The wage subsidy policy deadlock and South Africa’s youth unemployment crisis
25 August 2011
Note to editors: The following was released at a press conference held by DA National Spokesperson, Lindiwe Mazibuko MP and DA Shadow Minister of Trade and Industry, Tim Harris MP in Cape Town today.
Today, the Democratic Alliance (DA) launches http://www.youthwagesubsidynow.org/, a website developed to track the opportunity cost of not implementing the youth wage subsidy policy announced by President Jacob Zuma in his February 2010 State of the Nation Address.
Nobody disputes that South Africa has a crisis of youth unemployment. The rate of joblessness in our country is amongst the highest in the world, and 71% of the unemployed are under the age of 34.
We know that the Youth Wage Subsidy policy is not a silver bullet for youth unemployment. But it does represent the best way to start lowering the cost of employing young people without affecting conditions of employment or wage levels.
And no issue better illustrates the ideological deadlock in the ANC government than the delays around the implementation of this policy. It is clear now that, without Cosatu’s buy-in, anyone in this government who comes up with a progressive and relatively uncontroversial policy to tackle unemployment will struggle to find the political backing to implement it. Instead, they have to navigate a storm of shifting factions, interest groups and ideologies in the Tripartiate Alliance that can obstruct policy implementation – perhaps permanently.
It is up to President Jacob Zuma to take the tough decisions in the interests of the unemployed and marginalised, but so far he has failed to cut through the widening ideological divide between those ministers aligned to Cosatu and the left, and those open to more pragmatic solutions to our severe and worsening economic problems.
The Youth Wage Subsidy policy was first floated in October 2009 in the Medium Term Budget Policy Statement and formally announced by the President on 11 Feburary 2010. The opposition parties, analysts across the spectrum, and South Africa’s second biggest trade union – Fedusa – all supported National Treasury policy.
But loud opposition from Cosatu, on completely spurious grounds, delayed the discussion document by ten months. It now seems likely to delay implementation beyond the target date of 1 April 2012 – and perhaps forever – as they use their veto power at Nedlac, where the policy currently sits.
Treasury calculates that the subsidy would benefit 423 000 young job seekers over a three-year period, at a cost of R5bn. Numerous analysts have confirmed the viability and cost-effectiveness of this intervention, most recently the Centre for Development and Enterprise in a comprehensive report.
If Treasury had implemented the policy on 1 April 2010 instead of caving into pressure from Cosatu, it would today have already benefitted almost 200 000 young people and created more than 80 000 net new jobs.
Our campaign – calling on the government to implement the Youth Wage Subsidy Now – tracks the real cost of the delay in this policy and shows just how damaging further delays will be. We call on all South Africans to join the DA in asking the President to reject any further delays and start tackling the crisis of youth unemployment today.