The Economic Impact of
HIV/AIDS on Business in
South Africa
2003
Funded by
South African Business Coalition on HIV & AIDS
(SABCOHA)
Researched and compiled by the
Bureau for Economic Research (BER)
FFO
ORREEW
WO
ORRD
D
It is encouraging that South African business continues to demonstrate steadfast
commitment to fighting HIV/AIDS twenty-three years after the discovery of the disease. During
the past two decades global efforts have been focussed more on understanding the complex
social, economic and political issues surrounding this disease and less on making a business
case for HIV/AIDS programmes in the workplace.
In recent years, however, business seems to have a better understanding of its role
and responsibility to prevent HIV infections and mitigate the impact of HIV and AIDS. Taking
the lead in the fight against AIDS are large corporations that have demonstrated their
acceptance of the role that business should play through innovative workplace HIV/AIDS
programmes. Big business certainly leads other smaller sectors in managing AIDS as an
integral part of business, as is demonstrated in this study carried out by the Bureau for
Economic Research. There is room for improvement, but their leadership is commendable.
Most small and to some extent medium size businesses have not sufficiently shown
this understanding in terms of demonstrable leadership and action. There are various reasons
for this: firstly, as the report shows, there still lacks research that would help companies better
understand the specific issues that are faced by their respective industries and sectors;
secondly, while awareness about the disease is high, business-specific information and
knowledge that is necessary to motivate leadership into action is still lacking; thirdly, the
business sector alone cannot eradicate HIV and AIDS, therefore meaningful and results-based
partnerships and cooperation among the various business sectors and between the public and
the private sector need to be better managed. Underneath this seeming complacency lie
various inhibiting factors for smaller and medium size companies, such as lack of human and
financial resources, leadership and competition. In summary, small and medium size business
need to mobilise resources and support in order to respond effectively.
All is not lost by any means. Despite the generally slow and cautious pace of business
to implement comprehensive strategies to mitigate the impact of HIV/AIDS in the workplace,
this survey shows that a number of companies are already doing something, or are at least
aware of the need respond to the epidemic. While it is important that companies respond
efficiently to the challenges, it is equally important that the response is supported by clear
vision and strategy. This means that each company must respond to the particular challenges
faced by its industry, supply chain and community where it operates. It therefore makes good
business sense that leadership be involved and visible in developing and implementing AIDS
strategies in the workplace.
It is encouraging that some companies extend their programmes to their
communities. Although this aspect is not covered in this report, it is an important step in a
holistic response. But very few companies can justify doing anything beyond a charitable
purpose. This effectively means that smaller companies that are still struggling with their own
internal response are unable to support the communities on which they rely for survival. Yet it
is clear that for business to have a meaningful impact on the AIDS pandemic, internal and
external HIV/AIDS strategies need to be harmonised, that is, business must understand and
manage business specific and market driven threats and opportunities. The time is now ripe for
every business in South Africa to have a strategy for responding to the potential impact of
AIDS. In our quest to encourage business action, we must therefore ensure that we leave no
business behind.
South African Business Coalition on HIV & AIDS (SABCOHA)
January 2004
BLE O
FC
NTENTS
TTAABLE
OF
CO
ONTENTS
EXECUTIVE SUMMARY ........................................................................................... i
CHAPTER 1: RATIONALE FOR THE SURVEY ................................................................1
Introduction .............................................................................................................. 1
Key Characteristics of HIV/AIDS.................................................................................. 3
The Current Status and Future Course of the Epidemic in South Africa ........................... 4
The Economic Impact of HIV/AIDS............................................................................ 11
CHAPTER 2: SURVEY METHODOLOGY ...................................................................15
Introduction ............................................................................................................ 15
Survey Methodology ................................................................................................ 15
CHAPTER 3: SURVEY RESULTS .............................................................................18
Introduction ............................................................................................................ 18
Labour Force Details ............................................................................................... 19
How Has Business Responded to the Epidemic? ......................................................... 22
The Economic Impact of HIV/AIDS on Business in South Africa .................................... 34
CHAPTER 4: CONCLUDING REMARKS ...................................................................55
APPENDIX 1: SURVEY QUESTIONNAIRE .................................................................58
ECUTIVE SSU
MMARY
EEXXECUTIVE
UMMARY
•
The SABCOHA survey on the impact of HIV/AIDS on business in South Africa was
conducted by the Bureau for Economic Research (BER) among its respondents in the
manufacturing, retail, wholesale, motor trade and building and construction sectors. A
questionnaire was designed to serve a postal survey approach. The survey took place
during October and November 2003 and 1006 companies participated in the survey.
•
The survey results indicate that many businesses are already facing the consequences of
the epidemic. All in all, 9% of the companies surveyed indicated that HIV/AIDS has already
had a significant adverse impact on their business. More than 40% envisage a significant
negative impact on their business in five year’s time.
