Employment Tax Incentive: National Treasury response to public comments

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Finance Standing Committee

22 October 2013
Chairperson: Mr T Mufamadi (ANC)
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Meeting Summary

A delegation from National Treasury briefed the Committee on the proposals to introduce a tax incentive on youth employment, which had been taken through consultation processes, but was not yet in the form of a final Bill. The proposed tax incentive was meant to induce demand and make employers less hesitant in giving young people opportunities. There was intention not only to target the first time job seekers but also encourage employers to locate their businesses at designated special economic zones (SEZs). Government was under no illusion that a measure like this would not make unemployment disappear, and was fully aware that it needed to complement such a programme by other things, to get maximum impact. It was precisely for this reason that the tax incentive was to be kept simple. Government was trying to help people solve a major problem, and recognised that overly-onerous hurdles and requirements were likely to put employers off. This was not to say the measures of protecting people from abuse would be ignored. There would always be opportunism, where human beings were involved, and tendencies not to do the right things. It was stressed that this incentive was very similar to a whole range of other incentives, particularly the motor industry which, on the back of incentives, had greatly grown the local and export markets. The debt loss wage argument did apply.

It was pointed out that this incentive would be dealt with by way of a Money Bill and the procedure for these bills was outlined. It was stressed, several times, that this did not intend to change any other labour laws. Some of the comments made on the Bill went to concepts and principles. The trade unions did not believe that the Bill should be brought to Parliament before more consultations had been done at the level of the National Economic, Development and Labour Council (Nedlac). National Treasury did not agree, saying, firstly, that the incentive did not affect the current workforce, that if there was any displacement as a result of introducing the subsidy, there were labour law provisions already, as well as sanctions in this Bill, and that this Bill would primarily affect those who were not current employed, so although it would have a socio-economic impact, it was not directly to do with labour. This was also not a new initiative, having been announced by the President in 2010. A process of discussion paper, inputs and workshops (including Nedlac) had been followed. The point was made that if Nedlac had to settle all legislation, this would stop government and Parliament from dealing with bills, and that surely was not the intention.

Other issues discussed were the age groups; it was recognised that the most unemployment was in the under-29 age group, but National Treasury was concerned at setting the age too low as it might have the perverse incentive of encouraging young people to drop out of school. The question whether the incentives should be linked to learnerships was raised, but National Treasury held the view that it would be too cumbersome at the moment to link learnerships and incentives, and might stop uptake of the incentives. The National Treasury had been asked to look at extending it to asylum seekers and permanent residents, but again thought it might have perverse outcomes. The incentive was still experimental in the sense that it would run for three years, be closely monitored for two and a decision then taken how it may need to be changed after the third year. At the moment the incentive was R4 000 – R6 000, and this could include part-time people. No extra incentives would be included for employing people only part-time, and the question of minimum wages was also being looked into. Sanctions were to be applied for any abuse, but would not be so severe as to put employers out of business and thereby affect all other employees. It was intended that this apply from 1 January 2014, to target school leavers.   

Members sought clarity on the consultation process with Nedlac, particularly this was something that would change socio-economic policy, and the National Treasury explained its interpretation of the Nedlac Act and the consultation process in detail. They questioned if the youth wage accord had replaced the youth wage subsidy and asked whether it was not binding and therefore that all incentives should be approved by all constituencies. Whilst the proposals were supported in principle, they asked if there were other interventions that the Committee should be told about. They questioned what tax loss was contemplated, and submitted that a part-time worker who was not getting a minimum wage would not get any assistance through this Bill. Questions were also raised on what would happen if employers simply decided to substitute, and whether they should not be obliged to keep the employees on when the subsidy expired, and whether the PAYE schemes were not preferable. Other concerns were that the eligible employer needed to be clarified, as also the position of the labour brokers. One Member thought this should not be extended to anyone other than South African citizens, at the moment; there might be room for extensions later. The suggestion was made that Departments of Trade and Industry and Labour should also monitor the effectiveness of the instrument. Members asked that a clean copy of the Bill be produced for the next meeting, and noted that there was some urgency to the matter.

