The social and economic impact of youth unemployment
As such, their job-searching period becomes considerably longer than for experienced workers, which leads to gaps in employment history, loss of skills and productivity, and future work prospects are harmed. Young people struggling to find permanent jobs are bound to accept temporary positions, and these types of positions are not always considered ‘real’ work experience by employers and having these experiences listed on a CV, does not necessarily ease the process of finding work.
Moreover, temporary jobs are less protected, often pay less and do not offer job-related training and social benefits. As a result, unemployed young people face the worst possible career opportunities.
High youth unemployment has a negative impact on economic growth and productivity that can’t be ignored. There is a risk of loss of talent and skills, since a great amount of university graduates are unable to find a job and put their knowledge and capabilities into producing innovation and contributing to economic growth. Furthermore, having a large share of the young workforce unemployed, not only leads to reduced productivity and gross domestic product (GDP), it also increases the economic costs for the country, since there is a need for more money to be paid out on social grants and less money coming in from taxes.
The responsibility of business in addressing youth unemployment
Employers have a fundamental contribution to make in tackling youth unemployment, as they provide the job opportunities which enable young people to enter the labour market, while also engaging with young people in other ways to help them prepare for work. Understanding the role that businesses have to play in boosting the employment of young work seekers, the South African government launched the Employment Tax Incentive (ETI) Act in January 2014.
Commonly known as the youth wage subsidy, the act allows businesses to claim back some tax for employing young workers that adhere to certain requirements. The legislation encourages employers to hire young people by reducing the amount of PAYE payable to SARS, thereby, reducing the cost of employment to the employer while leaving the company’s earnings unaffected.
Employers that stand to benefit from the programme must be registered for PAYE, and cannot come from the national, provincial or local sphere of government. Eligible companies can also not be a public entity listed in the Schedule two or three of the Public Finance Management Act.
An employee will qualify if they are between the ages of 18 and 29 and have a valid SA ID or an asylum seeker permit. The employee has to have been employed on or after 1 October 2013 and must earn at least R 2000.00 per month, and no more than R 6000.00 per month. An employee will not qualify for the programme if he/she is related to the employer and if the employee is a domestic worker.
The incentive scheme is currently scheduled to end on 31 December 2016, but its effectiveness will be reviewed to determine whether or not the programme can continue into the future.
