Youth Wage Subsidy
There has been a proposal for a youth wage subsidy in some quarters. Those who are touting this idea say that it will help to solve the problem of youth unemployment.
The Congress of South African Trade Unions (Cosatu) opposes the idea, and has set out its reasons in a paper, which I think all who are interested in the topic should read.
I think that this kind of proposal needs to be considered very carefully. History can teach us something here. If the Speenhamland System had a better record, I might say that a youth wage subsidy was worth considering, but it didn’t. Actually, if one applied the Speenhamland System in South Africa, it would be more akin to a farm labour subsidy. If the striking farm workers at De Doorns, and others in a similar position, were to have their wages subsidised, it would be a closer parallel, and some of the same constraints apply: if the wages of farm labourers are increased, the money must come from somewhere, and the most obvious place for it to come from is an increase in the price of agricultural produce, which would hit the unemployed poor hardest.
The question of a youth wage subsidy is slightly different, especiqally in urban areas.
One of the things that prevents young people being employed in entry positions in many firms and organisaqtions is that the salary bill is heavily weighted towards top management. In other words, if the bosses weren’t overpaid, there would be more money to employ young people at entry-level positions. So what is presented as a proposal for a “youth wage subsidy” could just as easily be seen as a “fat cat management income subsidy”. Mrs Buthelezi at Nkwalini would be paying 15c in the Rand on her groceries in part to subidise the six and seven figure salaries of top management in Gauteng.
This is exacerbated by the so-called Black Economic Empowerment (BEE) policy. Among other things, this requires firms to have a certain proportion of black people at top management level. This means that black managers can command (and get) higher remuneration than their white counterparts. So a black person who replaces a white person at top management will be paid more — a lot more — than their predecessor. And that money could have been used to employ several young people at entry level. So BEE could more accurately be termed Black Elite Enrichment.
That does not mean that the white management people were or are underpaid. Far from it. The income disparity between rich and poor in South Africa is one of the biggest in the world, and is still growing, regardless of race. And a youth wage subsidy would simply exacerbate that.
I’m no professional economist, so the views I have expressed are those of an ordinary citizen. Well, a deacon is also supposed to be an “economist” of sorts, and the first deacons practised ekonomia. So I have a proposal.
I would like to see a gathering of Christian economists and Christian theologians getting together to discuss this and other related problems, to try to formulate a possible Christian response. Two that I know personally, who are concered about these things, are Dr Azar Jammine and Prof Tinyiko Maluleke, and I am sure that there are several others. Is there anyone else who thinks such a meeting might be useful?