Most leave school with a questionable education, lose their child grant and face a very uncertain future.
If they seek work, they join a queue of 4.7-million. If they do not, they join the group of not economically active 15.9million, hence the present unemployment rate of 25.6%.
The unemployment rate for 15-to 25-year-olds is 33%, and those with matric or less account for 65% of the unemployed.
Some say there is hope for the youth in the small to medium enterprises sector. Please! What hope is there of starting a business with no skills or job experience?
For the past five years, a youth wage subsidy has been bandied about. The proposals recently released by the Treasury envisage the payment of a wage subsidy to approved employers for employees between 19 and 29 years old employed on or after October 1.
The subsidy is equivalent to 50% of remuneration — up to R6000 a month — for the first 12 months of employment and 25% of remuneration for months 13 to 24. The minimum wage requirements must be met. There are obviously controls to stop the subsidised employment of family members and domestic workers.
The subsidy is offset against tax liability due in employees’ tax. To fast-track its implementation, the initial structure will not accommodate reimbursements to employers of any excess amounts generated. However, the proposals do include a six-monthly reimbursement process that may be implemented later.
With a little imagination, it is possible to couple the new wage subsidy to the S12H learnership incentive to create a legal double-dip tax incentive. So the prize is potentially a cash tax incentive of R56,000 over two years plus a R60,000 tax deduction for creating a new job.
The system is complicated. It has to be. One can imagine the schemes that will try to defraud the taxman. There have to be checks and balances. But in the current unemployment crisis all employers should be investigating the opportunity.
Originally published in the Sunday Times: Money & Careers Tax Talk column.