Why investing in youth is good for your business

It was Nelson Mandela that famously said, “The youth of today are the leaders of tomorrow”. And although some years have passed since his death, his words still echo true. How we treat our youth (legally defined in South Africa as people between the ages of 15-35) will have a lasting impact on the growth of our country and even local businesses.

Staggeringly, though, youth unemployment has sat at over 55% for two years in a row and was last under 50% n 2011. This is a worrying statistic. But it doesn’t have to remain so. There are many reasons why youth employment is a smart and responsible movement to become a part of.

In fact, over the years, many employers fail to realise that the demand for technologically-skilled individuals is rapidly increasing. While this should by no means be an encouragement to phase older workers out (in fact, with good strategy, workers of any age can learn new skills and apply the latest technology to their work), it does incentivise employers to consider employing younger talent that has more recent exposure to training within newer technological frameworks.

Furthermore, there are a variety of incentives for employing youth:

Employment Tax Incentive (ETI)

Beyond the advantages in employing people with the most relevant skills in your industry, there are tax incentives for employing young people too. The ETI was implemented in 2014 with the express aim of encouraging employers to hire young workers between the ages of 18 and 29, who earn less than R6 000p/m.

The incentive has the following benefits:

• Reduced amount of PAYE (Pay-As-You-Earn) payable by the employer
• ETI can be claimed for a total of 24 qualifying months
• It serves as complement to existing learnership agreements
• More young people are employed, and the economy is boosted

Please note that this is an over-simplification and any real consideration regarding the use of the ETI should be discussed with your tax adviser.

SDL & SETA Registration

By registering for the Skills Development Levy (SDL) and registering at your relevant Sector Education and Training Authority (SETA), you can offer learnerships and apprenticeships in your company. If you are able to secure a grant, you can use it to train your employees and invest in their skills, which is desperately needed in a country where unemployment rates have been sky-high for years.

The SDL is not optional for any business owner who expects to pay more than R500 000 in salaries over 12 months. The SDL amount payable is 1% of the total salaries paid. However, a large portion of these funds can be claimed back in various ways:

Mandatory grants: If you submit both your valid Workplace Skills Plan (WSP) along with your Annual Training Report (ATR) by the end of April every year, you qualify for a 20% return on the funds paid to the SDL.

Discretionary grants: Employers will need to apply for these grants with their respective SETA. The purpose of these grants is to incentivise employers to contribute to skills development while they address skills shortages within their specific industry. Not only does this create jobs, it is also a worthwhile way to invest in upskilling young people through learnerships. These discretionary grants could be worth up to 49.5% of the amount contributed to the SDL.

How are you investing in the leaders of tomorrow?

The path to a brighter future starts with you, the business leader. Not only are there many ways in which employing youth can help you save money, but it also contributes to the eradication of youth unemployment in South Africa while ensuring that you have staff in your company that can go a long way with you. What are you waiting for? Speak to your financial adviser today to see how you can make a difference while utilising the incentives detailed above.

This article is a general information sheet and should not be used or relied on as legal or other 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 adviser for specific and detailed advice. Errors and omissions excepted (E&OE)