In a boost for businesses supporting youth employment, the recent 2025 Budget confirmed the continuation of the Employment Tax Incentive (ETI) program, even introducing positive adjustments to its structure.
What's Changing on April 1, 2025
From April 1, the ETI will maintain its maximum value of R1,500 per month for the first year and R750 per month for the second year of eligibility, but with important adjustments to keep pace with rising minimum wages.
The good news for employers is an expansion of eligible income bands. The maximum incentive will now apply to employees earning between R2,500 and R5,500 monthly (previously R2,000-R4,500), and the incentive will gradually taper to zero at a monthly income of R7,500 (up from R6,500). This upper band limit increase from R6,500 to R7,500 represents a 15% increase that recognises the absence of inflationary adjustments over the past few years and means that businesses will have greater incentives to employ youth. The ETI is one of the most cost-effective job creation levers, and research has suggested that it may be useful to extend and enhance it in certain key sectors.
For wages below R2,500 where minimum wage exemptions apply, employers can claim 60% of the wage value.
These adjustments mean more employees will fall within the qualifying income range, potentially increasing the program's reach and impact.
The ETI Under Fire
The ETI came under fire just days before the budget announcement with a suggestion that the roughly R7 billion annual program cost be redirected toward "other employment initiatives" that would "boost unemployment in a more tangible way."
What This Means for Your Business
For now, employers can breathe easy knowing the ETI will continue with expanded eligibility thresholds. If your business employs young people earning between R2,500 and R7,500 monthly, you'll likely see increased benefits from these adjustments.
Subjects like the ETI will be on the agenda at GBS's must-attend Annual Employment Conference (#AEC25) on the 19th of March 2025. Join John Botha, Johnny Goldberg, Thembi Chagonda, Dr. Mark Bussin, and many more industry leaders at the conference. Set your organisation up for success in 2025 and register today! (Register here: https://globalretailoutlet.co.za/showevent/73)
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