What is the Employment Tax Incentive (ETI)?
It is an incentive aimed at encouraging employers to hire young and less experienced work seekers. It reduces an employer’s cost of hiring young people through a cost-sharing mechanism with government, while leaving the wage the employee receives unaffected. The employer can claim the ETI and reduce the amount of Pay-As-You-Earn (PAYE) tax payable by the amount of the total ETI calculated in respect of all qualifying employees. This incentive came into effect on 1 January 2014.
Many young South Africans are excluded from economic activity, and as a result suffer disproportionately from unemployment, discouragement and economic marginalisation. High youth unemployment means young people are not gaining the skills or experience needed to drive the economy forward. This lack of skills and experience can easily become an impediment to employment, thereby having long-term adverse effects on the individual and the economy.
In response to the high youth unemployment rate, government has implemented an incentive aimed at encouraging employers to hire young and less experienced work seekers, as stated in the National Development Plan.
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