THE African National Congress (ANC) last night rejected the proposed youth wage subsidy, opting instead for a "job seeker's grant" national executive committee member Paul Mashatile said yesterday.
Compulsory national service was also being looked at as an option.
ANC ally, the Congress of South African Trade Unions (Cosatu), has opposed the wage subsidy since it was announced by Finance Minister Pravin Gordhan in his 2011 budget speech. It appears to have made headway in its push for the subsidy to be scrapped, at the ANC policy conference in Midrand, yesterday.
Mr Mashatile said delegates felt that a system in which employers received money was open to abuse, and was "not a good mechanism to push employment".
Instead, they had endorsed the job seeker's grant proposed by President Jacob Zuma in his opening address to the meeting on Tuesday.
Mr Mashatile said the resources set aside by the government could be used to fund other mechanisms, including the grant.
The ANC has also proposed a national youth service - with the South African National Defence Force - which "should be compulsory as far as possible". He emphasised, however, that this did not amount to conscription. Rather it was aimed at preventing "loitering" by young school leavers, and to ensure that they were skilled.
The proposals would be further fleshed out at the ANC's national conference in December.
Speaking on the sidelines of the conference, Cosatu general secretary Zwelinzima Vavi hinted at a new approach, a "comprehensive youth development strategy", formulated with input from the unions and the ANC Youth League.
The idea of the subsidy had been lauded by the Democratic Alliance (DA), which argued that it would create 400000 jobs.
The DA and Cosatu clashed over the subsidy during a march earlier this year. Discussions around the subsidy are unfolding in the National Economic Development and Labour Council (Nedlac).
Cosatu has stalled the implementation of the youth wage subsidy by the Treasury, arguing that it would "entrench slavery".
The union federation released its detailed response to the Treasury and the DA this week, outlining its vehement opposition to the subsidy. The paper, submitted to the policy conference for discussion, argues that proponents of the subsidy incorrectly assumed that wages were a major constraint to job creation.
Mr Vavi said Mr Zuma's proposed job seeker's grant sounded like an "interesting intervention", but the concept had yet to be unpacked.
"In other countries you put together a system of ensuring that people continually search for work, to present themselves for training in whatever system you have for people seeking employment opportunities, and you give them a grant to continue surviving while they look for employment. That's what it is elsewhere in the world," he said.
Young Communist League secretary Buti Manamela welcomed the idea of a job seeker's grant, saying it would bring relief to young job seekers if endorsed by the ANC.
"What we've always been saying is that you have to reduce the cost of looking for a job, we never think about the cost involved for young people to look for a job, people getting a newspaper, getting money to travel to interviews, all those things require a cost."
In its paper opposing the youth wage subsidy, Cosatu argues that the youth wage subsidy was not a policy that emanated from the ANC, and was in fact rejected by party delegates at previous gatherings.
The federation also maintained the subsidy would bring about "substitution effects", with companies being given incentives to let go of workers in order that they employ subsidised ones.
Cosatu said the subsidy also did not guarantee skills development and training, and would entrench inequality in wages.
Cosatu president Sdumo Dlamini has said that the subsidy was typical of how the government "runs directly opposite to the ANC direction".
The federation has been critical of the Treasury for its perceived failure to implement ANC policies.