“President Jacob Zuma [on 18 December] signed the Employment Tax Incentive Act No 26 of 2013, making into law an initiative that will complement government’s measures … to create jobs for young workers and those in special economic zones,” National Treasury said in a statement.
According to the treasury, providing employers with tax incentives will encourage them to employ young workers.
“There will be no change in the wages that the employee receives but the effective cost of hiring the employee will be lower, making it more attractive for firms to increase employment,” the treasury said.
The government will share the costs of the employment for a maximum of two years under certain conditions.
“[The] government recognises that no one tool or incentive will be a panacea to solve our unemployment problem, however the tax incentive has the potential to make a real contribution towards the creation of new and additional jobs,” the treasury added.
The treasury highlighted the Act contains provisions to ensure that the incentives are not abused and do not result in discrimination against older workers.
Employers are eligible for the incentive if they are registered with the South African Revenue Services for Paye and had after 1 October 2013, employed a person between the ages of 18 and 29, who had a South African ID and was earning above the minimum wage and below R6 000.
However, domestic workers and employees related to the employer are not eligible.
The Act will take effect on 1 January 2014.
The Employment Tax Incentive Bill was signed into law following months of consultation with labour unions and businesses at the National Economic Development and Labour Council. The Congress of South African Trade Unions (Cosatu) has firmly opposed the law, arguing that it is not a solution to the country’s unemployment.
In November, the trade union embarked on marches demanding that the government “scrap” the then Employment Tax Incentive Bill.