Meeting report

Youth employment Tax Incentive: National Treasury briefing
Mr Lungisa Fuzile, Director General, National Treasury, said that the proposed tax incentive was meant to induce demand and make employers less hesitant in giving young people opportunities. Discussions with several stakeholders indicated there was intention not only to target the first time job seekers, but also make employers locate their businesses at designated special economic zones (SEZs).

In an environment where the education system was blamed for ill-equipping young people, it was clear that something was not working well. People tended to be sceptical. This was noticeable in job advertisements, which specified that the employers required many years of experience. The tax incentive initiative would deal with that kind of uncertainty. It would give employers comfort that the risk of hiring young people was not that huge, and government was prepared to share that risk.

Government was under no illusion that a measure like this would not make unemployment disappear. Government was aware that it needed to complement such a programme by other measures also to reach the maximised impact it desired. It was precisely for this reason that the tax incentive was to be kept simple. Government was trying to help people solve a big problem, and if too many onerous hurdles were put in place that might put people off. This was not to say that the measures of protecting people from abuse would be ignored. Whenever human being were involved, there would always be opportunism and a tendency to try to avoid doing the right things.

This new public finance logic was no different to other incentives, since South Africa already offered a range of other incentives. He cited the motor industry that contributed to the economy and exported to various other countries in the world, and pointed out that it was built on the back of incentives. The Motor Industry Development Plan (MIDP) programme for 2010/11 accounted for a tax expenditure to the tune of about R22 billion. The tax incentive was intended for the sector to generate a lot more on its own than what was generated from taxes. It was not clear if the motor industry would have done this without the incentive. The debt wage loss argument would apply.

Comments on the proposals
Mr Ismael Momoniat, Deputy Director General: Tax and Financial Sector Policies, National Treasury, said the Money Bill had been put out for comment, but had not yet been formally tabled. Money bills were dealt with through the Money Bills Amendment Procedure Act. What normally happened, as with all tax legislation, was that the Department would indicate to the Committee what the response had been to the comments made to National Treasury’s publication of the draft, and that they were taken seriously. Some of the comments were conceptual in nature. Several of the comments, especially from the trade unions, said the Bill should not be brought to Parliament, rather subjected to further consultation at the National Economic, Development and Labour Council (Nedlac).

This position was disputed, because the incentive did not affect the current workforce. The Bill affected those who were not currently employed; it would have some kind of socio economic impact, but not on labour. There would also be an extended membership for trade unions. This was not a new initiative as it was announced by the President in 2010 already. Subsequently, there was a discussion paper put out by National Treasury (NT). A number of inputs were received from various organisations and workshops were held within Nedlac.

When the NT went to Nedlac it was not in charge of the forum, but one of the stakeholders was. A lot of the comments rejected the subsidy in principle, and this was already a major point of difference. Mr Momoniat reminded the Committee that the country had a problem of high youth unemployment, and the question was how that was dealt with. This was one of the main measures Government introduced to deal with youth unemployment. It was experimental, and there was even very little revenue. A lot of people were opposed to the tax incentive, but were unable to propose any alternative measures. In every incentive there was an element of debt wage loss, and nobody was disputing that this one, too, would involve that. It was obviously desirable to try to minimise it, but it would never be entirely eliminated.

Mr Momoniat also emphasised again that this was a Money Bill and did not change labour relations. The Department was therefore not compelled to take the Bill to Nedlac. Parliament was the only supreme body that ought to amend, approve or reject money bills. The consultation process might not have been perfect, but it had been followed. He pointed out that there were many times when people would not reach consensus, but that did not mean that Government was not allowed to come up with a proposal and put it to Parliament.

