Perceptions of local businesses on the Employment Tax Incentive Act : the case of the Vaal Triangle region

Abstract

South Africa is facing the reality of extremely high youth unemployment rates. The problem poses a threat to the country’s economic development and future labour force projections. In response, the South African government has promulgated the Employment Tax Incentive Act, 2013 (Act 26 of 2013), a targeted employer-side supply wage subsidy which requires a significant degree of public-private sector cooperation. The purpose of this study is to determine perceptions of local businesses regarding youth unemployment and the aforementioned act to determine its feasibility as an appropriate tool to address this problem. A qualitative research approach was used to collect data. A total of 13 in-depth interviews were conducted with business representatives in the Vaal Triangle region, Gauteng. Results of the study indicate that 92 percent of the interviewed business representatives support the act. However, its effectiveness in contributing to the employment of the youth is impeded by supply side issues of the said crisis that make businesses reluctant to hire young people. Strict labour policies and laws also induce difficulties restricting its implementation.