So what exactly is the Youth Wage Subsidy and how can it benefit you as an employer?
The Youth Wage Subsidy came into effect on 1st January 2014 and is gazetted as the Employment Tax Incentive (Act no 26 of 2013)
In essence, it gives employers an incentive to employ young people between the ages of 18 and 29 by offering a subsidy of up to a maximum R1000.00 per month on salaries or wages. The subsidy does not apply to individuals who earn over R6000.00 per month.
The incentive is claimed when an entities tax return is submitted and cannot be claimed on employees who were already employed by the company prior to 31st October 2013.
The subsidy specifically excludes Domestic Workers and falls away after 1st January 2017.
So, in effect, if you pay say a school leaver say R2000.00 per month (if this amount was in accordance with your industry collective bargaining agreement) then the subsidy would be R1000.00 or 50% of the wage. If you were paying someone R 4000 per month then it would be 25%.
In my opinion, because of the salary ceiling, it is really going to apply to non graduates and so is likely to benefit manufacturing, mining and agriculture the most, but employers have to fall within specific economic zones or industries as decided upon by the Minister of Finance.