Reverse GEAR! – WSF Leaflet, undated

Reverse GEAR - WSF Leaflet

The WSF’s “Reverse GEAR” Leaflet

Original PDF  |  SAASHA PDF

GEAR is the ANC government’s official macro-economic programme. It was adopted in 1996, and replaces the RDP, which was the ANC’s programme in 1994.

According to the government, the GEAR program will promote economic growth, which will, according to its writers, help create jobs, help with the implementation of the RDP and generally reduce the apartheid legacy.

Here are the details and our comments. Decide for yourself:

GEAR’s Details

GEAR calls for:

  • Dropping of tax, although mainly on companies and the rich.

Workers then have to carry more of the tax burden to support the government. In 1994, company tax was 25% of the total tax income, the rest coming mainly from income tax (on workers) and VAT.

GEAR calls for a further reduction on company tax, for example Manuel’s “tax break,” which makes workers who get R20 000 per year pay R13 less tax per month, whereas companies will be contributing R2.5 billion less. Also included is a zero tax plan for certain company plants, where companies won’t have to pay tax for up to ten years!

  • Public sector “restructuring”

If you work for the government or in one of the government companies, expect to work harder, for less, giving management an excuse to fire those who will be left with no work to do, while the remaining must help manage the workplace. In other words, “job cuts” and less social spending. In fact., spending less money is central to GEAR: that is the reason why many teachers have been retrenched “on free will” the last three years and why nurses will from next year (2000) on will no longer receive free further training.

This is because of the dropping of tax on the rich, which leaves the government with less money to spend on social services. But even the money that is available is being redirected to anti-social aims. Most important, R36+ billion will go to the military, even though South Africa faces no military threats! Obviously, rather than help “implement the RDP” aims – houses, jobs, welfare – the cuts and redirection of spending will prevent these aims being reached due to “lack of funds.”

  • Privatisation

Government companies and services will be sold off, or contracted out, to private business. Many workers will lose their jobs, others will be forced to accept lower wages as companies will want cheap labour. One of the government plans (Igoli 2002) is to privatise services in Johannesburg by 2002.

This is also called “corporate welfare,” giving welfare to the companies who already make billions, as the state assets and companies will probably be sold at very low prices, instead of giving welfare to those people who have nothing.

  • “Structured flexibility” in the labour market

Simply: subcontracting and casuals, undermining trade unions and worsening working conditions, in short, flexibility structured for the bosses to do what they want, including hiring and firing, flexible, hours, flexible wages, multi-tasking and job insecurity.

  • Wage moderation

GEAR explicitly states that workers must not be given raises without matching increases in productivity. This essentially means no wage increases, because you have to work harder to earn more!

GEAR speaks of “price moderation,” which means that companies will be encouraged to stop raising process. This will make wage moderation easier to swallow. But you only have to look at the rising bread and petrol price to see that GEAR is not serious about “price moderation.” So, workers wages will stay static, but prices will rise: in other words, GEAR in practice means less wages and no raises.

  • Two lies

We need to deal with two common lies now: first off is the lie that higher wages cause unemployment. This is wrong, because when workers can buy more products (with higher wages), more of each product needs to be created, thus the need for more workers to do the job. When wages drop, workers buy less, so fewer workers have to be used to make the products.

The second lie is that an increase in wages cause an increase in price which in it’s turn make workers ask for a further increase in wages and so on (“wage-price spiral.”) Let’s take a small factory that employs 50 workers, and makes 80 bicycles per day, or 1600 per month. Now each worker gets an increase of R200 per month, costing the factory R10 000 more per month. If this extra cost is divided evenly across the bicycles, it will increase the cost by R1,66 per bicycle, which is an irrelevantly small increase.

The whole logic behind “wage moderation” is built on these two lies. It will clearly harm workers.

  • Dropping of exchange and trade controls

GEAR is keen on free trade. Any goods should be freely imported from anywhere in the world. This will make many small and medium businesses go bankrupt, as they will have to compete with big businesses from other countries. Those companies that survive the extra competition and the foreign companies that come in will have anti-union, low wage, labour practices, to maximise their profits.

  • A two tier wage system

Where new trainees (workers) will be paid (much) less than other workers. (Section 8.3) This will divide new and old workers.

What can we do about it?

GEAR is clearly harmful to workers, and must be stopped. But if we successfully fight Gear, capitalists from other countries will invade us or set up sanctions against us. This is because GEAR is part of an international system called, amongst other names, “neo-liberalism.” This system is summed up in the above paragraphs, as GEAR is a typical implementation of this system. It (neo-liberalism) is promoted by big international organisations such as the World Trade Organisation, the International Monetary Fund and others. These imperialist organisations attack countries that don’t implement neoliberal policies.

So if we want to fight GEAR, we will have to fight it internationally: this includes fighting it locally (getting the government to drop GEAR) and supporting international movements against neo-liberalism.

Neo-liberalism is a form of capitalism. Before it (after the world wars until the end of the 1960s) there was another form of capitalism, called “state capitalism,” where the economic participation of the government is increased, as compared to neoliberalism, where the economic role of the government is limited to forcing workers to accept their working conditions. But state-capitalism (confused with socialism by Marxist socialists in Russia and China) was no “workers’ paradise,” especially not Russia or China. Nor were they socialist.

Socialism is not dead. Libertarian socialism, the idea that workers should take over their working places and society and run them for themselves, is growing around the world.

We must fight against privatisation, job cuts, “wage restraint,” the dropping of exchange controls and all attacks on workers’ rights.

We must fight GEAR in South Africa and help workers in other countries fight Neo-liberalism in their countries.

We must fight and eventually destroy capitalism and create libertarian socialism, by taking over our workplaces and society and running it for ourselves.

The bosses need us to exploit us to get rich. We don’t need them, as they keep us poor.

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