Aug-Sept 2014 K.indd

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www.cosatu.org.za • AUG/SEPT 2014

measure for fi rms that will hire fi rst time would be trainee-employees 1 . 2. Nedlac Process 2.1. The details of the proposed policy measure were unveiled to so cial partners at Nedlac and subject ed to rigorous discussions whereat the Cosatu led Labour constituent raised its objections to the afore mentioned measure. 2.2. Inter alia, the objections to the mea sure ranged from the observed in adequacies pertaining to its (policy) objectives, perceived faults in the policy instrument design i.e. the wage subsidy design itself to possi ble detrimental employment effects. 2.3. Our objections to the youth wage subsidy entailed the following; 2.3.1 The wage subsidy targets, as its main objective, employers of fi rst time trainee-workers instead of trainee-workers themselves and assumes that existing entry level wage rate of (sought by) all fi rst time trainee-workers’ cannot be justi fi ed by their assumed productivity po tential. COSATU and NACTU rejected this as sumption citing evidence to the con trary. The evidence ranged in depth and wide in scope drew insights from the imperatives of the domes tic economy as well as from inter national best practice on the appli cation of wage subsidies relative to employment voucher system. The other part of the labour constituent at Nedlac, namely, FEDUSA accept ed Government’s proposed policy measure without putting a fi ght. 2.3.2 The policy measure was to be in troduced for a maximum period of two years for each group of unem ployed youth that are eligible and qualify. Cosatu argued “ .... The two year period duration is likely to engender a ‘revolving door syndrome’ whereby em ployers will hire one group of youths on a twenty four month basis without mak ing commitment to employ them after

completion of training which is meant to help them to acquire workplace experi ence, and because employers would want to access and exploit the oppor tunity offered by a 24 month window pe riod of the subsidy they (employers) will then hire another group ” Therefore, “... after two years ...the effect on net em ployment will be at best naught at worst negative”. Cosatu further argued “ ....In the con text where Government’s monitoring, in spection and evaluation of implemented policy is unsatisfactory , the effect of a so designed policy measure is likely that employers will substitute older, or ganised and supposedly expensive workers for younger , less organised and non-unionised less expensive ones. This will amount to a negative substitution effect, displacement of workers, damp ening of unionisation and the creation of two tier labour market segmentation” . In addition to other arguments raised by labour on many occasions, the above cited three formed the basis of our ob jections and hence our rejection and opposition to the youth wage subsidy policy measure. 3. Alternative Process i.e. Cosatu/Na tional Treasury Bilateral Process 3.1 A COSATU/NATIONAL TREASURY bilateral process (to which the Eco nomic Development Department was extended an invitation) was convened to mend the differences and explore feasible alternatives - but no avail. Differences remain stark as one party rejects outright the proposals by the other. A way forward was to relegate the matter to the Nedlac’s task teams which teams should fi nd a common ground or explore available alternatives. 4. Nedlac’s Task Team Processes 4.1 As a matter of usual or standard practice the Nedlac task team pro cess commenced with 3 teams (i.e.

business, government labour) of 3 -a- side per team. Discussions ensued without agreement, teams were reduced to 1-a-side per team, still no agreement or consensus. By this time it was reported in the cor ridors of Nedlac that it is now the Economic Development Depart ment in charge of government af fairs regarding youth wage subsidy discussions. Subsequent to this new approach informal discussions were held between Cosatu/EDD whose outcomes were immaterial to the positions of Government and / or Labour. 5. The introduction of the Employ ment Incentive Tax 5.1. Nedlac’s social partners that were in volved in the process of discussions from the beginning learnt from the media or from other sources that the State, through the National Treasury Department, is going to release a bill on the subject of youth employment incentive tax. The bill was gazetted and published for public comments and submissions. Cosatu and its af fi liates made submissions to Parlia ment protesting the due process by passed by Government leading up to the publication of the bill, object ing to the contents of it and ques tioning the rationale underlying the objectives of the policy intervention. 5.2. At Nedlac, a Cosatu led opposition to the bill protested that due pro cess was overlooked, the concerns of social partners ignored and of course the Nedlac Protocols were disregarded leading up to the intro duction of the Employment Incen tive Tax. Nevertheless, the public comment processes on the bill pro ceeded and an Employment Incen tive Tax Act was passed. 6. The Youth Employment Accord 6.1 Meanwhile another process of signing accords was unfolding at the Ned lac level or at least was sanctioned by the constituencies’ principals.

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