Treasury director-general Lungisa Fuzile says unskilled workers need the most help to join the workforce. Photo: Simphiwe Mbokazi Treasury director-general Lungisa Fuzile says unskilled workers need the most help to join the workforce. Photo: Simphiwe Mbokazi
Johannesburg - It would have been the National Treasury’s preference to reach “a broad consensus” on the employment incentives for young people before tabling the legislation before Parliament, but this was not to be, director-general Lungisa Fuzile told MPs yesterday.
Addressing the select committee on finance, Fuzile explained that one of the aims of the incentive was to make it more attractive for a business to employ labour than to set up machines and avoid increasing its workforce.
He acknowledged that agreement could not be reached at Nedlac, the negotiating forum for the government, business and labour.
Responding to a flurry of concerns from ANC MPs, led by Budang Mashile who argued that providing an incentive at a low level of pay appeared futile, Fuzile said he was particularly concerned about South Africans of working age who had failed to complete high school and were unemployed. Most matriculants were able to garner jobs relatively easily but it was those who lacked skills and were at the lower end of the pay scale that needed this assistance to get a job.
Mashile said the incentive should apply at a higher level.
For example, a person with an engineering certificate earned about R12 000 a month. To attract employment at this level, the incentive should be applied at a higher threshold.
However, the Treasury argued that those earning above R6 000 started to pay income tax and an incentive system above this level would make it too complex to apply.
“It is not an argument for starvation wages, but you need to start somewhere,” Fuzile said, noting that most workers aged 18 to 29 earned between R1 500 and R3 500 a month.
Noting concerns that existing workers could be disadvantaged – or even dismissed – because of the appointment of new, previously unemployed, workers using the incentive system, Matthew Simmonds, the deputy director-general in the budget office, reported that a penalty of R30 000 per dismissed employee would apply that was in “relation to the size of the transgression”.
Cosatu and its allied unions have argued that the new incentive legislation would push out existing – and experienced – workers and would drive down the cost of employment for the private sector.
Fuzile and Simmonds noted that the SA Revenue Service would enforce “anti-abuse provisions” with information from the Labour Department “and any other third party”.
The Treasury emphasised it was proposing “a cost-sharing mechanism with the private sector” to hire young and less experienced workers.
It was envisaged that the incentive system would run for three years from next year.