The National Treasury has given the go-ahead for an extension of the Employment Tax Initiative (ETI) to February 2029.
The sunset date would have been February 29, 2019.
Treasury reviews the viability and impact of the ETI, which was introduced in 2013 to draw additional young workers into employment and provide young workers with work experience, yearly. ETI shares the cost of hiring between employers and government.
Tax-compliant employers in the formal, private sector are entitled to pay as you earn (PAYE) tax reductions if they hire a qualifying candidate for ETI. ETI candidates must be between 19 and 29 years of age and earn up to a maximum of R6 000 a month.
These workers are often people lacking skills and tertiary education to otherwise enter the job market, since employers most often hire experienced, skilled candidates. The ETI incentivises companies to hire people that they would not necessarily have considered.
ETI claimed against PAYE in 2013/14 was R143 362, R2.4-million in 2014/15, R3.9-million in 2015/16 and R4.5-million in 2016/17. The preliminary figure for 2017/18 is R4.4-million.
Research done by Treasury in 2016 confirmed that 56% of employers surveyed confirmed that the ETI had contributed to an increase in the number of young people hired.