Equal education: No jobs created by Youth subsidy

JOHANNESBURG SOUTH – Equal Education has released a statement expressing dismay at the Minister of Economic Development, Ebrahim Patel, for allegedly misleading workers at the Cosatu Congress.

According to the statement, this was done by hailing the youth wage subsidy, officially known as the Employment Tax Incentive (ETI) as being a mechanism that helped create 426 000 new jobs since its implementation.

The statement by Equal Education notes that an earlier study looked at the first six months of the youth wage subsidy, whereas the second one looks at the first year, yielding the same findings. The second study compares “three years of data from before the introduction of the ETI and one year of data coinciding with the first year of its implementation.

This finding, the researchers (Vimal Ranchhod and Arden Finn) say, has important policy implications, given that 270 000 jobs were subsidised at an average cost of approximately R7 400 each over the course of the year.

“Indeed, even supporters of the subsidy in the business community are starting to admit it is an R2 billion per year sham,” said Equal Education Treasurer, Doron Isaacs.

He continued, “Patel’s reported claim goes further even than President Zuma’s in his February 2015 State of the Nation Address. Zuma noted that “R2 billion has been claimed to date by some 29 000 employers, who have claimed for at least 270 000 young people.” In other words, he did not claim that new jobs had been created, whereas Patel appears to. If Minister Patel is in possession of data which has not been made available to researchers then he should immediately release it, but if not he should desist from unproven claims.”

In a previous statement, and detailed submissions to Treasury, Equal Education explained how the subsidy works, however, Equal Education it was still questionable that subsidy gets claimed to the tune of R2 billion per year without creating jobs.