Commonly referred to as the “youth wage subsidy”, the Employment Tax Incentive (ETI) Act came into effect as of the 1st of January 2014 in an attempt to incentivise the employment of young South Africans between the ages of 18 and 29. The youth unemployment crisis is compounded by the fact that young people often lack the necessary skills and experience required by the corporate world. This incentive hopes to facilitate an increased chance of young South Africans being able to access the workforce, and thus – the formal economy.
How does it work?
• You need to qualify as an employer to access the ETI benefits.
• These benefits only apply to youth who qualify.
• These benefits hope to reduce the cost of employing young people.
• You will be able to claim the incentive for a 24 month period for all employees who qualify.
• It will reduce your cost of hiring young people through a cost-sharing mechanism with government, by allowing you to reduce the amount of Pay-As-You-Earn (PAYE) you pay while leaving the wage received by the employee unaffected.
• There is no limit to the number of qualifying employees that an employer can hire, and thus receive the incentive for.
• The incentive is currently scheduled to end on 31 December 2016.