This website uses cookies to ensure you have the best experience. Learn more

Unemployment In The Progression Of The Gear Strategy

1569 words - 7 pages

Itumeleng Ledwaba LDWITU001
Group no.:51
Unemployment in the progression of the GEAR strategy

When the new, first democratic government of South Africa stepped to duty in 1994, a lot of work needed to be done, from the building of houses for the poor to equal rights for all. Therefore, the government had to come up with strong structures or rather policies to serve and develop the new democratic country. Hence RDP (the Reconstruction and Development Programme) was adopted to do as the name suggests: to reconstruct and develop the country. In 1996, the government adopted a new macroeconomic strategy called Growth, Employment and Redistribution (GEAR). In this essay, I will analyse ...view middle of the document...

Figure:1 Unskilled and semiskilled workers

Figure1 above (source: Promoting Growth and Employment in South Africa, Jeffrey D. Lewis, June 2002) show us unemployment rate for the lower skilled labour categories. Clearly, since the GEAR policy was adopted in 1996, there has been a steady rise in unemployment, from the highs of approximately 50% unemployment rate in 1996 to approximately 57.8% in the year 2000, contrary to what was intended in the policy . The policy stated that it would create 400 000 jobs per year by the year 2000. “Almost half of the population lives in poverty, including many of the employed - the "working poor." Unemployment and underemployment are on the rise as more jobs are shed and people rely on survivalist activities to make ends meet. The complex nature of the transition emerged in deeply contradictory government policies." (COSATU policy statement, July 2001).

In the year 2000, the South African Reserve Bank (SARB) announced that it will use an inflation target policy, with a target of between 3 and 6. This rose a few eyebrows as most economically informed people know about the inverse relationship between inflation and unemployment in the short run. The public felt that inflation targeting side-lines the employment goal set out in the GEAR policy. “Rising unemployment and the recession have been the price that we have had to pay to get inflation down. That price is well worth paying.” ( Norman Lament, 1991). Nevertheless, a good rationale behind the choice is argued to be that “unemployment will only be temporary and a necessary step to overcome the inflationary pressures in the economy”.( http://econ.economicshelp.org/2008/03/unemployment-price-worth-paying-for.html ). How? If inflation is high, the economy needs to slow down in order to reduce inflation. The government planned to reduce spending and increase taxes to reduce the budget deficit. I’ll discuss the intended (theoretical) outcomes and compare them to the actual outcomes of this plan, with respect to employment or lack thereof. I shall use the AD/AS and the IS/LM models to show the intended outcomes. Consider the figures below, figure2 and figure3.

Figure2

Figure3

Suppose the economy is at equilibrium (point A), with a natural national output of Yn , price level P1, and interest rate of i0. When the government reduces the deficit, the IS (goods market equilibrium) curve as well as the AD (aggregate demand) curve shift leftwards to IS’, causing a decrease in output to Y’, which in turn causes a decrease in the price level and interest rate. The directions of the changes are shown by the arrows on the graphs. In the short run, the decline in output may lead to workers being laid off due to cuts in production, leaving more people jobless at these lower prices and interest rates. Because the price level decreased, the real money stock increases, causing a downward shift of the LM (Money market equilibrium) curve to LM’. So long as output...

Other Essays Like Unemployment in the Progression of the Gear Strategy

Innovation Management: the Key Strategy of Success

1018 words - 5 pages under capitalism. (Karl, 1848&1857&1863) In the long run, it would result into a high rise of service and products quality, a progress in the humanity society. However, if focusing on the individual unit, creative destruction is a challenge. Those who do not play well, like because of lacking skills or technology, will be eliminated out of the game. In the following sections, this paper is going to illustrate the importance of innovation strategy

The Sustainability Strategy of Microsoft Corporation

2528 words - 11 pages sustainability strategy. At the beginning, the history of and the strategic change will be shown briefly by the introduction. Then the theories, such as SWOT and Porter’s Five Forces, will be used to analysis whether the change of the strategy and evaluate is benefit for business. Finally, some relative and constructive strategy is going to afford for Microsoft Corporation in the next 3-5 years. The conclusion of this report is that as a long-term

The Appeal And Strategy Of BMW Advertising

1210 words - 5 pages have one thing in common. They all contain the messages that mainly aim to persuade people to consume their product. By various different methods, they slowly engage the consumers’ needs in certain ways. The most common strategy that ads/commercials are using may also include any of the fifteen basic appeals by Jib Fowles. In Fowles’s article “Advertising’s Fifteen Basic Appeals”, he discovered the 15Human emotional appeals that advertisers use

Critically Discuss The Practice And Theory Of Strategy Development Processes In Your Chosen Organisation