The other conceptual objection related to SEZs and designated industries. The reason for this was that South Africa was competing for investments. It was necessary to offer “suites of investments” that ultimately resulted in capital investments. Government wanted to attract investments that contributed to job creation. In this instance, the process had been agreed to at another Committee. The SEZs would apply to all low income workers.

There would not be a difference in wages for subsidised and non-subsidised workers. The difference was simply the cost to the employer. Where there was a subsidy, the employer would get something for the subsidised workers. He pointed out that the employer would be able to claim the subsidy for two years, but once the two years came to an end the employer would have to continue employing on its own.

Ms Beatre Gouws, Chief Director: Legal Drafting, Personal Income Tax, National Treasury, said at the moment there were many tax and other cash incentives for establishing companies. However, all of these were cash incentives, and government wanted to attract capital investments. The only thing that this incentive could do was to tip the scale in favour of labour.

Mr Momoniat continued, and said conceptually the unions objected to a perceived displacement of some workers, and downward pressure on wages. Unions did not have much evidence to support what they were saying. It was not correct that workers could always be substituted at will. The Department believed the specific provisions to penalise employers who displaced workers in order to get incentives would deal with some of the challenges that labour had raised. The question was how to design the bill and penalties to curb that risk. There obviously would be attempts to abuse or exploit the system. Again, he stressed that this Bill would not have an impact on labour or labour relations as it was a Money Bill.

One submission was made criticised the fact that the incentive was not linked to the many skills development and training programmes that government had. The NT accepted that in principle that it should try and do this. It was not sure if it could be done immediately; the potential for job creation lay with small companies.

There were issues with how funds for training opportunities from the Sector Education and Training Authorities (SETAs) would be obtained. The NT had sat down with the Departments of Higher Education and Training (DHET) and Labour (DoL) to see how it could try and access training. Training could not be done now, because that would limit employment. There was nothing that stopped the Department, if the incentive was approved by Parliament, to start a strong campaign to point out to youth who took up the incentive that there were training opportunities. In the meantime a clause had been put in the Bill to say that once the discussions were finalised with DHET, the Minister could make this a condition.

Mr Cecil Morden, Chief Director: Economic Policy and International Relations, National Treasury, said the learnerships that were in existence as an incentive were linked to training with a SETA programme. It was envisaged that companies could access both the learnership and the incentive; and as time went on, it could be possible could link the two. This was not difficult to do, but doing it now would be too cumbersome. Currently there were training incentives for young people to take up learnerships.

Mr Momoniat said the Department accepted the suggestions in principle and would have liked to have made it an obligation sooner, but doing so would have resulted in limited take-up. A lot of adjustments were made; some of the unions and Business Unity SA (BUSA) had raised this. In the presentation the Department was asked to review age-range. On one hand, the people who designed the Bill felt that it should not incentivise young people to leave school early, as that would have adverse outcomes. The Department was considering revising the age down to 18, but was still considering whether that might have perverse outcomes, as the majority of youth unemployment was concentrated below the age of 29. Mr Momoniat suggested that this was where government needed to target the incentive.

Other categories the Department was asked to look at were asylum seekers and permanent residents. However, NT did not want to go further than this because the feeling was again that it could have perverse outcomes, with people being brought into the country in order to use the incentive.

Ms Fundi Tshazibane, Deputy Director General: Economic and Macro Economic Policy, National Treasury, said that from the data analysis that had been undertaken it was found that when people got older, there were certain perceptions among the employers. Because of the changed perceptions, and the concentration, the Department was still experimenting with the incentive by focussing on the lower end and bringing people in. Whatever was experienced in the first years of the incentive could then be reviewed after the initial three-year period, to check whether there was observable change.

Mr Momoniat said the Department had been asked to extend the amounts. At the moment the incentive was R4 000 – R6 000. It was felt that the Department should stick to that range so that part-time people should be included.

