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South Africa’s employment tax incentive is not a success story
Sep 29, 2021 | The Conversation
Picture - South Africa’s employment tax incentive is not a success story

South Africa has one of the highest unemployment rates in the world. This was true even before unemployment increased as a result of the global financial crisis in 2008. And before COVID-19.

The country’s youth unemployment rate is even higher than the average. The (youth) employment tax incentive was supposed to help in addressing the problem. The incentive was adopted by Parliament in 2013 and came into effect in 2014. The original incentive offered to reduce the tax bill of firms that employed new workers between the ages of 18 and 29 who earned below R6,000 per month (US$400). The idea was that reducing the effective cost of hiring young workers, by subsidising up to 50% of their salary, would lead to firms creating more jobs for this group.

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