Sharp says the reason Cosatu is against the youth wage subsidy is that they are opposed to anything that will introduce competition for their members.
A march to Cosatu's headquarters in Braamfontein, held by Democratic Alliance (DA) supporters on 15 May, turned violent. Led by leaders Helen Zille, Lindiwe Mazibuko, Mmusi Maimane and youth leader Makashule Gana, the protestors' intention was to march to Cosatu House to demonstrate unhappiness with the union’s stance on the wage subsidy.
In his budget speech, Finance Minister Pravin Gordhan announced that a R5 billion tax credit over the next three years has been set aside for businesses that employ youth aged 18-29. Gordhan said the subsidy was to have been implemented on 1 April, but was still under discussion at the National Economic Development Labour Council, as Cosatu was blocking it.
Cosatu supporters did not wait for DA protesters to reach Cosatu House, but instead met the blue T-shirt-clad crowd on the corner of Jorissen and De Beer streets. Slogans and counter-slogans were sung, stones were pelted and several people, including a Mail & Guardian journalist, were injured.
Addressing supporters, Cosatu Secretary General Zwelinzima Vavi said a youth wage subsidy would further enrich company bosses and disadvantage older workers.
“What will happen is when workers get old, bosses will throw them into the street,” Vavi said.
Economist Loane Sharp says Vavi is right.
“A youth wage subsidy would result in more younger people being employed and that would drive wages down,” Sharp says.
“Wages for unskilled workers are generously high in this country,” he says.
Sharp quotes findings by an International Monetary Fund study that showed that a cleaner in SA earned more than a teacher in Brazil.
“Cosatu is showing it’s true colours – that is it anti-employment. They would rather have a handful working for a high wage than more people working for a lower wage,” Sharp says.
Unions and collective bargaining is what is keeping unemployment high, he says.
According to Statistics South Africa, 72% of the unemployed are under age 35.
Talking to DESTINY at the march, DA parliamentary leader Lindiwe Mazibuko said it was sad that the march had turned violent. She said the behaviour of Cosatu supporters was characteristic of their leadership.