Ms Marle van Niekerk, Director: Labour Policy, National Treasury clarified that if a person worked for half a month, the Department, in order to determine how much the employer would qualify for, would allow the employer to “gross up” the salary for the purposes of regarding that person as having worked for a full month. This meant that employers would not have any particular incentive to employ people part-time. This would also ensure parity and fairness between an employee employed for half of the month, and one employed for the entire month.

Initially, the registration of employers was only effective in terms of the persons who had to register for employees’ tax. In future, even if an employer was registered for employees’ tax, the Department would arrange the reimbursement mechanism so that that person could qualify from day 1. This was more for the small employers who were registered.

Mr Momoniat said there had been a number of recommendations that were accepted, including the fact that those already employed would be protected by the labour legislation.

Ms Gouws said there were two awareness campaigns to deal with areas where employers were not presently meeting the obligations but where the effect in terms of the incentive could be seen. This particularly applied where employers did not pay a minimum wage. At the moment the employer would still be able to claim the incentive. This was part of the employment tax system, and she stressed that employers would have to pay back the tax that was unfairly claimed if they paid a wage below the minimum wage. Secondly, they would have to pay a penalty of 100%. Rather than imposing the kind of penalty that would totally destroy the employer, with knock on negative effects for employees, the Department was proposing R30 000 penalty per displaced employee.

The total value an employer could draw in a year was R18 000, so R30 000 was made a solid number. Should an employer be found to have severely abused the system, by displacing a number of employees, the Minister could ensure that such an employer no longer qualified for the incentive. This could certainly be done through regulations. Two things would be taken into account, firstly to counteract the severity of the displacement but also to determine the effect on the current employees. The aim of the sanction was not to destroy employment opportunities.

Mr Momoniat continued and said the punishment was more proportionate, and that the Department would not want to destroy companies and jobs. The Department would certainly not want to be draconian. There had been a lot of effort and input into drafting the Bill.

In answer to questions raised as to when this incentive would start, Mr Momoniat said that the Department was looking at 01 January 2014. The intention was to target the school leavers. There were strong monitoring and evaluation mechanisms introduced. The Federation of Unions of SA (FEDUSA) had raised this sharply and the South African Revenue Services (SARS) would be monitoring and publishing information on the situation on the ground. They would also outline the penalty mechanism. Once the incentive was in place, there would be a review of the grant. Finally, he reminded Members that this would apply for three years, and then there would be revisions, based on the experiences to date

Mr T Harris (DA) complained that it was not ideal for Members to have only been handed the presentation documents when they arrived at the meeting; particularly when they related to such as detailed matter.

Mr Harris said that Mr Fuzile’s point about the unemployment rate now being the same as Greece and Spain was true, but the definition was too narrow. The problem in South Africa was that there were a number of job seekers who had simply given up looking. Mr Harris said he had not seen any other emerging or developed markets with unemployment as high as South Africa. This underlined why an incentive like this would give young job-seekers experience and allow them to move up the ladder. This would make them more employable and the country should directly target that group of job seekers. This was particularly the reason his party, the DA, supported this invention. However, the DA still had concerns about the status of the Act and the design elements that NT had not dealt with today.

Mr Harris said the Nedlac Act said, in section 5, that the Council would seek to reach consensus and conclude agreements on matters pertaining to socio-economic policy and consider all significant changes to socio-economic policy before they were introduced to Parliament. This made it clear why there were concerns. The Nedlac Act specified that any significant change to socio-economic policy should be considered at Nedlac before being introduced to Parliament. Members would agree that this was a significant change to socio-economic policy, yet the considerations on it had not been fully concluded by Nedlac. He was, therefore, concerned that the tabling of the Bill appeared to be in breach of Section 5 of the Nedlac Act. This also confirmed what the Congress of the South African Trade Unions (Cosatu) told the Committee, namely that the Youth Wage Subsidy had not been discussed at Nedlac, although this presentation stated that discussions had taken place. This was a fundamental point, and the Committee needed to know which version of events was correct.

