Fines warning on incentives

COMPANIES in the Eastern Cape were warned yesterday that they could face large fines if they abused the new youth employment tax incentive by firing older workers.

While also being told how they could benefit from the incentive by being reimbursed for up to half of the monthly salaries of new, young employees, there was a word of caution on breaking the law.

It came from Treasury personal income taxes and savings director Chris Axelson, who said labour law had not changed and that penalties of R30000 per employee would be charged to employers abusing the incentives.

"Employers may be disqualified if displacement of workers takes place by them getting rid of the older workers for younger workers just to claim incentives," he said.

Axelson was addressing employers at a briefing hosted by the Nelson Mandela Bay Business Chamber and Eastern Cape Socio Economic Consultative Council.

Answering a question on how government would manage trade unions' fierce oppostion to the incentive initiative and the possibility of large-scale strikes, Axelson said he hoped there would not be any strikes and that it would be possible to sit around a table and reason with union leaders.

The information session, at which some eployers expressed scepticism, was held against the background of the Eastern Cape having a 53% employment rate.

Axelson said nationally there were 2.4 million people under the age of 30 who were unemployed, and only half of job seekers between the ages of 20 and 24 managed to find work.

"Unemployment has reached crisis proportions, and we realise the youth employment tax incentive cannot address all the reasons for unemployment.

"The incentive aims to improve employment prospects for young workers over the medium term by trying to give them work experience," Axelson said.

For employers, the benefit was that they could get up to half of the salary of youths employed after October last year reimbursed for two years.

The incentive is applicable to South African employees between the ages of 18 and 29 earning between the minimum wage and no more than R6000 a month.

Axelson said employers could claim for both the learnership incentive and youth employment incentive, which was implemented at the beginning of the year, ending on December 31 2016, subject to a review by government.

Once special economic zones like Coega were declared, employers in these zones would be entitled to the same employment incentive for workers of any age.

Rhodes University Neil Aggett Labour Studies Unit head John Reynolds said there was a desperate situation in the Eastern Cape, with only 53% employment.

It was particularly vulnerable because more than a quarter of households survived on R800 or less a month and 72% had incomes of R6400 or less per month.

Despite the strongly performing extended public works programme, unemployment issues had not been resolved in the Eastern Cape because "wages are low and there are few opportunities beyond the programme".

Reynolds said one of the challenges of the incentive was that it could encourage "low-wage employment" but, given the situation, it should at least create more employment opportunities.

He also questioned how effectively abuse of the incentives would be monitored.

Chamber chief executive Kevin Hustler urged businesses to take advantage of the incentive to curb youth unemployment, which he said was a tremendous challenge. -