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Archive for the tag “youth wage subsidy”

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?


Cosatu, the DA and the youth wage subsidy

This week I lost a lot of respect for Cosatu.

Cosatu (Congress of South African Trade Unions) objects to the idea of a youth wage subsidy. The DA (Democratic Alliance) supports it. A couple of months ago Cosatu refused to meet DA leaders to discuss it, so the DA leaders decide to march to Cosatu headquarters to to hand over a memorandum on the topic. Cosatu objected to this, and said that the DA should engage properly, and not march. Yet when the DA leaders did try to engage properly, Cosatu rejected this. Then Cosatu supporters attack the DA marchers phyically. It’s a sad day for democracy in South Africa.

I dislike the DA, and would never vote for them. I have grave doubts about the value or usefulness of a youth wage subsidy. But in a democratic society they should have the right to express their views on this and discuss it with those of differing views. This week, Cosatu attacked democracy.

That does not mean that the DA is blameless. Remember the Democratic Party’s (one of the partners in the Democratic Alliance) 1999 election campaign, when they had posters all over the place, exhorting voters to “fight back” against democracy? Even if they made a public apology for that, I still wouldn’t vote for them — politicians love apologising for other people’s mistakes, but never for their own (remember Tony Blair’s apology for the slave trade, which ended two centuries ago, but he did not apologise for bombing Yugoslavia, Afghanistan and Iraq).

I think the Sowetan got it right when they said The time to talk is now – Sowetan LIVE:

Zille’s party is taking the march very seriously, and will be accompanied by Parliamentary leader Lindiwe Mazibuko, youth leader Makashule Gana and national spokesman Mmusi Maimane, in protest against what they term Cosatu’s bias against the unemployed and in favour of those who already have jobs. But what we are concerned about is the tone set by the parties ahead of today’s march. When the DA first mooted the march, Cosatu general secretary Zwelinzima Vavi said then the opposition party would never understand what it would be like to be a young black woman who earned a minimum wage.

Both parties have been behaving like kids in a primary school, though Cosatu have taken on the role of the playground bullies.

To be honest, I first learnt of the march on Twitter,  mostly from tweets objecting to it. I googled to find out what it was about, and discovered that it concerned the proposed youth wage subsidy, which I had not heard of before. So I googled for that, and what I read sounded rather vague, but it was enough to make me think I’m agin’ it.

I know that’s prejudice on my part, because I don’t know enough about the proposal or how it will work. But it reminds me of what I learnt in History II about the Speenhamland System, which ended up exacerbating the problems it was intended to solve.

But the issue will not be resolved by thuggery in the streets. Children bullying children in schools is bad enough. Adults bullying adults in the streets is worse. 

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