BUSINESS’ RESPONSE TO THE EPIDEMIC
•
The survey showed that only a quarter of companies have an HIV/AIDS policy in place.
The problem seems to lie with the smaller companies (with less than 100 employees),
where only 13% have implemented a policy. More than 90% of large companies (with
more than 500 employees) have implemented an HIV/AIDS policy.
•
Overall, 41% of respondents indicated that they have implemented an HIV/AIDS
awareness programme, 18% a voluntary counselling and testing programme, 13% a care,
support and treatment programme, while only 6% provide anti-retroviral therapy at the
workplace. Again, a breakdown per company size showed that the vast majority of smaller
companies still lack a strategic response to HIV/AIDS.
•
Bearing in mind that only a small proportion of the companies surveyed have implemented
any sort of workplace programme, only 32% indicated that these programmes had
increased their labour costs. The majority of these companies indicated that the cost
implications of these programmes had been small.
•
Of all the companies surveyed, only 14% reported having conducted research to assess
the impact of HIV/AIDS on their labour force, 8% on their production costs and only 6%
on their consumer base. Most of this risk assessment applied to the larger companies.
i
THE ECONOMIC IMPACT OF HIV/AIDS
Production Costs
•
More than a third of the companies surveyed indicated that HIV/AIDS has reduced labour
productivity or increased absenteeism and raised the cost of employee benefits. Some 30%
reported higher labour turnover rates; 27% indicated that they have lost experience and
skills, while 24% incurred recruitment and training costs due to the epidemic.
•
There are clear differences between the responses of large, medium and small companies.
More than 75% of large companies indicated that HIV/AIDS has led to lower labour
productivity or increased absenteeism, higher employee benefit costs and higher labour
turnover rates. Less than a third of small companies have noted any of these impacts.
•
When respondents were asked to rank the HIV/AIDS related costs according to the impact
that they have on company costs, they indicated that lower labour productivity and
increased absenteeism (1st), followed by higher employee benefit costs (2nd) and lost
experience and skills (3rd), are the factors that have the largest impact on company costs.
Labour Demand and Fixed Investment
•
Almost 40% of respondents indicated that the epidemic increases their demand for labour
(e.g. via work shadowing or replacement of AIDS sick workers). Only 12% indicated that
the epidemic is negatively affecting their employment decisions, while 48% feel that
HIV/AIDS has no impact on labour demand.
•
Overall, 18% of the companies surveyed indicated that they foresee appointing extra
employees (also known as work shadowing) to compensate for the impact of HIV/AIDS on
labour productivity, absenteeism and mortality.
•
Less than 15% of all companies surveyed reported that they were investing in machinery or
equipment to reduce their dependence on labour.
•
Only 6% of the respondents indicated that HIV/AIDS has had an adverse impact on their
decision to invest in South Africa.
Sales
•
It appears as if HIV/AIDS has had a smaller or less noticeable impact on the demand side
than on the production side of business in South Africa. Less than 10% of all companies
surveyed have noticed that HIV/AIDS has had a negative impact on their sales. However,
30% indicated that they expect HIV/AIDS to have an adverse impact on sales five years
from now.
ii
Prices and Profitability
•
Only 8% of all the companies surveyed expect to be able to pass some of the HIV/AIDS
related costs on to their customers by increasing their selling prices. If companies are not
able to recover costs by increasing selling prices, profit margins will come under pressure.
•
Approximately a third of the companies surveyed reported that profitability has been
adversely affected by HIV/AIDS, while only 7% indicated that profits were higher (e.g.
pharmaceutical companies and funeral parlours). More than half of the companies
surveyed expect that HIV/AIDS will adversely affect their profits in five year’s time.
Provincial Perspective
•
The survey indicated that companies located in KwaZulu-Natal and Gauteng are worst
affected. More than 40% of companies operating in KwaZulu-Natal and Gauteng
indicated that HIV/AIDS has led to lower labour productivity or increased absenteeism.
Companies based in the Western Cape have experienced a much smaller impact, with less
than 20% of these companies noting an AIDS induced adverse impact on the production
side of their business. These results are consistent with estimates of HIV prevalence among
pregnant women visiting antenatal clinics, which suggests that HIV prevalence is highest in
KwaZulu-Natal, followed by Gauteng, and lowest in the Western Cape.
•
Close to 40% of all companies operating in KwaZulu-Natal and Gauteng indicated that
HIV/AIDS has already had a negative impact on their profits. The corresponding figures for
the Western Cape and Eastern Cape is 25% and 27% respectively.
