Economic Development Minister Ebrahim Patel on Thursday ruled out imposing a youth wage subsidy without social consensus.
"We need to forge a consensus on how to address youth unemployment, instead of a 'kragdadige' (forceful) approach to push through a single measure in the face of opposition from youth organisations and trade unions," Patel said in a debate on the measure in Parliament.
Finance Minister Pravin Gordhan budgeted R5-billion to start implementing the subsidy from April.
But it was put on ice amid protest from Cosatu, and of late the ANC Youth League and the National Youth Development Agency.
Patel's pronouncement was eagerly awaited after Deputy President Kgalema Mothlanthe on Wednesday responded to questions from MPs on the subsidy by referring to the upcoming debate with the words: "Tomorrow is D-Day."
Patel said the Nedlac debate on the issue had been widened to include more concerned parties and they had agreed on the need for a "social compact" on how to get young people into jobs.
"No single mechanism can address the challenge of youth unemployment," he said.
"We are looking to short- and long-term measures and a package that is proportionate to the scale of the problem."
Patel suggested private and public sector initiatives could be added to existing policies like the expanded public works and the community work programmes.
"We have tabled a proposal for a youth employment committee under Nedlac to consider specific measures to boost employment for young workers," he said.
"By building a collaboration it will avoid unnecessary conflict and exploitative programmes. In addition where young people want to start their own businesses, government will help them."
Patel suggested government would provide support for youth entry into certain sectors of the economy, such as infrastructure and the green economy, but did not provide further details.
Democratic Alliance MP Tim Harris said Patel's speech seemed like the death knell for Gordhan's initiative and was a humiliating defeat for the Treasury chief.
"What an indignity for the National Treasury that Minister Patel is sent out today to set a nail in the coffin of the youth wage subsidy."
Cosatu had expressed fear that the policy would prompt business to replace experienced workers with young, "cheap" labour.