The African National Congress (ANC) is set to announce a far-reaching decision on the youth wage subsidy on Monday. It is likely to set it on a collision course with its labour ally, the Congress of South African Trade Unions (Cosatu).

The youth wage subsidy, after being announced by President Jacob Zuma in his 2010 state of the nation address, has been on hold ever since, despite Finance Minister Pravin Gordhan setting aside R5-billion for it in his 2011 budget.

The stumbling block to its implementation has largely been Cosatu’s argument that subsidising companies to hire young people would jeopardise the jobs of older workers. Negotiations over the subsidy have been before the National Economic Development and Labour Council for two years.

Delegates at the ANC’s policy conference last year had apparently rejected the youth wage subsidy, with Mr Zuma raising the prospect of a job-seekers’ fund in his closing address.

But a senior government source, who attended the ANC’s three-day lekgotla last week, said the subsidy was "back on the table" after it was felt that the unions could not be allowed to hold the party to ransom over the issue. Decent employment emerged through young workers obtaining experience and working their way up.

It was a matter of articulation, but a form of the subsidy would be announced today, the source said. The subsidy was not seen as a panacea to the challenge of youth unemployment and might form part of a raft of measures.

The ANC’s largest province, KwaZulu-Natal, supports the subsidy. Last year Premier Zweli Mkhize said the province was ready to implement the subsidy. Mr Mkhize was elected ANC treasurer in Mangaung in December.

On Thursday, ANC policy chief Jeff Radebe made clear that the issue of a youth wage incentive to encourage firms to hire young, inexperienced workers was back under consideration. He said the ANC would hold a bilateral meeting with Cosatu before or shortly after the state of the nation address.

New dynamics are at play in the relationship between Cosatu and the ANC, with the federation president, Sdumo Dlamini, now serving on the ANC’s national executive committee. The ANC has criticised Cosatu for its "public posture" towards its allies, with this criticism largely directed at its general secretary, Zwelinzima Vavi.

A Cosatu leader on Sunday said they would be meeting the federation’s affiliates this week to discuss managing the new arrangement and the relationship between Cosatu’s top leaders.

ANC secretary-general Gwede Mantashe will brief the media today on whether the proposals put before the lekgotla were endorsed. These decisions will inform an upcoming Cabinet lekgotla and would also feed into Mr Zuma’s state of the nation address on February 14.

Last Tuesday, the ANC met Cosatu’s second-largest affiliate, the National Union of Metalworkers of SA (Numsa). Numsa is leading protests against Eskom’s application to the National Energy Regulator for a 16% electricity tariff hike.

Numsa general secretary Irvin Jim on Sunday confirmed the meeting in which his union presented its case on why the application should not be granted. He said the meeting was cordial and Numsa understood that the ANC had to hold its own discussions on the matter.

The source at the ANC lekgotla said the Eskom price hike issue was debated. The spirit of the discussion was that prices had to be controlled to boost manufacturing and create employment.

Another source on the ANC’s national executive committee confirmed reports that the party had endorsed a call to declare education an essential service. The insider said education emerged as a "facilitating factor" for creating employment opportunities — the main focus of the lekgotla.