Sectoral Perspective
•
It appears as though HIV/AIDS has had the largest impact on the manufacturing sector (of
the sectors surveyed). More than half of the manufacturers surveyed indicated that
HIV/AIDS has led to lower labour productivity or increased absenteeism and some 40% of
manufacturers reported that HIV/AIDS has already reduced profits. Retailers appear to be
the least affected, with less than 20% of respondents in the retail trade indicating that
HIV/AIDS has had an impact on production costs. Approximately 25% of retailers reported
that HIV/AIDS has had a negative impact on their profits. The impact of HIV/AIDS on the
building and construction, motor trade and wholesale sectors rated somewhere between
that of the high-risk manufacturing and lower-risk retail sectors.
•
It is disappointing to note that only 9% of retailers and 15% of building and construction
companies surveyed have implemented an HIV/AIDS policy. Some 42% of manufacturers
have implemented an HIV/AIDS policy, followed by the motor industry at 31%.
iii
APTER 1
TIONALE FFOR
OR TTHE
HE SSU
RVEY
C
CHHAPTER
1:: RRAATIONALE
URVEY
INTRODUCTION
According to UNAIDS1, more than 60 million people have been infected with HIV
since the epidemic began two decades ago. By far the worst affected region, sub-Saharan
Africa is now home to 26.6 million people living with HIV/AIDS.2 In four of South Africa’s
neighbouring countries - Botswana, Lesotho, Swaziland and Zimbabwe – rampant epidemics
are underway, with HIV prevalence among adults exceeding 25%. The South African epidemic
is not far behind, with one in five adults estimated to be living with HIV/AIDS. Given our high
HIV infection rate and the size of our population, South Africa has the largest number of
people (±5.3 million) living with HIV/AIDS in the world.
HIV/AIDS is a risk of doing business in South Africa. It is right up there with the other
major identified risks such as asset security, exchange rate volatility, crime, political and
infrastructural risk. It is true that all of these risk factors exist across the globe, however,
nowhere else do they seem to combine with such severe implications to deter investment and
raise the cost of doing business as in Southern Africa and South Africa in particular. In fact, in
a recent report by Russell 20-20, a US-based association comprised of investment managers
and pension funds, the HIV/AIDS crisis was identified as one the critical priorities for the South
African government and business leaders. As in the case of all of the risks identified above,
HIV/AIDS must be proactively managed. In order to effectively assess and manage any risk, it
is essential to have adequate information regarding both the nature and the extent of the risk.3
This study strives to give a snapshot view of how and to what extent HIV/AIDS has
affected the manufacturing, trade and building & construction sectors in South Africa, as well
as to assess business' awareness and response to the epidemic This document expands on
previous research conducted in this area. Whereas the focus of most of the previous HIV/AIDS
workplace surveys has primarily been on “evaluating workplace responses” (e.g. prevention,
treatment and response programmes, HIV/AIDS risk assessment), the SABCOHA survey on the
impact of HIV/AIDS on business in South Africa also considers the impact of HIV/AIDS on
productivity, production costs, sales, profits and the investment and employment decisions of
firms. Furthermore, with the number of firms participating in previous surveys often being low,
1
UNAIDS Fact Sheet, July 2002: “The Impact of HIV/AIDS.” Available at http://www.unaids.org
2
UNAIDS, December 2003: “AIDS epidemic update.” Available at http://www.unaids.org
3
SABCOHA, August 2003: “HIV/AIDS and Private Sector Employers in Southern Africa.”
1
results could not be disaggregated to show the impact of HIV/AIDS on different sectors or
provinces. With 1006 companies across the country participating in this study, the SABCOHA
survey attempts to fill this gap. However, there is a need to expand this survey to include more
sectors, particularly high-risk sectors such as mining, government services and the transport
sector. Despite being lower risk, it will also be instructive to survey the financial and business
services sector, a sector that accounts for approximately 20% of our gross domestic product
(GDP).
By providing evidence of the impact that HIV/AIDS has on the economic bottom line,
this report reiterates the case for further action against HIV/AIDS in the workplace and beyond.
The private sector is in a unique position to respond to the epidemic, as it has contacts with
employees and the wider business community, as well as a wealth of experience and skills at
its disposal. The fact is that no business is immune from HIV/AIDS. “Business cannot afford to
ignore the reality of a disease that has the potential to destroy the very foundations on which it
is built, namely human capital.”4 The challenge is to find cost effective interventions that
mitigate the epidemic’s spread and impact. Effective programmes often include preventative
measures, such as workplace awareness programmes and condom distribution, and care and
support to infected employees. Some of the actions that business can take are discussed in
chapter 3 of this report.
In what follows, the key characteristics of HIV/AIDS are described briefly. A
particularly important characteristic of the epidemic is the fact that it is found mainly among
adults between the ages of 20 and 40, some of the most productive years of a person’s life.
This simple feature of HIV/AIDS already suggests that the epidemic will have an adverse
impact on economic growth.
