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Employment tax incentives leads to 270,000 new jobs

Employment tax incentives leads to 270,000 new jobs

The implementation of the Employment Tax Incentive Act has resulted in 270,000 young people getting jobs ever since its inception, the National Treasury said.

National Treasury spokesperson Jabulani Sikhakhane said there were around 29 000 different employers who had made use of the incentive ever since it came into effect last year.

“Information received from the South African Revenue Service (SARS) indicates that employers have claimed the incentive for at least 270,000 employees up until the end of September 2014.

“National Treasury is working with SARS to use the data that is included in the bi-annual reporting requirements from employers to create a more detailed assessment of the impact of the Act on youth employment.

“This work is still progressing, but a report will be published when the analysis is complete,” he said.

This follows the passing of the law in December 2013 after it had been put on ice to allow for consultations with labour unions and business at the National Economic Development and Labour Council (Nedlac) to take place.

The incentive was first announced by President Jacob Zuma in 2010 against the concerns of an increasing rate of unemployment amongst young people.

After the announcement, the then Finance Minister Pravin Gordhan later introduced it during his 2010 Budget.

These announcements were followed by the publication in February 2011 of a discussion paper, “Confronting youth unemployment: policy options for South Africa.”

It was then referred to Nedlac for consultations, and National Treasury said the comments made at Nedlac had been included in the newly approved draft Bill.

Sikhakhane said National Treasury will continue to monitor the implementation of the incentive and may act to change the incentive if there are unintended consequences that are not in line with the objective of creating more employment.

“As the incentive progresses and more data becomes available it will be easier to investigate these specific questions and they will be covered in any report that is published on the incentive,” he said.

He said the initial take up of the incentive has been “higher than expected,” and added that this can be seen as a positive start.

“More time is required to adequately assess the overall success of the policy as it is dependent on the number of new jobs created and the future opportunities and progression of employees who were hired as a result of the incentive.

“The incentive will then be up for review in 2016 where adjustments may be made to improve its impact and effectiveness,” Sikhakhane said.

The current phase of the Employment Tax Incentive is aimed at helping young people between the ages of 18 and 29 to get work.

“The other two categories of intended beneficiaries have no age restrictions and they are workers employed by companies operating in special economic zones (SEZs) designated by notice by the Minister of Finance in the Gazette; and workers employed by a business which is part of an industry which has been designated by the Minister of Finance, after consultation with the Minister of Labour and the Minister of Trade and Industry, by notice in the Gazette,” Sikhakhane said

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