.

The current phase of the Employment Tax Incentive is aimed at helping young people between the ages of 18 and 29 to get work.

“The other two categories of intended beneficiaries have no age restrictions and they are workers employed by companies operating in special economic zones designated by notice by the Minister of Finance in the [Government] Gazette; and workers employed by a business which is part of an industry which has been designated by the Minister of Finance, after consultation with the Minister of Labour and the Minister of Trade and Industry, by notice in the Gazette,” Sikhakhane said.

The incentive was first announced by President Jacob Zuma in 2010 against the concerns of an increasing rate of unemployment among young people. Following this announcement, Pravin Gordhan, at the time minister of finance, introduced the incentive in his 2010 Budget.

In February 2011, a discussion paper, “Confronting youth unemployment: policy options for South Africa” was published. It was referred to Nedlac for consultation, and the National Treasury said the comments made at Nedlac had been included in the newly approved draft Bill.

Source: SANews