Having considered some of the more important characteristics of the epidemic, the
current status of the epidemic in South Africa and projections of its future course are presented
and discussed. Unfortunately, reliable statistics on the actual number of AIDS cases or AIDS
deaths in South Africa are not available. The main source of information concerning the HIV
epidemic in South Africa is the Annual Survey of Women Attending Antenatal Clinics
conducted by the Department of Health. This chapter contains a brief discussion of the results
from the latest antenatal clinic survey, as well as projections produced by the ASSA 2000
model - the HIV/AIDS model developed by Professor Rob Dorrington and the Actuarial Society
4
UNAIDS 2000. “The Business Response to HIV/AIDS: Impact and Lessons Learned.” p.40. Available at
http://www.unaids.org
2
of South Africa (ASSA). Estimates of HIV prevalence per Living Standards Measure (LSM) group
by the Bureau of Market Research (BMR) are also presented.
The final section of this chapter considers the economic impact of HIV/AIDS and how
different levels of a society are affected. HIV infected individuals and households will be the
first to experience the economic impacts of AIDS, whereafter the effects will ripple outwards to
business and eventually the macro-economy.
KEY CHARACTERISTICS OF HIV/AIDS
The AIDS (Acquired Immune Deficiency Syndrome) epidemic is a fairly new epidemic,
with the first AIDS deaths only registered during the mid-1980s. AIDS is caused by a virus that
attacks the human body’s CD4+ lymphocytes - a key part of the body’s immune system. This
virus is commonly known as HIV, an acronym for the Human Immunodeficiency Virus. In order
to attack a person’s immune system, the virus has to enter the bloodstream. Transmission can
occur through sexual intercourse, from an infected mother to her infant (through the placenta,
during birth or via breast milk), through the use of contaminated blood or blood products or
by sharing intravenous drug-injecting equipment. Given the modes of transmission, it is not
surprising that HIV/AIDS is concentrated among infants and adults between the ages 20 and
40. People with other sexually transmitted diseases are significantly more susceptible to
HIV/AIDS infection via sexual intercourse than those without sexually transmitted diseases.
Furthermore, females appear to be at higher risk of becoming infected via heterosexual
intercourse than males.
People who are infected with HIV may lead relatively healthy and productive lives for
many years after they are infected with the virus, as the virus has a long incubation period.
During this period, the virus gradually weakens the immune system and the body becomes
increasingly unable to fight off infections. Symptoms of HIV infection include chronic fatigue,
diarrhoea, fevers, weight loss, skin infections and swollen lymph glands. The time from
infection to development of AIDS generally varies between 3 and 12 years. The second phase
(AIDS) sets in when the body is no longer able to resist more severe opportunistic infections or
diseases such as tuberculosis, bacterial pneumonias, meningitis, herpes and certain types of
cancers and diarrhoeal diseases. AIDS victims usually die within 1-2 years after the onset of a
severe infection or cancer. Although life can be prolonged with anti-retroviral treatments, there
is as yet no cure for HIV/AIDS.
3
In all, AIDS is a fatal disease caused by the Human Immunodeficiency Virus, a virus
that is mainly acquired through heterosexual intercourse. HIV/AIDS primarily affects adults in
their economically most productive years and does not spare the elite. HIV/AIDS is already
widespread, particularly in the developing world. These characteristics suggest that HIV/AIDS
could be the most devastating disease man has ever faced, not only in terms of its
demographic consequences, but also in terms of the economic implications of the epidemic
for countries with severe epidemics.
THE CURRENT STATUS AND FUTURE COURSE OF THE EPIDEMIC IN SOUTH AFRICA
According to the Joint United Nations Programme on HIV/AIDS (UNAIDS), South
Africa’s HIV prevalence rate appears to be somewhat lower compared to some of our
neighbouring countries like Botswana, Swaziland, Zimbabwe and Lesotho. However, it should
be noted that the HIV/AIDS epidemic started later in South Africa. Recent projections of the
HIV/AIDS epidemic in South Africa have indicated that South Africa may well experience an
epidemic similar in scope, if not more severe than that of its highly infected neighbouring
countries in the near future. A combination of historical, socio-economic and developmental
factors have made and will continue to make South Africa more susceptible to a severe HIV
epidemic than most other countries around the world. These factors include disrupted family
and communal life - due in part to apartheid, migrant labour patterns and high levels of
poverty; the low status of women in society and the high prevalence of violence against
women; resistance to the use of condoms; social norms that do not frown on high numbers of
sexual partners, especially in the case of men; high levels of other sexually transmitted
diseases, which increase the likelihood of the transmission of HIV; and the most developed
transport infrastructure of any African country, which facilitates the easier spread of the virus
into new communities.
