"Experience" of the youths at the first place rather than "Education"Nov 24, 2013 407 view(s)
Government introduced a wage subsidy for the youths after the end of five years of strong debate. The idea behind this youth wage subsidy was first introduced by the international panel of advisors hired by the government in 2008 in order to advise on various economic strategy. Thinking on this strategy funds were also decided in the 2011 budget to pay for such subsidy.
However, the union opposition has led the necessary legislation only to be passed. They argued strongly that the subsidy will not solve the ongoing unemployment problem in South Africa. Supporters of the subsidy are well known with this fact. The main aim of the subsidy is to indicate the most worst levels of unemployment where youths under the age of 30 years i.e. about 42% versus the one older than 30 years which are about 17% are without jobs.
Lack of proper education is not the only reason behind this high rate of unemployment among young workers. But, they are far educated in terms of formal education than the old workers. The true fact is that employers consider the need of formal education very lightly. According to them work experience is the most valued and important thing. So, the scenario is such that older workers with less education but having work experience are more likely to find jobs than the youths who are more educated but no work experience.
The youth wage subsidy is aiming to address this difference. They are trying to make the employment for the youths more cheaper and recover their lack of work experience. Also at the same time their wages will also not be reduced, means they will receive the same salary as the older workers. So the claims that the young workers will be paid “poverty wage” are totally wrong.
According to the rules of subsidy, the employers are allowed to deduct 50% from the monthly PAYE payments of the workers who are earning R2,000-R6,000/month and aged between 18-29 at the time of hiring them for the first time. This will inturn cut the cost of hiring young workers.
Once the workers get used to with the workplace and accept the opportunity to prove their consistency, many young workers will continue their jobs even after the subsidy expires. And those who lose their job are still benefited as they are now having good work experience, their future job achievement is also improved a lot.
The opponents of this subsidy argue that it is just a waste of time because the government will now subsidise the employers who have created jobs in any way. This may result in different problems, as it is not easy to create jobs rapidly. They are not just created by the young workers. However old workers are more valued than the young workers by the employers. So, unemployment rate is high among the youths.
The main reason behind the arguments between the supporters and the opponents is that whether the subsidy will actually create jobs or not, or its will just distribute the existing jobs evenly among the young and the older workers. The centre question of this disagreement is that whether the wage levels which matters a lot during the job creation by the firms. According to the subsidy supporters, lower wages will encourage the firms to create more and more jobs. Young workers will be given new designation and
because the firms can now pay them less than the current going rates.
While the opponents believe that the number of jobs are fixed and so the supporting workers will replace the existing workers. The unions are not accepting that lower wages will create more jobs because the conclusion states that higher wages reduce the number of jobs. This states that there is some kind of settlement between jobs and the wages. In other way it can be said that jobs with higher wages can only be achieved at the cost of the unemployed youths.
This youth wage subsidy will test in the real sense that how much wages matters for the firms to create jobs. But as said above, it is a fact that this subsidy is not just enough to completely remove unemployment from South Africa. It can be reduced only when there is a sustained economic growth. Along with this at the same time the education quality also needs to be improved a lot, so that the employers are valued for their education not only for their work experience.
None of the above things will happen in seconds, but this subsidy is a good opportunity for the young workers trying to find jobs.