Mr Harris, however, continued that even if there were discussions, the point was that there had been no report written by Nedlac. Nedlac would publish a report in order to comply with section 5 of its Act; as the structure needed to reach consensus and conclude agreements. He noted that the presentation had failed to list the unions under the groups that had given comment. Could the officials explain exactly what happened at Nedlac?

Mr Harris commented that there were various questions that the NT delegation did not answer the last time it appeared, and that he would appreciate it if every question was answered today.

The Committee had a statement issued by the Deputy Minister in the Presidency, to say the youth wage subsidy no longer existed under that name, and that the R5 billion that was announced was now going to the youth wage accord. In simple terms, this statement implied that the youth wage accord had replaced the youth wage subsidy. If this was correct, how should the Committee regard the youth wage accord? If the Committee had to regard the youth wage accord as binding, then it was clear that the condition on page 14, that all incentives should be approved by all constituencies, did not apply in this case.

Mr Harris said the Committee noted Cosatu’s comment that the constituencies resisting the passing of the Bill required urgent political intervention to stop it from going ahead. He asked if there was anything else going on that the Committee should know about. The Committee should know if there were any other attempts to intervene, from any other source, and if NT had received any other communication.

Mr Harris said the new addition, in the original format of the Bill was the sunset clause. This was explained, however, during the public hearings as a three-year sunset clause and not two. He wondered if the reference to two years was now given because these were the last two years of the Medium Term Expenditure Framework (MTEF). The word “sunset clause” implied something stronger than the three years.

Mr Harris said it was useful that in the original bill there was an estimate of the total cost of a three-year youth wage subsidy. He asked how strong the incentive was, relative to the original R5 billion rand The number given to the Committee was R1 billion to R2.3 billion, and he asked if this implied that it was only going to be one-fifth as strong as original amount. If not, then he asked if NT could give a capitalisation breakdown over the next three years, or more simply, asked what was the number that the Committee could attach, in tax loss terms, to the Bill.

Mr Harris said the main problem with the Bill was that it left those young people who most needed the help still unsubsidised. A person who was a part-time worker in the service sector did not get a minimum wage that was sectorally determined. If such a person was paid a low salary, that person was not subsidised, because of the R2 000 sub-minimum. This was a problem, and he was worried that NT had not made an attempt to solve it.

Secondly, if there was concern about substitution, he pointed out that the most vulnerable group were the existing young workers. The original design of the youth wage subsidy provided a subsidy for existing workers, to make sure that this most vulnerable group was not substituted. That had been totally removed from the Bill now and he wondered why this was no longer of concern and whether NT was completely satisfied that this group was sufficiently protected by the measures that were in existence already in the Bill.

Mr Harris said the ability to claim back was still limited to the Pay As You Earn (PAYE) Bill. If an employer had a large business that employed a lot of young people, but where only a few managers were eligible for PAYE, that employer could not get benefits for employing new young people because the employer would run out of PAYE to claim that. The original version that allowed for simple pay-outs was a better design.

Ms A Mfulo (ANC) thanked government for responding accurately to the presentations made by the stakeholder. NT had also highlighted what was agreed to. She shared the commitment on skills and development and training as proposed by other stakeholders, but said there was no need to agree to the proposals because there were already other instruments such as the SETAs that looked after training. What NT was doing was to offer an opportunity at entry level of the job market.

Ms Mfulo said she was concerned with the need to define an eligible employer, which had not been clarified, and the status of labour brokers. These brokers arranged a significant number of employment opportunities for the youth. They ended up becoming de facto employers and they deducted money for PAYE. Something had to be done to ensure that they were included; currently the proposal excluded them, and it would be necessary to clarify the position to avoid disputes between labour brokers and the ultimate employers.

Ms Mfulo said although she did not have quarrels with asylum seekers being included in the category of people, NT needed to remember that this was still an experimental instrument. South Africa sat with a huge problem but although the proposals were being criticised, nobody was proposing any real solutions. Given the realities, she would prefer to see the focus on South Africans. Other people could be considered later.

