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Employment Tax Incentive: South Africa’s latest weapon to solve unemployment crisis

IFM_Employment Tax Incentive
The employer may claim the total Employment Tax Incentive calculated for all qualified employees, which will lower the PAYE tax due

In order to solve the country’s unemployment crisis, the South African government has increased the Employment Tax Incentive (ETI) to encourage firms to hire more.

Employers are urged to hire young, inexperienced job searchers through the Employment Tax Incentive, remarked President Cyril Ramaphosa during his recent State of the Nation Address.

A cost-sharing arrangement with the government will lower the employers’ costs to hire young people while maintaining the basic wage parameters.

The employer may claim the total Employment Tax Incentive calculated for all qualified employees, which will lower the Pay-As-You-Earn (PAYE) tax due. On January 1st, 2014, this incentive went into effect.

“Our economy has grown more recently than it did before the pandemic. Around 1.5 million additional employment were added to our economy during the third quarters of 2021 and 2022,” President Cyril Ramaphosa noted.

He mentioned that more than a million people had received employment and income prospects due to the Presidential Employment Stimulus.

“Last year, we discussed how important the Presidential Employment Stimulus is for creating employment and income prospects. Every province and area in our nation has now benefited from the initiative’s creation of more than one million opportunities,” he claimed.

A new group of 150,000 school assistants has also begun working at more than 22,000 educational institutions within the country since February 2023.

President Cyril Ramaphosa also declared that the country’s Social Employment Fund is seeking 50,000 members for its upcoming labour phase for the common good.

The revitalised National Youth Service will create 36,000 job possibilities in South Africa through nonprofit and community-based organisations.

The Department of Home Affairs has also hired the first batch of 10,000 young South Africans to digitise over 340 million paper-based civic records.

“SAYouth.mobi, a zero-rated online platform enabling young South Africans to access chances for learning and earning, now has more than three million registered members,” President Cyril Ramaphosa stated, while claiming that the National Youth Development Agency, which continues to offer assistance to young entrepreneurs and job seekers, was closely involved in the process.

President Cyril Ramaphosa also claimed that the ‘Presidential Employment Stimulus’ is helping people sustain their ability to make a living independently.

Approximately 140,000 small-scale farmers have been given input coupons to purchase seeds, fertiliser, and equipment, advancing agricultural reform and food security.

About 640,000 hectares of land have been cultivated as a result of this initiative. According to President Cyril Ramaphosa, 68% of these farmers are women.

He also talked about the government’s plans of giving 250,000 extra vouchers to small-scale farmers by 2023 end.

“These are illustrations of how innovation, ingenuity, and dedication on the part of the government can improve the lives of citizens,” he remarked.

“This year, the National Skills Fund will provide R800m through an innovative model that links payment for training to employment outcomes to develop skills in the digital and technology sector,” President Cyril Ramaphosa added.

President Cyril Ramaphosa also reaffirmed his government’s demand of businesses and departments to drop the condition of young people seeking entry-level positions to have work experience.

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