Orientation: South Africa has high levels of unemployment and severe problem of youth unemployment. This implies that the country requires a comprehensive strategy to create more jobs for the youth. Policymaking is one of the strategies that have been introduced to encourage job creation for the youth. The youth wage subsidy is just one of the strategies proposed and this article unpacks what employers and unemployed youth say and think about this policy directive.

Research purpose: The main aim of the study was to determine the perceptions of unemployed South African youth and employers on the proposed youth wage subsidy incentive scheme.

Motivation for the study: Youth unemployment is a very important issue and the reality is that it is a concern of every government globally. South Africa is therefore not an exception as it is a country that has been experiencing high levels of youth unemployment for the last few decades. In an attempt to curb this pressing challenge of youth unemployment, a proposal to introduce a youth wage subsidy policy was made by government; (since its mention), this idea has been met with a lot of opposing opinions from those against it and applause from those who support it. This has motivated this study to probe the perceptions of the subsidy by those who will be affected by its provisions.

Method: A triangulated research approach was adopted through the administration of survey questionnaires amongst the unemployed youth and semi-structured interviews with human resource managers and specialists. A sample of unemployed youth was drawn from selected communities within KwaZulu-Natal. In addition, semi-structured interviews were conducted with human resource managers and specialists at selected organisations to determine their perceptions of the proposed scheme and any benefits or limitations they believe it might have. Non-probability sampling was used to sample 100 respondents (N = 100), 90% of whom were unemployed youths and 10% of whom were employers.

Main findings: The overall results indicate that more that 93% of the youth surveyed and more than 90% of employers are in support of the youth wage subsidy. In terms of how it should be structured and implemented, about 80% of respondents in the employer survey preferred the tax rebate and incentive option as most of them stated that it will be an easier process to manage and monitor. More than 50% of employers believed that it will ease the wage burden and ensure business sustainability. On the other hand, 88% of the youth surveyed believed it will increase employment for the youth. Findings furthermore reveal that 10% of employers and 28% of the youth were concerned that the subsidy has the potential to exploit older workers (i.e. those who are already in employment) and feared corruption from some employers; otherwise they are in support of its implementation.

Contribution: This is one of the areas that have not been sufficiently explored; as a result, there is not much information about it in the current body of knowledge. This study will contribute to current knowledge about a current policy initiative critical to the development of the country. This research also culminates in important recommendations and draws conclusions that could contribute to the formulation of guidelines on how the government could embrace the youth wage subsidy incentive scheme as a strategic intervention that could benefit the employers and the youth and at the same time aid in finding a solution to South Africa's youth unemployment crisis.