Given that South Africa’s epidemic is still at a fairly early stage of development and
that the median incubation period appears to be around 8.5 years, the brunt of the impact of
the epidemic in terms of AIDS illnesses and deaths is yet to be felt. Although reports from
hospitals confirm that the number of HIV/AIDS related illnesses and deaths are rising rapidly,
there is no reliable data available on the actual number of AIDS cases or AIDS deaths in South
Africa.5 One reason for this is that AIDS cases are not notifiable (people are not legally bound
5
Official reports from Statistics SA confirm that there has been a steady increase in young, adult mortality over the
last decade. However, the most recent official cause of death statistics available are those for 1996 (as reported
by Statistics SA). (Their reports on recorded deaths are generally only published 4-5 years after the year
4
to report an AIDS case). However, even if the disease was legally notifiable, under-reporting
could still take place, as many victims are never diagnosed with HIV/AIDS before they die.
Furthermore, due to fear of social rejection, those who are correctly diagnosed may decide not
to reveal their status.
Antenatal Survey Data
Currently, the annual survey of women attending antenatal clinics by the Department
of Health provides the most representative and reliable set of data concerning the HIV
epidemic in South Africa. The anonymous testing of a sample of women at selected public
sector antenatal clinics during October each year provides information on HIV prevalence
rates among women attending these clinics (i.e. sexually active pregnant women). As the vast
majority of the women attending public sector antenatal clinics are black, the survey results
provide good coverage of pregnant black women. Unfortunately, the white, coloured and
Asian population groups, as well as the wealthier part of the black population group, are
under-represented in this survey, as they generally tend to attend private sector clinics.
Figure 1
HIV prevalence among antenatal clinic attendees in South Africa
(Department of Health)
30%
26.5%
24.5% 24.8%
25%
22.8% 22.4%
20%
17.0%
14.2%
15%
10.4%
10%
7.6%
4.0%
5%
0.7%
1.7% 2.2%
0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
covered.) By 1996, the number of AIDS deaths was too low to rely on to make accurate predictions of the future
course of the epidemic.
5
The latest antenatal clinic survey (Department of Health 2002) revealed that 26.5%
of women attending public sector antenatal clinics were infected with HIV by late 2002 (see
figure 1). HIV infection rates for men are not measured in the antenatal clinic survey, but are
generally projected to be somewhat lower compared to that of women.
The survey results suggest that the epidemic is most advanced in KwaZulu-Natal, with
HIV prevalence of women visiting antenatal clinics estimated at 36.5% (see figure 2). Other
provinces with very high infection rates are Gauteng, the Free State, Mpumalanga and the
North West, where more than 1 in 4 women visiting public sector antenatal clinics tested HIV
positive. The Western Cape’s epidemic is still at a relatively early stage of development, with
only 12.4% of women visiting antenatal clinics in this province testing positive for HIV.
However, HIV prevalence in the Western Cape is currently increasing at a faster rate than in
the other provinces (see table 1).
Figure 2
Provincial HIV prevalence according to antenatal clinic data 2002 (Department of Health)
0%
5%
10%
15%
20%
25%
30%
35%
36.5%
KwaZulu-Natal
31.6%
Gauteng
Free State
28.8%
Mpumalanga
28.6%
26.2%
North West
23.6%
Eastern Cape
Limpopo
Northern Cape
Western Cape
40%
15.6%
15.1%
12.4%
26.5%
South Africa
6
Table 1 shows that HIV prevalence increased in 6 of the 9 provinces in South Africa
during 2002. Extrapolations from the antenatal clinic data indicate that 5.3 million South
Africans were infected with HIV by the end of 2002, compared to 4.74 million in 2001
(Department of Health, 2003). The latest survey results seem to indicate that the epidemic has
not yet reached a plateau.
Table 1
HIV prevalence among antenatal clinic attendees by province (Department of Health)
1997
1998
1999
2000
2001
2002
KwaZulu-Natal
26.9
32.5
32.5
36.2
33.5
36.5
Gauteng
17.1
22.5
23.9
29.4
29.8
31.6
Free State
19.6
22.8
27.9
27.9
30.1
28.8
Mpumalanga
22.6
30.0
27.3
29.7
29.2
28.6
North West
18.1
21.3
23.0
22.9
25.2
26.2
Eastern Cape
12.6
15.9
18.0
20.2
21.7
23.6
Limpopo
8.2
11.5
11.4
13.2
14.5
15.6
Northern Cape
8.6
9.9
10.1
11.2
15.9
15.1
Western Cape
6.3
5.2
7.1
8.7
8.6
12.4
RSA
17.0
22.8
22.4
24.5
24.8
26.5
ASSA Model Projections
Due to a lack of comprehensive data on HIV prevalence in the general South African
population, demographers extrapolate from this antenatal clinic survey data to the total
population by making assumptions about HIV infection rates in the sub-groups of the
population not covered by the survey (e.g. men). In extrapolating from the antenatal clinic
survey data to the general population, researchers need to take note of the fact that the HIV
prevalence among pregnant women attending public sector antenatal clinics will likely be
higher than HIV prevalence among the general population. Certain sub-groups of the
population that are not covered by the survey may have lower levels of HIV infection. These
include men (mainly due to biological factors), people who are not sexually active and more
affluent people that attend private sector clinics. On the other hand, there are smaller subgroups of the total population that may have higher infection rates, such as sex-workers and
migrant workers. The estimates from the antenatal clinic survey are used in combination with
assumptions with regard to HIV infection rates in the sub-groups of the population not covered
7
by the survey to develop demographic models to project the future course of the epidemic. In
what follows, demographic projections from the well-recognised ASSA 2000 model are
presented. The ASSA 2000 model was developed by Professor Rob Dorrington and the
Actuarial Society of South Africa (ASSA).
Figure 3 shows the estimated age distribution of the HIV epidemic among males and
females in 2003. HIV infection rates are highest among women between the ages of 20 and
39 (i.e. their most fertile years). It is estimated that peak prevalence rates for men occur at
older ages - between the ages of 25 and 44 (i.e. possibly their most productive years). The
majority of people who die from AIDS will be in the 30 to 45 year age group.
Figure 3
HIV prevalence per age group in 2003 (ASSA 2000)
40%
35%
30%
25%
20%
15%
10%
5%
0%
0-14
15-19
20-24
25-29
30-34
Females
35-39
40-44
45-49
50-59
60+
Males
The HIV/AIDS epidemic will have a disproportionate impact on the working age
population, with approximately 25% of adults aged 20 to 64 already infected with HIV (see
figure 4). ASSA 2000 model projections suggest that, in the absence of any interventions, HIV
prevalence among adults (20 to 64) could reach 28% in 2006.6 AIDS deaths among the
working age population are expected to quadruple over the next decade. Although no reliable
6
The ASSA model is currently being updated in order to produce projections of the course of the epidemic if
interventions such as voluntary counselling and testing are implemented and antiretroviral treatment is provided
to HIV/AIDS victims.
8
estimates of HIV infection per skills category are available, it is believed HIV prevalence is
highest among semi- and unskilled workers and lowest among highly skilled workers.
Figure 4
HIV prevalence among adults - ages 20 to 64 (ASSA 2000)
30%
25%
20%
15%
10%
5%
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
0%
Figure 5 shows the Bureau of Market Research’s estimates of HIV prevalence among
adults (15 years and older) per LSM (Living Standards Measure) group in 2001. The LSM
grouping system was developed by the South African Advertising Research Foundation (SAARF)
and is widely used as a market segmentation tool in South Africa. The SAARF LSM groups are
determined on a basis of 29 variables that include variables related to living standards, such
as whether people have access to hot running water, electricity, a fridge, a microwave oven, a
flush toilet, a personal computer and a motor vehicle. Whereas the rural poorest of the poor
are typically found in LSM 1, the urban richest of the rich are found in LSM 10.
9
Figure 5
HIV prevalence among adults per LSM group in 2001
(Bureau of Market Research)
0%
5%
10%
15%
20%
LSM 1
(R 748)
LSM 2
(R 895)
LSM 3
(R 1 113)
LSM 4
(R 1 595)
18.1%
LSM 5
(R 2 289)
18.0%
LSM 6
(R 3 731)
LSM 7
(R 5 495)
LSM 8
(R 7 407)
LSM 9
(R 9 743)
LSM 10 (R 13 406)
16.8%
17.9%
18.3%
17.2%
14.6%
11.9%
6.5%
3.8%
Various companies have developed LSM profiles with respect to their products and
services. “By determining the impact of HIV/AIDS on different LSM groups, companies can
arrive at a better understanding of the current and future impact of HIV/AIDS on sales of their
products and services, and thus on their long-term profitability and viability in the light of the
HIV/AIDS epidemic.”7 It is clear from figure 5 that HIV prevalence is highest among LSMs 1 to
6, where more than 15 % of people aged 15 years and older are estimated to have been HIV
positive in 2001. AIDS mortality is expected to rise significantly and peak between 2006 and
2010, when a large percentage of people who are currently HIV positive will have progressed
to full-blown AIDS and the terminal phase of the disease. It is expected that HIV/AIDS will have
a severe impact on sales of goods of which members of LSM groups 1 to 6 are strong
consumers, including basic foodstuffs such as bread, flour, yoghurt, milk, rice, instant coffee,
tea and fresh fruit and vegetables. In contrast, HIV prevalence among LSM 10 members is
estimated to be low. However, the strong buying power of LSM 10 members implies that even
a relatively limited number of AIDS deaths could impact on sales of goods directed at this
group, such as durable and luxury goods.
