While the newly tabled Employment Tax Incentive Bill was a "step in the right direction”, with many companies eager to participate, government needs to improve its communication and streamline its processes to convince some business organisations that it would work in their favour, the South African Chamber of Commerce and Industry (Sacci) highlighted on Wednesday.

A survey conducted by the chamber showed that the majority of respondents planned to participate in the new tax rebate programme, but those who had failed to respond had told Sacci CEO Neren Rau, following the closure of the survey, that they were “disillusioned” by previous experiences with similar programmes.

After four years of development and debates, the incentive intervention was designed to provide a leg up for unemployed youth between the ages of 18 and 29, who make up 70% of South Africa’s jobless, as government moved to reduce the cost of hiring for companies through tax breaks.

Sacci policy consultant Pietman Roos explained that the rebate was based on three categories. The hiring of first-time workers at wages lower than R2 000 a month per person would allow a company to claim back 50% in taxes, while wages of between R2 000 and R4 000 a month per person would net the company R1 000 in tax rebates per person.

The tax rebates for hiring young workers at salaries between R4 000 and R6 000 a month would be calculated to a specific formula, but would remain below R1 000.

However, it had emerged that some firms were hesitant, as they were pessimistic about the prospect of red tape and the effectiveness of the new Bill’s uptake, after experiencing bureaucracy around other incentives, particularly involving sector education and training authorities, where experience led to a preference to undertake their own internship and worker development programmes.

When asked about the potential of the Employment Tax Incentive Bill to alleviate the private sector’s fears, Roos noted that the practicalities of the plan were not perfect and admitted that the Bill had the potential to fail on an administrative level.

Rau stressed that, if the incentive scheme failed, it would not be as a result of a lack of commitment or participation from business.

The snapshot survey of 35 companies had revealed that 88% of business entities planned to participate, with over 90% of these wanting the incentive extended beyond December 2016, when the sunset clause automatically ended the subsidy.

The government set a time period on the incentives, believing that the temporary tax plan would supply a short-term boost to South Africa’s chronic youth unemployment challenge, with the economic environment expected to recover sufficiently to create and sustain new jobs by 2016.

Further, the legislation provided that the incentive would only apply to Economic Development Zones and industries designated by the Finance Minister; with manufacturing, tourism and the services industry having a sizable appetite to implement the incentive, said Rau.

The survey was undertaken to provide insight into business perceptions of the new regulations.

Despite a few “design features” that could cause the policy to be less efficient, the Bill was a step in the right direction and would likely create an additional 160 to 216 jobs from the companies surveyed alone, said Roos.

The National Treasury's policy document estimated that 423 000 young people would benefit from the subsidy over three years.

Further, despite the new Bill offering bigger incentives to companies paying first-time workers less than R2 000 a month, the majority of the entities surveyed indicated that they would hire people at higher salaries.

However, economic conditions were the major bottleneck to 50% of the surveyed companies hiring new recruits, noted Rau, indicating that small businesses were just as committed to job creation as government, they just needed a platform.

Only 20% of the companies were hindered by high wages and 10% by labour legislation.

The remaining 12% of the businesses that were not interested in the incentive plan said they did not currently need more workers.