Ms Mfulo proposed that after two years, the employers must be obliged to continue employing the employees, to avoid them simply discarding those employees once the time for the incentive had lapsed. She pointed out that this was what happened with the learnerships.

Ms Mfulo said she was comfortable with the consultation that seemed to have happened with stakeholders, including Nedlac. Although she understood that SARS would manage the claiming process she said further clarity was required. The ANC wanted, if and when the incentive started, to see several departments involved in monitoring the effectiveness of the instrument, such as the Department of Trade and Industry (dti) and Department of Labour (DoL).

General responses
Mr Fuzile replied that NT would not be accountable if there was no report at Nedlac. He indicated that he attended the deliberations at Nedlac twice to present on the original proposal. Some of the pronouncements people heard in public resulted from the consultations that occurred at Nedlac. The Nedlac Act drafters were careful in how they drew certain provisions within the Act, and were clear that before something was introduced to Parliament it had to be convincing. He read out sections 5(b) and (c) of the Nedlac Act which noted that Nedlac must consider all proposed legislation relating to labour market policy before an attempt (seek) was made to introduce it in Parliament. Failure to reach consensus at Nedlac did not mean that the Bill could not be introduced anyway. This was a judgement call. The point made in his presentation was that the consultation envisaged could not take away the original powers of government to present a proposed law to Parliament, nor the powers of Parliament to process the laws. If this was to be interpreted as a barrier, it would mean government’s and Parliament’s power, as conferred by the Constitution, could simply be usurped by Nedlac. He hesitated to interpret the provision in such a manner. He reiterated that this incentive was not changing labour legislation, but was simply cross-referencing to ensure none of the provisions would undo what was provided for in labour legislation.

He concurred, in principle, that employers should be compelled to keep the young people after two years, but this was something with very profound impact. Ideally, NT would like to see the young people continuing in the same employment so that the net result would be that employment increased. However, other labour laws regulated the relationships between employers and employees, in so far as keeping their services and the circumstances when they could be laid off. If NT were to enter that territory the Bill would then cease to be a money bill. The Minister of Finance only had jurisdiction to introduce money bills to Parliament, and could not veer into territory of his colleagues.

The emphasis on training needed not only to be focused on theoretical learning. The most critical thing about training was that young people acquired practical skills, however menial the tasks assigned might be at the work place. No employer had ever employed people just because salaries would be subsidised by Government, if there was no work to be done. The continued emphasis on SETA training should not be elevated to a point where the training acquired in service was disregarded.

He cited a story of one person at national Treasury who was first employed as a security guard. She later moved on to become a full-time receptionist, then into Personal Assistant (PA) duties, and was now an Executive Personal Assistant; she had been exposed to the opportunities by being in the specific work environment.

Mr Fuzile explained that there was no exclusion for people who earned below R2 000, where there was an agreement in the sector. When there was no agreement, the exclusion would apply. There would be not too many jobs in South Africa that fell below that wage range, including the farming sector. The original proposal did not have a minimum wage figure, but that changed after consultations within Nedlac, and outside.

He cited how the model could work in practice, using the example of a motor plant that NT had visited. When informed of the incentives, this company trained a bigger number of employees than it would require to assemble a particular model car, on the basis that some would drop out during the training, or after it, but the motor manufacturing industry did have a database and all those trained would get employment in the industry, even if not with that particular company, within a year or two. If Government were to instruct people to retain people once they had trained them, many companies would be unwilling to train people and give them he kind of opportunities offered by this company.

Ms Van Niekerk said one of the concerns raised at Nedlac was that the incentive could not be the only thing that Government did, and it must be complemented by other measures. The Cosatu proposal that countered the incentive focussed on the training element. When the youth accord was put out, Government spelt out the strategy as reflected. The six elements that the strategy entailed were education and training, public sector employment, youth target sector side, promotion of youth entrepreneurship, youth cooperatives, and private sector measures. This legislation would contribute to the private sector measures. This was where NT could also contribute. Private sector measures could be any number of things like taxes, grants, incentives, jobs funds, and other issues between government and the private sector. The view was that the incentive was but one element of the measures that were there in the youth employment accord.

