http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.17Change: 0.08
R/$ = 11.21Change: 0.08
Au 1218.58 $/ozChange: 2.32
Pt 1289.00 $/ozChange: 1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 06, 2012

Doubt about job seekers' grant

Back
Mangaung|SECURITY|Adcorp|Africa|BBC|Education|Security|System|Water|Africa|South Africa|Security|Security|Herman Mashaba|Loane Sharp|Mike Schussler|Sandile Zungu|Security|Water
SECURITY|Africa|Education|Security|System|Water|Africa||Security|Security|Security|Water
mangaung-city|security|adcorp|africa-company|bbc|education-company|security-company|system|water-company|africa|south-africa|security-facility|security-industry-term|herman-mashaba|loane-sharp|mike-schussler|sandile-zungu|security-person|water



The ANC's proposed job seekers' grant has been met with far less enthusiasm than the abandoned youth employment subsidy.

"The job seekers' grant will have nowhere near the impact the youth wage subsidy would have had," said Adcorp labour market analyst Loane Sharp.

"The change from the unemployment subsidy to a job seekers' grant involves such a totally different economic method of working that it's not clear that the ANC has identified the problem of unemployment correctly."

The African National Congress resolved at its June policy conference to include a job-seekers grant as part of the comprehensive social security package, in response to submissions by the National Youth Development Agency and the ANC Youth League.

The party has shown no appetite for the youth wage subsidy put forward by National Treasury last year in an attempt to alleviate the high youth unemployment rate.

Treasury estimates that unemployment among those under the age of 25 years old is about 50%, accounting for 30% of total unemployment.

The two-year subsidy for employers who take on first-time workers could create 178 000 net new jobs at a cost of R28 000 each, Treasury said.

The subsidy was meant to be put into effect in April this year, but had been stuck in negotiations at the National Economic Development and Labour Council.

The ANC's alliance partner, the Congress of Trade Unions, was strongly opposed to the subsidy, arguing it would give companies an incentive to let go of existing workers in order to employ subsidised ones.

Sharp said the grant would subsidise the cost of recruitment, which was unnecessary as South Africa has a very well-functioning informal industry recruitment system.

"Unemployment is a function of the cost of employment, not the cost of recruitment... The subsidy will not make job seekers any more desirable to job givers."

The youth wage subsidy, however, could have created over 500 000 jobs.

"Our own estimates suggest that National Treasury was very conservative in estimating the number of new jobs that would be created," said Sharp.

"We believe employers are much more sensitive to employment costs than the Treasury."

He said it was pity that the subsidy had seemingly been abandoned as it would have shown the trade unions that employment is "wage sensitive".

"It would demonstrate, almost in an experimental way, just how sensitive employment is to wages... which has been disputed in the trade union movement."

Black Business Council (BBC) spokesman Sandile Zungu also saw immediate benefits to the youth wage subsidy, while the advantages of the grant were not clear.

"As the Black Business Council... we are waiting for details of how they envisage doing it."

The BBC was in favour of the youth wage subsidy as it "had an inherent motivation for business to come to the party and an immediate benefit to young people getting some experience whilst not necessarily in full employment".

Zungu said the proposed grant raised important questions:

-- Is it going to encourage business to employ youth?

-- Will it create an incentive for the unemployed to pull up their bootstraps and continue to look for work?

-- Will it strengthen or weaken the state's coffers in the long-term?

-- Who is going to pay for it given that the South African tax base is limited?

Zungu suggested labour's valid concerns about the subsidy leading to job losses among older workers should have been addressed, rather than abandoning the scheme altogether.

"Instead they threw out the baby with the bath water. We did a face exchange instead of treating the warts and pimples."

Rather than creating jobs, the job seekers' subsidy might just teach the youth to queue.

"The youth must wake up at 4am and go to work, not wake up to go and queue," Zungu said.

Sharp and Zungu both questioned the sustainability of the grant.

Sharp said according to Adcorp figures, the average time spent searching for work is 806 days, while South Africa has around 6.5-million unemployed or discouraged work seekers.

Multiplying 6.5-million by 806 days, amounts to just over 5.2 billion days for which work seekers would need to be subsidised, making the grant "fiscally impossible".

Treasury had set aside R5-billion over three years for the subsidy. The job seekers' grant had not yet been costed.

Herman Mashaba, chairman of the Free Market Foundation, took a different view.

"I don't really believe that giving grants is going to arrest our high employment, given our restrictive labour legislation," he said, referring to both the youth employment subsidy and the job seekers' grant.

"You can't, on the one hand, treat employers as enemies of the people then, on the other hand, expect them to give jobs."

He said if government was serious about arresting high unemployment, it should introduce less restrictive labour legislation.

"If you bring in a subsidy to encourage entreupreneurship and to encourage economic activity it could work, but not with our current punitive labour legislation."

Economist Mike Schussler said given the high unemployment, the country could not be seen to do nothing.

Broad employment figures for the first quarter of the year showed about 7.3-million people were employed full-time in the formal sector, while about 7.75-million people, including discouraged work seekers, are unemployed.

"I don't know of any countries, outside of war zones or those involved in civil war, to have more people unemployed in broader terms... than employed," Schussler said.

The unemployed therefore make up double the number of the some four-million workers belonging to trade unions, he said.

"So for the politicians, they have to be seen to do something."

However, he did not see the job seekers' grant solving the country's unemployment problem.

"The youth employment subsidy may at least create some jobs... but nobody knows at the moment what this thing [grant] is."

Schussler said it would probably make more of a difference to fix the education system, re-examine the labour laws, give farmers confidence in their tenure, and encourage miners to mine, among others.

Zungu warned it was too soon to judge the job seekers' subsidy.

"We may be jumping the gun, they may have a genie in the bag which, once put on the table, we may engage and say, what a smart way out of the quagmire."

The proposal will be fleshed out at the ANC's national conference in Mangaung in December.

Edited by: Sapa
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Updated 35 minutes ago There were delays in the Gautrain train service between Hatfield and Park stations on Thursday morning due to cable theft, operator Bombela Concession Company said. The delays, on the north-south line, were caused by around 300 metres of signalling cable being stolen...
Protech Khuthele Holdings on Wednesday said, in a cautionary note to shareholders, that, as the failed company unwound, investigations were ongoing into its affairs. The company provided no indication of the completion date.
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
The latest TransUnion Vehicle Pricing Index (VPI) contains a number of small, but significant indications that the tide may at last be turning for the beleaguered used car industry. For the third successive quarter, used car inflation has increased on a year-on-year...
The South African new vehicle market is likely to reach around 630 000 units in 2014, down from the 650 000 units recorded in 2013, says Toyota South Africa Motors (TSAM) president and CEO Dr Johan van Zyl. Van Zyl is also president of the National Association of...
Efforts by the Kenya government to increase energy generation by 5 000 MW over the next three years received a major boost following the award of a $2-billion contract to build a coal power plant in Lamu.  Despite allegations of irregular tendering process, the...
Using crafty wordplay on a well-known Internet meme, brilliant South African-born US entrepreneur and businessperson Elon Musk announced that Tesla Motors would not initiate patent lawsuits against anyone who, in good faith, wanted to use its technology. Instead,...
August new vehicle sales declined by 1.4%, to 55 722 units, compared with the same month last year. Assisted by the car rental market, the South African new passenger car market, at 37 953 units, contracted by 1 047 units, or 2.7%, compared with August last year.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks