YES boss pushes for full tax write-offs to boost youth hiring

The CEO of the Youth Employment Service (YES) says small businesses should be able to claim back from Sars 100% of the wages they pay to interns, arguing that stronger tax incentives would accelerate youth employment.

“If a small business hires someone through the YES programme, that entire intern salary should be a tax write-off, because that’s good for the business,” said Ravi Naidoo. This would allow small businesses to hire someone essentially for free and still enjoy the benefit because “it’s good for a younger person to get the experience in a small business”.

The private sector-led employment initiative places young people aged 18-29 in 12-month internships in various companies around the country. On Thursday it celebrated surpassing 200,000 work placements for young South Africans.

It is the world’s largest fully private sector-funded youth employment programme and has grown more than 30% annually since 2021, with more than 1,900 businesses funding internships and R12.5bn paid in salaries.

With a reach into disadvantaged communities, Naidoo said 74% of YES participants come from households on social grants, helping 44,000 such households rise above poverty and injecting R1.61bn into rural areas.

Apart from making wages fully tax-deductible for SMEs, he also proposes that companies be allowed to claim tax benefits for YES placements under the skills development levy (SDL). At the moment, companies cannot recognise their employment of young people via the initiative for purposes of gaining skill development points in the broad-based scorecard, a limitation Naidoo believes discourages broader corporate participation.

Delivering the main address at an event to mark the 200,000 work placements in Johannesburg on Thursday, President Cyril Ramaphosa said that when business and the government came together to conceive YES in 2018, their ”shared vision was for the programme to have a positive, sustainable, long-term impact on the economy”.

With this YES programme having grown to the level that it has, it is a real testament to how there is value in public and private partnerships.”

—  President Cyril Ramaphosa

Noting that the BEE incentive was the principal instrument for participation, Ramaphosa suggested this may not be an effective enough incentive.

“I believe that those incentives may not work, that they’re too light,” the president said. “We were focusing more on BEE, but the real focus should be on getting young people jobs. We should be focusing on how we assist companies and support them to get them to assist us in job creation.

“With this YES programme having grown to the level that it has, it is a real testament to how there is value in public and private partnerships.”

The Presidency has reported that 68% of all demand-led youth jobs in the Presidential Youth Employment Intervention are YES positions, highlighting the programme’s significant role in the country’s youth employment efforts.

Ramaphosa recounted a conversation with former German chancellor Angela Merkel about learning from the European powerhouse’s dual education system, which combines company apprenticeships with vocational schooling.

He proposed adopting a similar model, in which young people gain formal education while simultaneously working in companies, bridging the gap between skills development and employability.

Ramaphosa said the target was to secure another 200,000 placements to double the participation rate to 400,000 by 2030. He also vowed to get state-owned enterprises to participate, saying he would request the minister responsible for those entities to provide plans about how they are going to participate.

“The public sector needs to generate quality internships that help us build the capacity of the state, and I’m sure that YES will not mind if the public sector simply leverages the proven monitoring, reporting and placement infrastructure already built by YES as a public-private partnership,” he said.

Naidoo said that to promote higher absorption of interns into permanent roles, there must be more emphasis on “finishing the journey”. He likened the challenge to supporting a student who has come all the way through their exams but is left stranded at the final hurdle.

“If companies that take people from our programme recognised the absorption part more, then it’ll be a bigger pipeline.”

Part of the YES programme’s plan to improve intern absorption involves an AI-powered learning and skills-matching platform called SkillQuest, designed to provide targeted training and career guidance for specific fields.

“Where we can, we give the right type of support to the right group of people,” Naidoo said.

YES has also partnered with companies like Microsoft to provide exam-based certifications for 50,000 young South Africans in these spaces, he added.

Colin Coleman, co-chair of the YES initiative, said: “The sustainable solution to ending structural unemployment is massive job creation through stimulating economic growth. To absorb the current net 300,000 entrants into the economy each year who cannot find jobs, we need a minimum of 3% economic growth.”

To generate enough new jobs to make a dent in the unemployment rate, South Africa needs economic growth closer to 5% per annum, Coleman said.

“We believe uniting around driving much higher economic growth, cracking down on lawlessness wherever it may occur, and employing smart economic diplomacy on the global stage is a recipe to sustain this current promising turnaround and produce conditions for the creation of millions of jobs for our people and our youth.”

Naidoo also called for greater support for young entrepreneurs emerging from the programme. He said YES counted more than 28,000 alumni who have started businesses and could expand further with the right backing.

“The key to future competitiveness in South Africa lies in mobilising the energy and ingenuity of our youth,” he said.