Gear

Growth, Employment and Redistribution programm (GEAR)

The Government of South Africa showed its commitment to open markets, privatisation and a favourable investment environment with its introduction of the Growth, Employment and Redistribution (GEAR) strategy – the neoliberal economic strategy to cover in the period 1996-2000. The policy was meant to increase investment, especially Foreign Direct Investment, in the country to help achieve goals. The key goals of the policy as originally outlined were economic growth of 6% in the year 2000, inflation less than 10%, employment growth above the increase in economically active population, deficit on the current account and the balance of payments between 2 and 3 percent, a ratio of gross domestic savings to GDP of 21.5 percent in the year 2000, improvement in income distribution, relaxation of exchange controls and reduction of the budget deficit to below 4 percent of GDP. It also identifies the key labour market reform initiatives and programmes that were implemented by the government in that period as the “institutional reform” and “government programme” pillars of the job creation strategy of Gear.

The Gear promised to reduce poverty and inequality via a surge in economic growth. The economic growth engine in Gear takes the form of a demand stimulus led by a rapid expansion in private sector investment. However, the outcomes of the Gear strategy have been mixed. It brougth greater financial discipline and macroeconomic stability but largely failed to deliver in key areas. In the Gear strategy, growth is supposed to lead to the reduction of poverty and inequality. Employment creation is the mechanism in the Gear linking growth to poverty and inequality reduction or wealth redistribution. Although the Gear did not set specific targets for poverty and inequality reduction, it clearly aimed to substantially lower both.

According to the Congress of South African Trade Unions (COSATU) and a range of other...