One of the most intractable problems facing South Africa is high unemployment, particularly (and this is a global problem) among the youth. Initiatives to deal with the issue have failed and our unemployment has risen from 21% in 2008 to over 27% at present. Clearly this is not sustainable.
Recently government, business and labour announced the YES (Youth Employment Service) program to tackle youth unemployment. YES will, over the next three years, provide one million young people with a one year’s internship in a business.
The YES initiative recognises that Small and Medium-sized Enterprises (SMEs) are a fundamental driver of employment and seeks their involvement. SMEs should look to get involved as the program is already funded and apart from helping to overcome unemployment, SMEs can reap benefits for their own businesses.
The rationale for YES
Most young people do not get a Matric pass and find it extremely hard to find a job. They thus cannot get the experience and skills to become an effective part of the community. In addition, most of the unemployed youth live in townships which are a substantial distance from businesses.
Currently youth unemployment stands at over 50%.
How YES works
The program has a three-pronged approach:
- In the next three years over 100 companies will sign contracts with 1 million interns. The program will be for at least 1 year and interns will:
- Gain work experience
- Be given practical business training courses (training modules have been developed and will be given to interns)
- Acquire the necessary skills to ensure they will be able to perform in business
- A database of all the CVs of interns will be set up which will be available to companies seeking to employ staff.
- Business hubs will be set up in the townships where training and mentorships will take place. Satellite facilities of SARS, CIPC and B-BBEE accreditators will be available at these hubs. In addition, there will be internet provided along with facilities, including 3D printers, for light manufacturing.
A database will be built up linking township SMEs to the large corporates which will give priority to trading with these small businesses.
- It is unlikely that the 100 larger companies will be able to take on 1 million interns and they will sponsor those who they are unable to accommodate for internships with Black-owned SMEs in townships. This will build up business and employment in these areas.
This is particularly an opportunity for businesses who want to tap into the “Black” market. Why not set up a Black-owned SME in a township and train interns in your products/services and in your business? The interns get knowledge and experience and you can offer employment to the stronger candidates in your business whilst helping other candidates become marketable to other businesses.
Incentives for business to get involved
The interns will earn R3,500 per month. Employers can get this refunded via the Employment Tax Incentive (ETI) which is paid by reducing your monthly PAYE.
There is also the potential to move either one or two places up in your B-BBEE score. A discussion paper is out for comment on amending B-BBEE legislation, the main proposals being –
- In essence companies are set targets as to how many interns they should train and if they exceed their target and offer employment to a percentage of candidates, they move up one position in their scorecard. Companies doubling the number of their target interns and employing double their required quota will move up two positions in their scorecard.
- In addition, companies can claim 50% of their YES skills spend in the Skills Development category.
Remember these are draft proposals and the final legislation could be tweaked.
There will be annual fees (R20,000 for SMEs) for companies who wish to register and participate in the YES program.
Overall, there are plenty of incentives for businesses who wish to participate in the YES program. With most of the large companies putting their support behind this initiative, it will probably be successful and contribute to solving one of the country’s most pressing problems.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)