Semi-Skilled and Skilled Employment Tax Incentives: A Comparative Analysis of South Africa, Australia, and Canada

One of the primary reasons contributing to the high unemployment rate in South Africa is the substantial portion of the South African population lacking sufficient education and training. Employers’ endeavour to generate new employment opportunities during challenging economic times is compounded by the urgent demand for a skilled South African workforce equipped with the specific skills desired by employers. These adverse conditions elucidate the pivotal importance of mechanisms, such as tax incentives, in encouraging employers to create new employment opportunities and to upskill employees through on-the-job training. The purpose of this chapter is to evaluate the design variables of prevailing South African employment tax incentives in terms of their support and encouragement for employers to create semi-skilled and skilled employment opportunities through on-the-job training in South Africa. To achieve this, an inductive research approach is employed, utilising both a literature review and comparative analyses as research methods to qualitatively analyse various design variables of employment tax incentives in South Africa. Subsequently, these design variables are compared with employment tax incentives of Australia and Canada by examining their tax legislative requirements and practical applications. This chapter contributes by highlighting specific design variables embedded within employment-related tax incentives that may discourage employers from utilising them. Finally, this chapter makes recommendations to inform the South African tax regulator on potential amendments that could enhance the attractiveness of the prevailing South African employment-related tax incentives for creating semi-skilled and skilled employment opportunities through on-the-job training.