Growth, Employment and Redistribution (GEAR)

Growth, Employment and Redistribution (GEAR)
Name	Growth, Employment and Redistribution (GEAR)
Type	Economic policy framework
Country	South Africa
Adopted	1996
Authors	Nelson Mandela Cabinet, Trevor Manuel
Status	Historical

Growth, Employment and Redistribution (GEAR) GEAR was a macroeconomic strategy adopted by the Cabinet of South Africa in 1996 under President Nelson Mandela and implemented during the administration of President Thabo Mbeki. Crafted within the context of post‑apartheid reconstruction, GEAR sought fiscal consolidation, private sector investment, and structural reform to stimulate growth, reduce unemployment, and promote redistribution. The plan intersected with debates involving trade unions such as the Congress of South African Trade Unions and political parties including the African National Congress and the Pan Africanist Congress of Azania.

Background and Policy Context

GEAR emerged after the negotiation processes that produced the Interim Constitution and the 1996 Constitution, following the 1994 South African general election and the end of Apartheid. It reflected compromises between liberation movement leaders like Nelson Mandela and financial institutions modeled on World Bank and International Monetary Fund advice. Debates around GEAR involved entities such as the South African Reserve Bank, the National Treasury, the Congress of South African Trade Unions, and the Confederation of South African Trade Unions. International actors including International Monetary Fund delegations, World Bank missions, and investors from United States and United Kingdom business circles influenced the policy environment.

Objectives and Key Measures

GEAR articulated objectives including fiscal discipline, promotion of foreign direct investment, and stimulation of employment through private sector growth. It emphasized targets like reducing the budget deficit overseen by the National Treasury, controlling inflation consistent with the mandate of the South African Reserve Bank, and liberalizing trade in line with General Agreement on Tariffs and Trade commitments and negotiations at the World Trade Organization. Key measures included public expenditure cuts affecting ministries such as the Department of Social Development (South Africa) and the Department of Public Service and Administration, tax policy adjustments referenced by the South African Revenue Service, and reforms to encourage investment from conglomerates and multinationals like Anglo American plc and De Beers.

Implementation and Institutional Framework

Implementation involved coordination among the Cabinet, the National Treasury, and the South African Reserve Bank. Provincial administrations such as those in the Gauteng and Western Cape provinces had roles in delivering services while entities like the Development Bank of Southern Africa and Industrial Development Corporation were instruments for industrial strategy. Social partners including the Congress of South African Trade Unions, the South African Communist Party, and business groups such as the Black Management Forum and Business Unity South Africa engaged through forums like the National Economic Development and Labour Council.

Economic and Social Impact

Proponents argued GEAR contributed to lowering inflation under the South African Reserve Bank's policy and attracting capital inflows from investors in United States and Europe, with portfolio movements connected to markets in Johannesburg and institutions like the Johannesburg Stock Exchange. Critics pointed to persistent high unemployment rates measured by Statistics South Africa and weak employment growth in sectors such as mining companies like Gold Fields and manufacturing firms like Sasol. Social outcomes involved tensions over public service delivery overseen by the Department of Health (South Africa) and the Department of Education (South Africa), with impacts on household poverty documented by researchers at institutions such as the University of Cape Town and the University of the Witwatersrand.

Criticisms and Controversies

Critics from the Congress of South African Trade Unions, the South African Communist Party, and academics from the University of KwaZulu-Natal argued GEAR prioritized fiscal austerity over redistribution, clashing with promises of the African National Congress in its ANC's Reconstruction and Development Programme. Debates featured prominent figures such as Thabo Mbeki's ministers and economists influenced by policy schools connected to Harvard University and University of Chicago traditions. Controversies included disputes over privatization proposals affecting state enterprises like South African Airways and Transnet, clashes with municipal authorities in cities such as Cape Town and Durban, and public protests involving organizations like the Treatment Action Campaign.

Legacy and Subsequent Policy Developments

GEAR's legacy influenced later frameworks including the Accelerated and Shared Growth Initiative for South Africa and the policy shifts under subsequent administrations, with fiscal strategy debates continuing in the National Treasury and among legislators in the Parliament of South Africa. Successor initiatives engaged institutions such as the Industrial Development Corporation (South Africa), the Development Bank of Southern Africa, and planning documents linked to provincial governments in Gauteng and Eastern Cape. Ongoing discourse connects GEAR-era policies to later socioeconomic policy instruments, social movements, and academic studies at centers like the Human Sciences Research Council and think tanks such as the South African Institute of International Affairs.

Category:Economic policy of South Africa