7
BMR 2003. “The Demographic Impact of HIV/AIDS on Provinces and Living Standards Measure (LSM) Groups in
South Africa, 1996 to 2011.” Research Report No. 310. p.8.
10
THE ECONOMIC IMPACT OF HIV/AIDS
South Africa faces one of the world's most severe HIV/AIDS epidemics. Whereas the
disease was initially only regarded as a serious health crisis, it is now clear that the epidemic
also holds economic consequences for our country. HIV infected individuals and households
will be the first to experience the economic impacts of AIDS, where after the effects will ripple
outwards to businesses and eventually the macro-economy.
The economic impact of AIDS on households primarily stems from its impact on
household income and expenditure. The loss of a breadwinner could permanently reduce the
income of a household, particularly in the case of lower income households, who are often
inadequately insured. The financial impact may well be exacerbated if another member of the
family has to stop working to care for the sick. Moreover, HIV/AIDS typically strikes more than
one member of the household. Many households may become entirely dependent on an old
age pension or other social support grants. AIDS may well worsen poverty and exacerbate the
skew income and wealth distribution in certain African countries, as poor households appear
to be more vulnerable to the epidemic and have fewer resources available to cope with the
disease
The AIDS epidemic will affect household spending patterns, as HIV/AIDS infected
households will be burdened by higher health care costs, transport costs to and from health
services and funeral expenses. Households may have to divert funds away from savings or
other expenditure categories, such as children's education or non-essential spending. Some
households may even find it necessary to liquidate fixed assets in order to be able to acquire
medical care for the sick or to cover burial costs. Furthermore, AIDS deaths will reduce the
absolute number of consumers in an economy, which could have a negative effect on total
consumption expenditure. Similarly, private residential investment will be constrained by the
slower growth in the population as a result of the epidemic.
AIDS related illnesses and deaths of managers, employees and their family members
could have a significant impact on business. It is expected that companies will need to
increase their contributions to pension, life, disability and medical benefits on account of the
AIDS epidemic. In addition to these direct cost increases, indirect costs to companies may also
rise. These costs include recruitment and training costs, cost of increased labour turnover, lost
skills, worker absenteeism due to illness or compassionate leave for workers to attend funerals
and to care for sick family members, lower labour productivity due to physical disability, stress
11
and reduced morale caused by the illness or death of friends, fellow employees and relatives,
legal fees and time spent on negotiations between labour and management, as well as the
costs involved in ensuring occupational health and safety standards. The vulnerability of
different companies will vary, depending on factors such as the labour intensity of the
company; the risk profile or susceptibility of its workers; the skills of affected employees and
the ease of substitution between workers; the structure of employee benefit schemes; the
degree to which companies have implemented strategies to cope with HIV/AIDS in the
workplace, the impact of AIDS on suppliers of key production inputs, as well as on the
company's target market. HIV/AIDS induced cost increases will have an adverse impact on
corporate savings and profits, constraining fixed investment by the private sector.
The HIV/AIDS epidemic will put special pressures on the public sector. One of the
most visible consequences of the epidemic will be an increase in the number of people
seeking medical care – a substantial proportion of the HIV/AIDS victims will likely turn to state
hospitals for medical care. The financial strain on the public health sector could be severe, not
only as a result of the sheer number of people seeking health care, but also because health
care for AIDS patients is more expensive than for most other conditions. An important
challenge for the government will be that the increased financial burden stemming from higher
public health care and other social spending such as foster grants and institutional care for
orphans will probably coincide with reduced tax revenues. Increased direct and indirect costs
will reduce private sector profits, which are likely to have an adverse impact on economic
growth and wages, indicating an erosion of the tax base and lower government revenue. In all
likelihood, HIV/AIDS will lead to a shift in spending from “more to less productive avenues”
(e.g. from public sector fixed investment to health care services).
Given all the potential impact channels, it can safely be stated that HIV/AIDS will
more likely than not reduce GDP growth in countries with severe epidemics. However,
predicting the extent of the impact of the HIV/AIDS epidemic on macro-economic growth is by
no means an easy task. The brunt of the impact is likely to be felt years from now and
projections of the economic impact of HIV/AIDS are subject to limitations on, inter alia, the
ability to estimate the current scope of the epidemic, projecting the course of the epidemic into
the future and estimating the economic consequences of the demographic, productivity and
health care cost implications of the epidemic.
Most of the attempts that have been made to quantify the macro-economic impact of
HIV/AIDS occurred during the early 1990s and relied on fairly simple models, often only
12
projecting the impact of HIV/AIDS on overall economic growth and per capita income.
Estimates of the impact of HIV/AIDS on countries with advanced epidemics ranged anywhere
from a reduction of 0.1 to 4.4 percentage points in the average GDP growth rate over the
next 10 to 20 years.
