Articles for November 2022
Has the Employment Tax Incentive created jobs?
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The Employment Tax Incentive was introduced in 2014 in response to South Africa’s chronic structural youth unemployment crisis. Its aim was to encourage employers to hire young people by subsidizing their wages. ‘High youth unemployment,’ said SARS, ‘means young people are not gaining the skills or experience needed to drive the economy forward. This lack of skills can have long-term adverse effects on the economy.’ But how effective is it? This is a critical question as the fiscus must bear the cost of foregone revenue. An analysis of firms that claim the incentive compared with those that do not, runs into methodological challenges and casts doubt on the efficacy of the policy.