Andrew Louw MPL
DA Leader in the Northern Cape
Honourable Speaker, Honourable Premier, Honourable Members of the House, guests in the gallery, members of the media The fight for our democracy can never be overstated. The involvement of our youth from Soweto, to Kimberley, to the Eastern Cape and the Western Cape should never be underscored. Youth all over South Africa lit the flame that could not be extinguished. One thing that we should never forget Hon. Speaker, is that the march was a youth march to a democratic South Africa. Second to that, we must never allow the ANC to claim to be the sole custodian of our freedom. The youth of 1973 Durban Westville; the youth of 1976 Soweto and the youth of 1980 Western Cape were not ANC. Hon. Speaker, we are now living in the future that the youth of that era fought for. It is therefore necessary that we give the youth back their future. Let us give back the hope for a better tomorrow to our young people. At the dawn of our new democracy in 1994, some 18 years ago, born –frees – as they are referred to today – were welcomed into a new South Africa. Constitutionally speaking, it was a South Africa fundamentally different to the one their parents grew up in. But while government policies have sought to address the divisions of the past, the infrastructure of discrimination developed over centuries of colonialism and apartheid, have not been easy to overturn. As a result, not enough of those born in 1994 are in matric this year. And even those who do successfully make it through the gates of our education system and complete their qualifications, will be confronted with challenges. Hon. Speaker, while there are an estimated 900,000 scarce-skilled vacancies in the South African economy, many of our youth will not have the correct skills to fill them. The question that we should be asking is therefore not what the future holds for the young professional, but rather how can we make sure that we have more young professionals in the future? To start with, we need a government that demonstrates absolute dedication to the cause of upliftment though the creation of opportunity. In this regard, the DA has been calling for the implementation of the Youth Wage Subsidy for ten years and we fully supports the implementation of the Youth Wage Subsidy, as outlined in National Treasury’s document titled: “Confronting youth unemployment: policy options for South Africa”, as was published in February 2011. To date, however, implementation of the wage subsidy has been stalled in NEDLAC by none other than COSATU. Meanwhile, business, government and FEDUSA, which is South Africa’s second largest union federation, are in favour of the youth wage subsidy. In the spirit of Youth Day, the DA wishes to put forward our argument for a wage subsidy to be implemented now, without revisions. Why a Youth Wage Subsidy, you may be wondering? Well Hon. Speaker, as I alluded to earlier, it is important to recognize that in an environment where young people have little work experience and the costs of firing and hiring new staff can be high, firms tend to hire fewer young people than they should. Demand for young people to work in firms is thus low. A youth employment subsidy aims to address this by: – Reducing the financial costs or risk associated with not knowing the productivity of the person to be employed; – Helping to make the training of young workers more affordable to employers, particularly smaller employers; and – By encouraging a more active job-search because youths believe that they are unable to find work. Hon. Speaker, getting that first job is important. Young unemployed people whow have some work experience are over three times more likely to find a job than young people who have none. This said, allow me to present you with a brief overview of how the wage subsidy would work: · It will only cost government R5 billion over three years to implement the youth wage subsidy. The auditor general has found that government loses R30 billion to wasteful expenditure and corruption every year. Hence, if we cut down on this waste, we can easily afford a R5 billion investment to create jobs for the youth. · Employers who grow their labour force by employing people between the ages of 18 and 29 will be eligible to the wage subsidy. The youth wage subsidy will only be relevant to those employees who earn less than R60 000 per annum, in other words less than R5000 per month. At the same time, an employer will only be eligible for the subsidy for two years. · The subsidy will be paid over to complying businesses in the form of a tax credit, and will therefore be administered by the South African Revenue Service. · Projections indicate that it would cost the state R37 000 per new job created. This is much lower than other job-creation alternatives, like the expanded public works programme, which requires a R60 000 investment by government per job created. In response to the Youth Wage Subsidy, COSATU’s argument is that the youth wage subsidy will create a two-tiered labour system, where the old get fired and the young simply get hired to replace them. They also say that the subsidy is in effect a hand-out to businesses and therefore cannot be justified; and that it will create distortions in the labour market. Cosatu’s concerns are, however, unfounded. Allow me to explain: 1. The wage subsidy proposal can be written in such a way to safeguard those who are already employed. It will only be provided to those businesses who expand their workforce and therefore, the two-tiered labour force concern is unfounded. 2. Current labour legislation would also not allow for people to be fired simply to be replaced by younger people. That is illegal and cannot happen. 3. Businesses treasure their experienced employees, so they would not simply fire them to replace them with inexperienced workers. That makes no economic sense. This plan will safeguard those already employed and make it easier for businesses to expand their workforce to include young people who struggle to find work otherwise. 4. This is not a hand-out to businesses. It is a plan that will help business to employ more people. It will reward businesses for employing more people and will help the unemployed by getting more people into jobs. 5. It will also not cause problematic distortions. Treasury has conducted an in-depth study of the proposal and its possible outcomes and has found that it will result in the creation of 178 000 jobs without affecting wage levels or conditions of employment. So you see Hon. Speaker, COSATU’s concerns are unfounded, instead, I dare say that Cosatu is opposed to the Youth Wage Subsidy because they know it will be difficult to unionise these workers. This said, COSATU’s primary objective is to increase union membership, not to increase the number of employed people. That is why they are fighting against an excellent proposal that is clearly in the national interest. Unlike Cosatu, however, the DA is fighting to have more people employed. Hon. Speaker, Singapore, halved their unemployment between 2003 and 2007, partly due to the implementation of a youth wage subsidy. The United Kingdom, Chile and Argentina, also had variations of the wage subsidy, which provided tangible results. National government, however, needs look no further than the Western Cape for two working examples of how it can be done. The Western Cape government has launched two programmes, similar to a Youth Wage Subsidy. These are the Work and Skills Programme and the Premier’s Advancement of Youth programme. The Work and Skills Programme recruits young people, who are placed with a “host employer” for a year, with a minimum of 12 weeks dedicated to skills development. They are each assigned a mentor for the 12-month period where they are paid a stipend of R1000 a month, which employers are encouraged to top up, and they learn practical skills,. While working, they can apply for permanent positions that become available at the host employer. Since 2009, 2500 young people have benefitted from this programme and a further 750 will benefit next year. Furthermore, most of those on the programme go on to permanent employment. Regarding the Premier’s Advancement of Youth programme, young people from disadvantaged areas who are unable to go to university, are employed in provincial government. They are provided with an income and are given the skills and experience needed to get a permanent job. These, Hon. Speaker, are substantial achievements that should be mimicked across the country as a matter of urgency. In closing, Hon. Speaker, I therefore wish to emphasize that South Africa has an acute problem of youth unemployment, which in effect means that young people are not acquiring the skills of expertise needed to drive the economy forward. While the Youth Wage Subsidy is by no means the be-all and end-all of our solution to youth unemployment, as there are millions of unemployed youth and the Youth Wage Subsidy will only create several hundred thousand jobs, it will nonetheless get the ball rolling. On this note, allow me, on behalf of the DA, to congratulate Cosatu for placing the baton of the fight against poverty and unemployment in the hands of the DA. The march to Cosatu House demonstrated that this union is about proliferating their own membership, and not about becoming the champion of the poor and unemployed. In closing, I therefore call on Hon. Members to pledge support for the Youth Wage Subsidy. Let us not allow Cosatu to be the roadblock to the implementation hereof. Our youth deserve so much better, they are counting on us, so let’s not let them down! Lets us give back the future and the hope for a better tomorrow, to our young people. Thank you.