President Jacob Zuma has given the assurance that the government intends going ahead with its planned wage subsidy to cut youth unemployment, but its final design could still be negotiated.
Mr Zuma also hinted that rules could be established to address concerns raised by the Congress of South African Trade Unions (Cosatu). This is likely to fuel claims by the Democratic Alliance (DA) that Cosatu rather than the African National Congress (ANC) is driving government policy.
The issue of the wage subsidy was thrust into the limelight when DA and Cosatu supporters were involved in street battles this week, as the DA tried to march on Cosatu House to highlight Cosatu’s opposition to the scheme.
The union federation appears unlikely to budge. Emboldened by recent government climb-downs at its insistence, Cosatu said yesterday it would continue to try to influence economic policy, which includes persuading the government to abandon the subsidy.
A three-year pilot of the R5-billion subsidy was meant to start in April last year but was halted when Cosatu objected during talks at the National Economic Development and Labour Council (Nedlac).
In a written reply to a question by Democratic Alliance (DA) parliamentary leader Lindiwe Mazibuko, Mr Zuma said this week the government had undertaken to resolve the concerns raised at Nedlac, which included that the subsidy scheme would result in older, higher-paid workers being replaced by younger workers.
Mr Zuma said the rules could be thrashed out during talks so risks could be reduced. "For example, firms will only be able to access - the incentive if they create additional jobs for young and inexperienced South Africans above current employment levels. The incentive targets a net rise in youth and overall employment."
He said existing labour law prevented the retrenchment of older workers.
But Cosatu’s economic policy adviser, Chris Malikane, who also teaches economics at the University of the Witwatersrand, said the government could not visit every factory to see whether employers were abiding by labour laws.
Mr Zuma said the tax system would monitor the number of jobs created and ensure young employees hired were additional staff.
Yesterday, the DA laid a complaint of intimidation against Cosatu after Tuesday’s march turned violent.
Ms Mazibuko said yesterday that Mr Zuma had " put the politics of the tripartite alliance ahead of the interests of millions of unemployed South Africans. Instead of showing leadership, he has chosen votes at Mangaung (the ANC’s conference in December)."
Prof Malikane said the subsidy was a shortsighted initiative, when SA’s unemployment crisis needed government intervention at a broader, macroeconomic level.
Cosatu has shot down key parts of the government’s New Growth Path, introduced in November 2010 as a policy guide to creating 5-million new jobs by 2020. It has been punting its own policy, which calls for more state intervention in the macroeconomy. It wants inflation targeting to be dropped, in favour of a pegged rand.
As the DA questions who is in charge of economic policy in the alliance, Mr Zuma faces growing pressure to manage the battle for dominance, especially in the build-up to leadership elections.
The government has proposed that the youth subsidy be made available for workers under the age of 30, whose salaries are below the personal income tax threshold. It will be paid for a maximum of two years and have a maximum value of R12 000.