Over the past few years there has been renewed interest in the modelling of the
economic impact of HIV/AIDS, mostly due to increasing appreciation of the scope of the
epidemic in Sub-Saharan Africa and in South Africa in particular. The year 2000 saw the first
serious attempts at quantifying the economic impact of HIV/AIDS in South Africa, in the shape
of research papers by ING Barings8 and Arndt and Lewis9. Although ING Barings and Arndt
and Lewis relied on the same demographic inputs, the models that were employed differed, as
did their assumptions with regard to how the epidemic would affect the economy. The two
studies produced divergent projections of the impact of HIV/AIDS on economic growth whereas ING Barings predicted that GDP growth would be only 0.3 percentage points lower
on average during 2002-2010 compared to what would have been possible without AIDS,
Arndt and Lewis projected that GDP growth could be as much as 2.0 percentage points lower.
Arndt and Lewis concluded that per capita GDP levels would also be lower due to AIDS, while
the ING Barings study suggests that per capita income may rise.
In 2001, the Bureau for Economic Research (BER) employed its annual macroeconometric forecasting model to model the impact of HIV/AIDS on the South African
economy. Simulation results suggested that the rate of GDP growth could fall from a projected
average of 3.7% over the period 2002-2015 to 3.2% per year due to the HIV/AIDS epidemic
(a reduction of 0.47 percentage points). The BER projected that the South African economy
would be 5.7% smaller by the year 2015 than it would have been without HIV/AIDS. In
contrast, the level of per capita GDP is projected to be about 14.8% higher (in real terms) by
2015, as the adverse impact of the epidemic on the size of the population will outweigh the
negative impact on real GDP. These projections are notably less devastating compared to that
of Arndt and Lewis, but slightly more pessimistic compared to that of the ING Barings study.
The divergence in the above-mentioned estimates of the impact of HIV/AIDS on
economic growth in South Africa reveals the extent of the uncertainty about the magnitude of
the macro-economic impact of the epidemic. By providing much needed insight into the
8
QUATTEK, K., April 2000. “Economic Impact of AIDS in South Africa: A Dark Cloud on the Horizon.” A study by
Wefa SA commissioned by ING Barings.
9
ARNDT, C. and LEWIS, J.D., August 2000. “The Macro Implications of HIV/AIDS in South Africa: A Preliminary
Assessment.” Special submission to the South African Journal of Economics.
13
economic impact of HIV/AIDS on business and how business is responding to the epidemic,
the results from the SABCOHA survey will serve as valuable inputs in future macro-economic
modelling exercises.
14
APTER 2
RVEY M
THODOLOGY
C
CHHAPTER
2:: SSUURVEY
MEETHODOLOGY
INTRODUCTION
This section provides an overview of the methodology that was used to conduct the
SABCOHA survey on the impact of HIV/AIDS on business in South Africa. A questionnaire was
developed as a survey tool and the questions were evaluated in a pilot study. The
questionnaire incorporated questions about the economic impact on HIV/AIDS on business in
South Africa and the private sector’s response to the epidemic. The survey was conducted
between 10 October and 20 November 2003. The questionnaire was sent by mail to a panel
of 3003 regular participants in the BER’s quarterly business surveys. The panel of participants
is broadly representative of the formal manufacturing, trade (retail, wholesale and motor trade)
and building and construction sectors. Some 1006 completed questionnaires were returned to
the BER, signifying a response rate of 33%.
SURVEY METHODOLOGY
The Questionnaire
A questionnaire was developed to survey the economic impact of HIV/AIDS on
business in South Africa and to determine how business has responded to the epidemic. The
questionnaire was designed to serve a postal survey approach. In order to optimize
participation in the study, few figures were called for and questions were kept simple – most of
the questions required that the respondent simply “tick the appropriate box”. Furthermore,
individual responses are treated as strictly confidential. The questionnaire is presented in
Appendix 1.
A pilot study was conducted to evaluate the questionnaire. The questionnaire was
faxed to 20 companies and follow-up phone calls were made. Respondents were asked to
point out the questions that they found ambiguous or difficult to understand, to suggest ways
to simplify the questionnaire and to indicate whether important issues with regard to the impact
of HIV/AIDS on business have been omitted. Respondents were also given the opportunity to
suggest further questions and to give general comments on the survey. Telephonic interviews
with the respondents revealed an overwhelmingly positive response to the survey. Valuable
information was gained from the pilot study and some questions were adapted to prevent
ambiguity.
15
In order to ensure the integrity of the results, respondents were urged to complete the
questionnaire even if they thought that HIV/AIDS has had no impact on their business. In a
letter accompanying the questionnaire, it was requested that the CEO, owner or manager of
the organisation, or the executive that knows best about the impact of HIV/AIDS on the
business, complete the questionnaire. