South Africa

Alliance wars: The return of the youth wage subsidy poser

By Ranjeni Munusamy 21 October 2013

If there was one thing the Zuma administration had wanted to get right, it was to break the negative trend of unemployment and introduce measures that would show dramatic results in job figures by the end of Zuma’s first term as president. With seven months to go before the term runs out, what was meant to by a flagship programme of this administration is still stuck in draft legislation phase. The youth wage subsidy is back on the agenda through the draft Employment Tax Incentive Bill now before Parliament’s standing committee on finance. While the ANC wants it to be law in two months, Cosatu is again on the warpath. By RANJENI MUNUSAMY.

Over the last few days, two major issues have exposed the untenable relationship between the ANC, SACP and Cosatu alliance and the charade of the alliance economic summit seven weeks ago. This summit at the end of August was apparently different from previous meetings because all issues of contention were confronted candidly, the media was told afterwards.

The Cosatu delegation was led by the federation’s president S’dumo Dlamini and acting general secretary Bheki Ntshalintshali. With the federation’s suspended general secretary Zwelinzima Vavi and the outspoken metalworkers’ union general secretary Irvin Jim not there, it was presented as a more constructive meeting.

“Where there are differences within the alliance these were freely expressed, and we have established processes for further engagement”, the summit declaration stated. An alliance task team was to be established to iron out differences, including over the National Development Plan and economic policy. This apparently meant that from then on, there would be no public spats as all the partners respected each other’s points of view and were committed to resolving the issues they differed on through the agreed channel.

Less than two months down the line, another fallout is looming over the e-tolls on Gauteng freeways and the controversial youth wage subsidy. Cosatu has vehemently opposed both, while the SACP does not support the youth wage subsidy.

The alliance summit took no decision on the issue of e-tolling and therefore, Cosatu was lulled into a false sense of security that the implementation was still a long way off. Now that President Jacob Zuma has signed the legislation allowing for the implementation of e-tolling and following the dismissal of the Opposition to Urban Tolling Alliance’s appeal in the Supreme Court of Appeal, Cosatu holds the responsibility to live up to its promise to fight e-tolls through a mass defiance campaign.

Government has signalled that the e-tolls would be implemented by the end of the year. There is clearly no time for Cosatu to expect an alliance task team to resolve this issue or wait for another alliance summit to take up the matter.

So it is great irony that that the Cosatu leaders who are now supposedly more “compliant” to the will of the ANC leadership and who agreed at the alliance summit to a non-aggression pact are the ones who have to lead the federation and other civil society organisations in a war against the government over e-tolls.

Last week, Cosatu was again frothing over the draft legislation before the parliamentary standing committee on finance that has reintroduced the youth wage subsidy first announced by Zuma in his State of the Nation address in 2010. The Employment Tax Incentive Bill makes provision for companies to receive incentives for hiring younger workers. When Finance Minister Pravin Gordhan first sketched out the subsidy in the 2010 Budget, he said labour market data showed that employers were reluctant to hire inexperienced work-seekers, while school-leavers lack basic workplace competencies.

“Furthermore, our bargaining arrangements push up entry-level wages, pricing out inexperienced work-seekers,” Gordhan said. The idea therefore was to provide a subsidy to employers that would lower the cost of hiring young people without work experience.

But the proposal was fiercely fought by Cosatu. Its main problem with the youth wage subsidy was that it would create a multi-tiered labour market and lead to older, unsubsidised workers losing their jobs. Its opposition was intensified once the proposal received support from the Democratic Alliance. As a result, government backed off and has not been able to come up with a proper jobs plan that can take unemployed youth off the streets.

In February, a Youth Employment Accord was signed at the National Economic Development and Labour Council (Nedlac) with a package of measures for training and work experience for young people. The youth wage subsidy was not in the accord in its pure form but the allowance for “incentives” left the door open. The Treasury has now run through that door and the ANC is cheering it on.

ANC Chief Whip Stone Sizani signalled in a statement the ruling party’s intention to fast track the Bill through Parliament, saying he was confident it would come into operation from January 2014.

“We have no doubt that the incentive will encourage the private sector, which employs over 70% of those in formal employment, to expand its intake of young workers. This will contribute towards the reduction of unemployment in general,” Sizani said.

But Cosatu is calling for the immediate withdrawal of the Bill. It is furious about the process to rush the legislation through Parliament.

“We have serious concerns about the process and the speed with which Treasury intends to ram the Bill through Parliament, despite the Bill only recently being made public and the implications this has for genuine public consultation.

“We note that Treasury has indicated that the Bill is intended to implement commitments made under the ‘Youth Employment Accord’. This is despite the fact that the Accord requires that any incentives be ‘approved by all constituencies’. It would be incorrect to state the proposals in the Bill have in fact been approved by all constituencies,” Cosatu said in a statement.

Realising that it had been played at the alliance summit, the federation said: “Additionally we must register our serious concern that these proposals were not tabled for discussion at the economic summit of the Tripartite Alliance that was held at the end of August. We find it strange that although Treasury indicated in early June 2013 that it intended to publish an Employment Tax Incentive Bill, it chose to publish this only after the conclusion of the alliance summit.”

Cosatu said the Bill was “poorly drafted” and it seemed unlikely that anyone with credible labour law expertise was consulted in the drafting process. “Noting that this Bill is subject to extremely constrained Parliamentary timeframes as it is the year preceding national general elections, we have serious questions about whether there will be space to address the numerous technical problems in the Bill.”

The Young Communist League of South Africa (YCLSA) has also weighed in on the debate. It is a rare attack on the ANC government coming from a structure of the SACP.

“The draft Employment Tax Incentive Bill is a product of consistent efforts by the Treasury, which is the highway of entry and has become the harbour of neoliberal ideology in our government,” the YCLSA said.

It disputed that there were safeguards in the legislation to prevent job losses of unsubsidised workers. “A mere reference to unfair and automatically unfair dismissals which the Bill promises to act against through a penalty will not prevent the displacement of older and non-qualifying employees.”

“The proposal by the Treasury seeks to build a low-road employment strategy based on cheap labour, and will thus deepen the rate of the economic exploitation of workers by the capitalists. The subsidy that the Treasury is obsessed with is not a stipend for trainees undergoing disciplined and well-structured skills development programmes,” the YCLSA said.

The YCLSA said it would support Cosatu in their mass action and Section 77 strike notice at Nedlac against the youth employment incentive.

While previously the fight over the youth wage subsidy was abstract, it has now escalated to a real battle about process and the contents of the Bill. It is all meant to come to a head in Parliament’s last session of the year before the beginning of the December recess. If the debate spills over into next year, it will have to wait until the opening of Parliament in February, by which time the 2014 election campaign will be in full swing.

Cosatu cannot be seen to be surrendering on this issue as it will lose further confidence of its members, and be seen to be capitulating to the ANC. If government gives way again, the ANC cannot seriously campaign on a jobs ticket and it will go down as a massive failure of the Zuma administration.

While the youth wage subsidy showdown was probably inevitable considering the government’s inability to deal with unemployment, e-tolls is a somewhat self-inflicted debacle. The reality is someone in the ANC or Cosatu has to blink first. Whichever way it goes, both sides are bound to lose.

A double-barrelled Cosatu mass action campaign on e-tolls and the youth employment incentive will be deadly for the ANC’s campaign season. On the other hand, should the ANC’s view prevail, an emasculated Cosatu would lose its vote-gathering potency and destabilise the alliance further. The last thing the ANC needs in the coming months is to give competing unions weapons with which to siphon membership away from its alliance partner.

There is no easy way out of this mess. DM

Photo: A group of protesters gather outside Cosatu headquarters in Johannesburg on Friday, 24 May 2013 after the march against e-tolls was cancelled. Picture: Werner Beukes/SAPA

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