Deputy Speaker and hon members, as we deliberate on the legislation before this House today, thousands of young and old workseekers are sending their curricula vitae to potential employers. They are queuing at business premises. They are answering advertisements for vacancies, or asking friends and family members about job opportunities at their places of work. Just on Tuesday this week the Quarterly Labour Force Survey results for the third quarter this year were released. These showed that approximately 3,3 million of the 10,4 million youth aged between 15 and 24 years were not in employment, or education, or training.
In its 2009 election manifesto, the ANC identified five priority areas, with job creation as the key to sustainable livelihoods and economic development. We said that these priorities would be tackled with all the means at our disposal: the resources of government, the vision of the Freedom Charter, and the energy and commitment of our people. Our priorities would specifically target the needs of the youth, women, workers, the rural poor, the elderly and people with disabilities.
To this effect, government is providing a number of incentives geared to increasing investment; enhancing competitiveness and productivity; supporting employment creation; encouraging on-the-job training; enhancing skills capacity; and addressing climate change challenges. A number of these incentives are in operation already.
The employment tax incentive is one aspect of the ANC government's holistic programme of action on unemployment. Other aspects include the Expanded Public Works Programme; the Community Work Programme; skills development through universities, further education and training colleges, and Setas; the various programmes that flow from the Industrial Policy Action Plan; the Jobs Fund; and small business support.
Government also has a particular focus on youth unemployment, and the programmes that fall under the Youth Employment Accord address other factors that cause youth unemployment. We cannot succeed in any efforts to improve the lives of South Africans if our economy does not utilise the talents, energy, insights and efforts of all its people who are willing to work, including young, inexperienced workers.
Young workseekers are particularly vulnerable to unemployment because they do not have a proven track record to indicate their productivity to potential employers. In addition, long spells of unemployment early in life reduce the chances of eventual employment and the level of future income. We view the introduction of this incentive as a critical intervention, because young workers, the future of our economy, are currently not gaining the work experience that will form the basis of future performance.
The employment tax incentive proposed in this Bill can make a significant contribution in the fight against youth unemployment. It will also do so by sharing the costs of employment of young workseekers between employers and government. Government will reimburse employers up to 50% or R1 000 per eligible worker to stimulate employment. This presents a good business case for employers to expand employment by hiring workers that would previously have been overlooked.
In the past, most of our incentives for businesses targeted investment, which meant that capital-intensive industries received most benefits. This incentive specifically targets the hiring of a vulnerable group of workseekers, which will result in higher labour intensity of production. This is also the reason for extending the incentive to special economic zones and other designated industries, but without the age criteria in these areas. Finally, this is an incentive that can help small and medium- sized businesses most, because they are engines of employment growth and the design is intentionally simple.
Through the public comment process we received submissions from companies that indicated that they were ready to employ young workers due to the availability of this incentive, and we will hold them to that.
This mechanism will operate by lowering employers' tax liability which arises through the pay as you earn, PAYE, system. This means that at the end of each month an employer will subtract the value of the incentive from the PAYE contributions he has withheld on behalf of Sars. Employers that do not have a high enough PAYE liability to offset the full incentive will be allowed to roll the unclaimed amounts over to the next month. In addition, Sars is developing a cash reimbursement mechanism for companies that have no PAYE system.
The intention is that the incentive will be implemented from 1 January in order to allow new school-leavers also to benefit from a better chance at finding employment.
This proposal has been in the public domain for two-and-a-half years, and all practicable suggestions for changes to the incentive have been taken into account as we implement the incentive. We will learn ways to improve the design even more as we implement it, especially since this incentive will be closely monitored and evaluated. Circumstances in the economy may change, which would necessitate adjustments to the incentive. This is always the case in policy implementation.
What we have in front of us is the best possible solution to the problem that we face, but it is not a panacea, given the information that we have available to understand the problem of youth unemployment. Now is the time to implement this solution and there is no better time to do it than now. Thank you, Deputy Speaker.