Mr Fuzile again commented that too much was made out of the line, in the youth accord, that there would be “agreements”. Obviously NT would prefer it if agreements could be reached, but the absence of such an agreement should not prevent NT from introducing legislation.

Mr Fuzile said that tax expenditure was often misunderstood. NT interacted with the youth on the R5 billion, and young people wanted to know why the money was simply not being disbursed. The flexibility to move it to other things was complicated and often it was misunderstood. He said the amount was an estimate.

Mr Momoniat added that the R5 billion was an estimate made in the original proposal, but NT had, since then, taken suggestions to reduce debt wage losses. The figure given last week was indeed based on the remaining two years of the MTEF. This was not a big issue and was not reducing the number of people who could apply. NT would be happy with a massive take up.

Mr Chris Axelson, Director: Tax Analysis, National Treasury, clarified that this was not setting the cost lower than before. The displacement provisions made in the Bill were good enough. NT tried to make the provision as effective as possible, using the taxpayers’ money. By excluding the existing workers this was creating, directly, a great loss, but such an action would not decrease the net amount of new jobs created or the effectiveness of the policy.

Ms Van Niekerk clarified that in relation to the youth currently employed, who might be displaced, the displacement provisions here could be used, but it must be remembered that other labour laws also offered protection, if they could prove that they had been displaced for no good reason. NT was open to suggestions.

Mr Momoniat said NT would prefer it if the incentive developed beyond the PAYE, but this was not anticipated for the first phase. Payments would come out of the PAYE. NT was open to suggestions.

Mr Momoniat also explained the sunset clause. It was originally set at three years, but it was agreed that after two years there would be a review, to inform what might happen at the end of the three years. If the situation was chaotic, or was simply not effective, then the programme would be expanded. NT was excited about putting this forward, and believed it was a panacea and would make an impact on youth employment.

Mr Momoniat also answered queries on the refugees, saying that in fact the numbers were small to the point of being insignificant. There were constitutional issues between citizens and non-citizens, but all of that would be taken into account. Refugees also had rights, but that was not an issue from the finance viewpoint. The Commission for Conciliation, Mediation and Arbitration (CCMA) would receive complaints with regard to monitoring and enforcement, but there would be other role players. There was no objection to also including other departments if they were able to help.

Mr Momoniat replied, in response to Mr Harris’ question on other interventions and pressures, that there were a lot of other process that were ongoing, and that the delegation today were officials, not politicians. He presumed there would be lots of discussions. Beyond Nedlac, there were no official processes in which the officials were involved. The issue of sectors was put in such a way that there would be no specific sectors but employers. NT was not closed to any suggestions, if Members felt certain sectors ought to be targeted. It was hard to say which industries would be targeted, because the youth applied to all sectors.

Ms Mfulo said there had been legislative amendment that had been proposed by NT, with regards to what an employer was, and the age being pushed to 18. She asked if the Committee was comfortable giving NT the green light on what it had proposed.

The Chairperson said what NT had submitted would part of the deliberations the Committee would have later on.

Mr Momoniat indicated this was urgent and needed to be certified and passed onto the state law advisors.

Mr Harris asked if would be possible for NT to produce a new draft, and Mr Momoniat confirmed that this was possible.

The Chairperson said the Committee would be meeting on Friday. He was unable to make a ruling but said the Committee would allow NT to proceed in terms of the proposed interventions. At the next meeting the proposed Bill would be ready.

The Chairperson thanked the delegation and said the input had been informative. The point about the importance of the consultative processes not substituting other constitutional mandates was crucial. The Committee would take that into consideration when it deliberated on the Bill.

The meeting was adjourned.


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