SA Government Youth Employment Incentives Explained

SA GOVERNMENT YOUTH EMPLOYMENT INCENTIVES EXPLAINED

A) SARS : EMPLOYMENT TAX INCENTIVE (ETI)

Why is there an ETI?

Millions of young South Africans are excluded from participating in economic activity, and as a result suffer disproportionately from unemployment, discouragement and economic marginalisation. High youth unemployment means young people are not gaining the skills or experience needed to drive the economy forward. This lack of skills can have long-term adverse effects on the economy.

In South Africa the current lack of skills and experience as well as perceptions regarding the restrictiveness of labour regulations make some prospective employers reluctant to hire the youth. As a South African employer, you now have a great opportunity to boost the employment of young work seekers.

What is ETI?

The ETI is an incentive aimed at encouraging employers to hire young work seekers. It was implemented with effect from 1 January 2014.  

What are the benefits for employers?
  • It will reduce the employers cost of hiring young people through a cost-sharing mechanism with government, by allowing you to reduce the amount of  Pay-As-You-Earn (PAYE) you pay while leaving the wage received by the employee unaffected.

    • For example, employers who are registered for PAYE, and who employ a person for the full month of February 2014 and earns R2000, will get R1 000 off their monthly PAYE liability (provided that the employee is a qualifying employee based on all the other remaining requirements). For more information on how the ETI works, click here.

  • Employers will be able to claim the incentive for a 24 month period for all employees who qualify. Click here for more information.

  • The incentive amount differs based on the salary paid to each qualifying employee and whether the qualifying employee was employed after the inception of the ETI programme on 1 October 2013. ETI may only be claimed for a total of 24 qualifying months. Click here for more information.

  • This incentive will complement existing government programmes with similar objectives e.g. learnership agreements.

  • The aim of the ETI is to facilitate the increased employment of young work seekers.

Who qualifies for ETI?
The employer is eligible to claim the ETI if the employer–
  • Is registered for Employees’ Tax (PAYE), or must be eligible to register for PAYE (e.g. the employer can't register just to claim ETI, other registration requirements must be met)

  • Is not in the national, provincial or local sphere of government

  • Is not a public entity listed in Schedule 2 or 3 of the Public Finance Management Act (other than those public entities designated by the Minister of Finance by Notice in the Gazette)

  • Is not a municipal entity

  • Is not disqualified by the Minister of Finance due to the displacement of an employee or by not meeting the conditions as may be prescribed by the Minister by regulation.

  • Top Tip: To work out if you are a qualifying employer click here.

  • How do I determine who is a qualifying employee?

  • Top Tip: There is no limit to the number of qualifying employees that an employer can hire.  

An individual is a qualifying employee if he or she–
  • Has a valid South African ID, Asylum Seeker permit or an ID issued in terms of the Refugee Act

  • Is 18 to 29 years old

  • Is not a domestic worker

  • Is not a “connected person” to the employer

  • Was employed by the employer or an associated person to the employer on or after 1 October 2013 and

  • Is paid the minimum wage applicable to that employer or if a minimum wage doesn't apply, is paid a wage of at least R2 000 (where the qualifying employee was employed for 160 hours in a month) and not more than R6 000 remuneration.

Important: The value of the ETI the employer may claim depends on the value of the monthly remuneration paid to the qualifying employee. If the employee has worked less than 160 hours in the month, the remuneration amount must be ‘grossed up’ to 160 hours per month to calculate the value of the ETI. The amount can then be calculated and be ‘grossed down’ in the same ratio. See more information here.

Source : https://www.sars.gov.za/TaxTypes/PAYE/ETI/Pages/default.aspx

 

B)YES FOR YOUTH (YOUTH EMPLOYMENT SERVICE)

Does RecruitAGraduate.co.za assist with sourcing youths for YES?

Yes! We do. 

Companies may recruit youth from any partner they choose.

What is Yes4youth?

South Africa’s Youth Employment Service aims to create jobs for the youth in line with South Africa’s national development goals. Once a company is registered with the YES platform you can receive the benefits. Recruit A Graduate assists companies to source youth for the YES program benefits.

How can my company benefit from YES?

YES is a business-driven initiative which is a partnership with government and labour, in collectively tackling a national plan to build economic pathways for black youth. YES aims to create one million jobs for youth. In this process, a business can gain one or two levels on their B-BBEE scorecard by hosting a YES youth for a period of 1 year. There is deep value in the tech-driven youth behavioural content to nurture and motivate young people and business throughout the year. This technology assists business and SA youth in succeeding in their first work experience.

Under the programme, businesses will create one-year paid positions for youth aged between 18 and 35 with a minimum paid stipend of R3,500 a month.

Those businesses which do not have the capacity to place more people in their organisations have the option of sponsoring the salary for a one-year placement in small and medium enterprises or to help young people start and grow their own businesses through seed funding.

Source : https://www.yes4youth.co.za

C) DTI SKILLS DEVELOPMENT LEVY & SETA

The employer needs to be registered for the Skills Levy contribution and be registered at the relevant Sector Education and Training Authority (SETA). SARS will be able to identify which SETA is relevant to the business. This will allow the company to offer apprenticeships or internships on an outlined programme. Funding may be provided for apprenticeships and internships from the Skills Development Levy.  https://www.vocational.co.za

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