Given that job creation and high levels of youth unemployment were two of South Africa's biggest challenges, government would aim to raise the employment levels of young school leavers by an additional 500 000 by 2013, through a proposed youth wage-subsidy scheme.

About 870 000 jobs were lost in 2009 as a result of the recession, pushing the country's unemployment rate to 24,3%, its highest level in five years.

While job cuts and retrenchments had been, in part, responsible for the rise in unemployment, the fact that job creation had nearly halved over the past 12 months, as companies cut back on hiring new employees, had had a far greater impact on unemployment.

The National Treasury on Wednesday noted that young people and the less-skilled citizens had been worst affected.

It pointed out that only two out of five South Africans of working age had a job, while the country was not producing the skills it required to expand the economy.

"Labour market data confirm that employers are reluctant to hire inexperienced work seekers, while school leavers lack basic workplace competencies. Furthermore, our bargaining arrangements push up entry-level wages, pricing out inexperienced work seekers," Finance Minister Pravin Gordhan commented in his 2010/11 Budget speech.

To that end, the Department of Labour was undertaking initiatives to improve information services to help young people access jobs and training opportunities.

Government wanted to further support these initiatives by offering employers a subsidy that would reduce the cost of hiring young people with limited or no work experience.

"Under consideration, is a cash reimbursement to employers for a two-year period, operating through the South African Revenue Service payroll tax platform, and subject to minimum labour standards. It will be available to tax-compliant businesses, nongovernmental organisations and municipalities," said Gordhan.

He noted that a discussion document on the proposed youth wage subsidy would be tabled by the end of March, with young people expected to start benefiting from the initiative by early 2011.

Other initiatives that were being considered to boost youth employment could include a regulatory reform of the probationary period to reduce the costs associated with determining a young worker's productive potential and a minimum wage reform to align productivity and wages for young workers.

Meanwhile, Gordhan also announced the provision of R52-billion for expanded public works projects over the next three years, of which R2,5-billion would be used to support labour-intensive projects in the social, non-State and environmental sectors.

He added that the development of green economy initiatives could create new opportunities for enterprise development, as well as create jobs.

The second phase of the expanded public works programme (EPWP2) was expected to create 4,5-million short-term job opportunities between 2009 and 2014.

Possible modifications to the EPWP2 would include: the inclusion of a community works programme and a nongovernmental organisation (NGO) pilot programme; performance-based incentives to encourage provinces, municipalities and NGOs to undertake more labour-intensive projects; and improved accountability arrangements and formal targets.

EMPLOYMENT OUTLOOK

The Treasury highlighted that job creation was likely to remain weak in the short term as the world continues its slow economic recovery.

To reduce unemployment, the country would have to boost its economic growth and ensure that its growth was more labour-intensive.

At the current projections of a moderate recovery in the local economy, the National Treasury expected about one-million jobs to be created over the next five years, which would lead to only a marginal decline in unemployment by 2014.

It estimated that if the local economy grew by 3,5% a year between 2015 and 2019, this would create 1,3-million jobs, which would bring the country's unemployment levels down to 19,8%.

However, if 6% a year growth could be achieved, 2,3-million jobs could be created between 2015 and 2019, resulting in the unemployment rate dropping to 13,8%.

UIF ASSISTANCE TO UNEMPLOYED

Meanwhile, the National Treasury said that the Unemployment Insurance Fund (UIF) had, in conjuction with the National Skills Fund, set aside R2,4-billion to fund the training layoff scheme, despite uptake of this scheme having been slow.

SKILLS DEVELOPMENT

Meanwhile, Gordhan also announced the allocation of R6,7-billion to the 23 Sector Education and Training Authorities (Setas) for skills development purposes in the 2010/11 financial year.

A further R1,7-billion would also be provided for the National Skills Fund, which together with the Setas, formed part of the country's National Skills Development Strategy.

The Treasury announced that government would also work to strengthen the ties between skills development and further education and training (FET) colleges.

"Expanding and improving capacity at our FET colleges is a vital part of our growth strategy. We have set ourselves ambitious targets to expand the number of young people studying vocational subjects. The budget for FET colleges of R12-billion over three years, has been shifted from provinces to the National Department," said Gordhan.

He added that a further R1,3-billion would be allocated to improve the salaries of FET college educators.

The National Treasury noted that government, together with business and labour, might have to look at the curriculum being offered by FET colleges to ensure that a better match between training and skills development was achieved.

Government would work towards dealing with a lack of training in certain skills areas and would aim to increase the capacity of FET colleges to train larger numbers of people.

The National Treasury noted that high failure rates at these institutions also had to be dealt with.

Further, the recapitalisation of about 200 technical schools, through a new conditional grant in 2010/11, would also aim to ensure that the technical skills of learners in these schools were linked to the actual workplace requirements.