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Equal Education apologises to Minister Ebrahim Patel for undue criticism, which arose from an incorrect 24 November news report published by the Labour Bureau of IOL / Independent Media.

The IOL news report opened as follows:

“Economic Development Minister, Ebrahim Patel, has hailed the youth employment incentive as being a mechanism that helped create 426 000 new jobs since its implementation.

“He is speaking at Cosatu’s congress in Johannesburg.

The employment incentive is more well known as the controversial youth wage subsidy.”

Based on the above we issued a press statement (now amended) on 25 November, which criticised the Minister’s apparent comments, and cited the scholarly evidence which has confirmed that the Employment Tax Incentive / Youth Wage Subsidy has created no jobs and is a failure.

On 28 November various people commented on the EE Facebook page that the Minister had not mentioned the Employment Tax Incentive / Youth Wage Subsidy, but had instead been speaking about the Youth Employment Accord.

We responded to these commenters by explaining that we had relied upon the IOL news report. It had reported that a government minister had praised a government policy, and thus our reliance on it was perfectly reasonable.

We immediately e-mailed the journalist asking for clarification. We further responded by saying that should the IOL news report prove to be false we would certainly withdraw our criticism of the Minister.

This morning, 29 November, the IOL Labour Editor, Amy Musgrave, issued a series of tweets (here, here, here) stating that the IOL news report was incorrect. She did not explain what new evidence had convinced her that the journalist had misreported, but on the basis of her word we have withdrawn the criticism of Minister Patel.

We understand that the Youth Employment Accord and Employment Tax Incentive/Youth Wage Subsidy are two different things, which were possibly conflated in the IOL news report. The Youth Employment Accord does not mention the Employment Tax Incentive / Youth Wage Subsidy. However, Treasury cited the Youth Employment Accord in the opening sentence of its public announcement of the Employment Tax Incentive, so IOL’s confusion is somewhat understandable.

We reiterate the main thrust of our original statement that the Employment Tax Incentive / Youth Wage Subsidy is a failure. A second study released by UCT researchers in August, undisputed by scholars, has confirmed that “the ETI has not resulted in a statistically significant change in the probability of young people finding jobs, despite its cost of R2 billion over the first year of its existence [from 1 Jan 2014].”

In a previous statement, and detailed submissions to Treasury, we explained how the subsidy works, why it was likely to fail, and how it is that the subsidy gets claimed without creating jobs.

We are encouraged to note that Minister Patel’s department is involved in a review of the Employment Tax Incentive / Youth Wage Subsidy, and we hope that this leads to this R2bn per year wastage being discontinued.