South Africa Plans Tax Breaks to Encourage Youth Employment

South Africa will give tax breaks to companies to encourage them to hire new job seekers, Finance Minister Pravin Gordhan said.

“One of our most pressing development challenges is to expand work opportunities for young people,” Gordhan said in his budget speech to Parliament in Cape Town today. “There has been extensive debate on how this should be done. A wide range of measures are needed, including further education, training, public sector employment opportunities and support for job creation in the private sector.”

While 25 percent of South Africa’s workforce is unemployed, the jobless rate for those under the age of 30 is more than 40 percent, according to the government.

The National Treasury in 2010 outlined plans to subsidize the wages of unskilled entrants to the labor market at a cost of 2 billion rand ($227 million) to 6 billion rand a year. That proposal was never implemented because of objections from labor unions, who said existing workers would be displaced and employers would benefit more than the unemployed.

“A tax incentive aimed at sharing the cost of employing young work-seekers will be tabled for consideration by Parliament,” Gordhan said. “It will help young people enter the labor market to gain valuable experience and access career opportunities. A similar incentive is proposed for eligible workers of all ages within special economic zones.”

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