The Employment Tax Incentive (ETI)
(ETI): A Win for Youth, a Win for Business
South Africa’s youth unemployment crisis isn’t new – but it’s urgent. We’re sitting on one of the youngest populations in the world, and yet, millions of young people are stuck at home, unable to access meaningful work opportunities.
Enter the Employment Tax Incentive (ETI) – one of the government’s most underutilised (and misunderstood) tools to create youth employment at scale.
But it only works if it’s used properly.
🧠 What is the ETI, Really?
The ETI was introduced in 2014 to encourage businesses to hire young South Africans. It’s not a loan. It’s not funding. It’s a tax reduction on PAYE for every qualifying young person you employ – up to R1,000 per month, per person.
And if you’re running a learnership or training programme that includes employment? Even better.
⚙️ How It Works: The Basics
To qualify for ETI, the employee must:
✅ Be aged 18–29
✅ Earn less than R6,500 per month
✅ Be employed full-time (at least 160 hours/month)
✅ Be a South African citizen, permanent resident, or refugee
✅ Not be a domestic worker or “connected” to the employer
You can claim this incentive for up to 24 months per employee.
Example?
If you hire 10 qualifying youth at R5,000/month each, you could be saving R10,000/month on PAYE alone. Over a year? That’s R120,000 back in your business.
🧩 Why It Matters for Your Business
ETI makes it cheaper to employ young people – full stop. That means:
✅ Lower payroll costs
✅ Easier entry into youth recruitment
✅ Extra cash flow to reinvest in training, growth, or support
For SMMEs especially, every cent counts. And when paired with a solid training or learnership programme, the impact is even greater – on both your BEE scorecard and your bottom line.
🚨 Common Pitfalls to Avoid
This is where things can go wrong:
❌ Claiming for ineligible employees
❌ Miscalculating wages or working hours
❌ Failing to track eligibility month-to-month
❌ Using ETI to replace existing staff
Penalties are no joke. You could face a 100% clawback of what you claimed – or even R30,000 fines per displaced employee if you’re gaming the system.
This is about real work, real impact, and real systems that support it.
🔄 ETI vs Learnership Tax Breaks (Section 12H)
Both ETI and Section 12H offer incentives, but for different reasons:
| ETI | Section 12H | |
|---|---|---|
| Focus | Hiring youth | Enrolling youth in formal learnerships |
| Mechanism | PAYE rebate | Corporate tax deduction |
| Eligibility | Age + salary-based | Linked to SETA-registered learnerships |
| Duration | Max 24 months per employee | Based on learnership duration |
The magic? Use both. Properly.
📣 So, How Do You Start?
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Check Eligibility: Look at your current employees and recruitment plans.
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Keep Clean Records: Age, salary, hours worked – you’ll need proof.
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Claim via EMP201: Submit your ETI through your monthly SARS PAYE submission.
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Get Expert Help: If in doubt, speak to your tax team or training provider.
🚀 Final Thoughts
The ETI isn’t just about tax savings – it’s about creating pathways into work for young people who’ve been left behind. It’s about taking advantage of what’s already available to do better, do more, and do it smarter.
And with the right systems in place, tracking, reporting, and maximising your claim doesn’t need to be a headache.
If you’re employing young people – don’t leave this on the table.
Let’s make youth employment everyone’s business.