Youth unemployment has soared to almost 60% in South Africa and government and business owners are under pressure to relieve socio-economic issues.
The current Covid19 pandemic is also not helping the situation with more and more retrenchments being at the order of the day.
BUT WHAT IS THE SOLUTION?
Have you ever thought of employing learners or interns in your business?
There are numerous advantages of getting involved in these initiatives, the first and most important being that the Government incentivizes companies who choose to become involved.
There are currently 3 initiatives you can choose from to get involved when it comes to employing youth in South Africa:
A learnership is a vocational education and training program combining theoretical knowledge with industry specific workplace experience leading to a qualification registered on the National Qualification Framework (NQF).
In practice a learner will enter into a fixed term employment contract with a company and attend training designed for that specific work environment. Normal term of a learnership is 12 months and at the end of the learnership they would have obtained an NQF qualification.
Learnerships are perfect for Grade 12 school leaving students.
An internship is a work experience program for individuals after their studies in order to gain practical experience required to make a positive contribution with respect to the career path they pursue.
These programs are normally for a period of 12 months and the candidate receives a fixed term internship contract.
Internships would normally focus on newly qualified graduates.
Youth4Youth Employment Scheme (“YES” program):
The YES program is like the internship program above, except you register your interns with YES4Youth and are eligible for additional BBBEE benefits.
WHAT IS IN IT FOR ME AND MY BUSINESS?
Financial benefits of Learnerships and Internships
- Section 12H of the Income Tax Act (The Act) provides for an allowance to employers in respect of qualifying registered learnership agreements entered between the employer and employee.
The Act allows for the following amounts to be added as an additional expense to the company, reducing its taxable income:
- R 40,000 Annual allowance upon registration of each learnership. This amount is calculated pro-rata.
- R 40,000 completion allowance upon successful completion of each learnership.
The R 80,000 allowance per learner is for NQF level 1–6 qualifications and increases to R 120,000 for disabled learners. NQF level 7-9 qualifies for lesser amounts.
- The Employment Tax Incentive (“ETI”) is an incentive that was launched by SARS with the aim of encouraging employers to hire young job seekers. It reduces the cost of hiring young people by reducing the amount of PAYE owed by the employer to SARS without affecting the employees’ salary.
The allowance is calculated on a sliding scale of salaries less than R 6,000 per month and for example if the intern earns R 4,000 per month, the company gets a monthly deduction on their monthly PAYE bill of R 1,000
DID YOU KNOW?
Companies with candidates under Learnership programs are eligible for the Section 12(H) allowance as well as ETI whilst candidates under Internships as well as the YES program can only qualify for the ETI allowance.
All of the three initiatives above will positively impact the BBBEE scorecard with additional benefits for the YES program where companies can gain up to 2 levels on their BBBEE level. For example, a level 3 contributor can end up as a level 1 contributor if they implement the YES program correctly.
The Edge group of companies have consulted on and implemented several successful programs for our clients with each program specifically designed to meet and optimize our clients needs.
One of our recent projects included empowering African females from rural communities for one of our clients. This resulted in 6 African females getting access to an opportunity to gain valuable skills, gain employment and in turn uplift their families and community. The project further assisted our client to receive a B-BBBEE level 1 rating.