The idea of a job seekers grant was proposed during commission discussions around the ANC's social transformation policy document, Gauteng chairman Paul Mashatile said on Thursday.
"In the commission there was no support for the youth subsidy as initially proposed. We have proposed the job seekers grant, which is different from the youth subsidy," he told reporters at the ANC policy conference in Midrand.
He said the criticism around the youth subsidy was that money was being given to employers on the promise that they would employ young people.
This would be like "throwing money down the drain".
"Of course [the grant] is something that will be discussed further with other stakeholders, but that idea has been supported and we will be developing it further," he said.
"It is not giving job seekers money but is putting these resources into situations where young people get trained and prepared for employment opportunities."
He said the commission had also proposed the idea of a compulsory national youth service.
"We...agreed that young people should also get involved in what we call the national youth service, for a period of two years at least and that this should be made compulsory as far as possible.
"We will not introduce any idea of conscription, but get young people into the national youth service that can take place in different sectors of the economy.
"We don't want to see a lot of young people loitering in the streets. There are young people who immediately after matric go into university... We also want young people to have some time in their life to do some kind of national service.
"The target is people who want jobs but don't have the skills and need training," he said.
The ANC's head of policy Jeff Radebe on Wednesday said the job seekers grant would not replace the youth wage subsidy.
"It's not a replacement for the wage subsidy... (but) whether it's succeeding or not will be contested in the next 24 hours."
He said the proposal for the job seekers grant was submitted by the National Youth Development Agency and the ANC Youth League.