2627 words - 11 pages Task: Critically discuss the practice and theory of strategy development processes in your chosen organisation. In your discussion, include some implications for the "learning organisation" concept in relation to strategy development in your chosen organisation.This sub-task of the essay will address how strategy development processes and implications for the "learning organisation" concept in relation to strategy development are applied in

The Un Garnd Strategy

2956 words - 12 pages Fasulo, Chap 4, the American Ambassador 1) Why does the American Ambassador to the UN get a chapter to itself in this book? The American Ambassador gets a chapter to itself in this book because the U.S. representative has the highest visibility job at the United Nations. This representative need to resolve many issues like Peace & Security, Stabilizing fragile peace settlements, and prevent regional conflicts from spinning out of

Nestlé's Strategy in the Chinese Ice Cream Market

1947 words - 8 pages potential for Nestlé. In this report, I will explain Nestlé's international strategy in the Chinese ice cream market, and the different moves and tactics it used to compete with local brands in the first times. I will then discuss the effectiveness of the strategy and I will conclude with Nestlé's new international business strategy in China. Nestlé's strategy in the Chinese ice cream market : an unusual entry-mode Founded in 1905 by the

The Affect Of Project Management On Strategy And Governance

3508 words - 15 pages Projects are critical to the success of any organization as they involve the activities that result in new or changed products, services, environments, processes and organizations. Organizations have increasingly embraced project management as a key strategy for staying ahead in today’s highly competitive business environment. Successful implementation of project management creates an organization that can readily meet the demands of each

Marketing Strategy for the Metabical

1473 words - 6 pages Position The success of Metabical product launch is critical to both CSP company and to the marketing director Printup. In order to achieve the long-term steady market goal, CSP need to identify their optimal target customer, appropriately position the Metabical product, and implement an efficient communication strategy. CSP should treat overweight women with BMI less than 30 at the age between 25 and 65 as their optimal target customer for

Is This the Right Strategy

3512 words - 15 pages Business Strategy Emirates Airlines In a League of its Own By Prof Dr M. S. S. El Namaki T With the global economy Is this the Right Strategy? booming, globetrotting is no longer a perk in the corporate world. With the advent of internet and rapid innovations in the field of communications and travel, the world has truly shrunk in size. Plastic money is passé. Time is the new global currency. he airline industry, which

The Elias Group Strategy Paper

1992 words - 8 pages thirty-one full time staff and a network of over 100 specialized consultants that provide business owners with several of services such as: Preparing a firm to qualify for the GSA schedules, assisting in the appropriate response to a government request for either goods or services, assisting in providing an analysis of business operations and operating policies to assure appropriate regulatory compliance, assisting lobbying efforts for industry

The Influence of Market Strategy on Performance: Which Strategy Type Leads to Superior Performance Under Which Circumstances?

3251 words - 14 pages Abstract In theoretical and empirical literature as well as in practice both market pioneering and later entrant strategy are outlined to lead to superior product performance. This literature review analyzes which strategy leads to superior product performance under which circumstances. Therefore, a conceptual framework is developed which illustrates the complex relationships of the integrated parameters. A detailed literature review is

Related Papers

The Causes Of Unemployment Essay

2779 words - 12 pages The Causes of Unemployment According to the Keynesian economic theory, unemployment results from insufficient effective demand for goods and services in an economy. Some believe that structural problems and inefficiencies in the labor market cause unemployment. Others believe that regulations like minimum wage laws imposed on the labor market lead to unemployment. Some thinkers believe that unemployment is a result of the law of demand and

The Causes And Effects Of Unemployment In Ghana

1905 words - 8 pages EGYPT During the various reins of the Egyptian Pharaohs tax collectors were known as scribes. During one period the scribes imposed a tax on cooking oil. To insure that citizens were not avoiding the cooking oil tax scribes would audit households to insure that appropriate amounts of cooking oil were consumed and that citizens were not using leavings generated by other cooking processes as a substitute for the taxed oil. GREECE1 In

The Strategy Of Growth In Economics

1391 words - 6 pages Using Teams In production and Operation Management Five Skills a Forensic Accountant Need to Possess Determine the most important Five Skills that a Forensic Accountant Needs to Possess. The down slope in the economy has driven a new demand of accountants in the job market. The economy is at all-time low so the government is scrutinizing and penalizing businesses for inappropriate accounting scandals. Recent incidents of fraud have been

A Critical Review Of Progression In Mathematics

3416 words - 14 pages A critical review of mid-term planning with a focus on progression of learning in Mathematics Student No. 20041373 Mathematics as a subject and recent developments DFE (2013) states that Mathematics is a highly interconnected subject and it’s learning is built on in a hierarchical way, this is where the development of new mathematical concepts and skills is built upon previously acquired knowledge and students should be able to make the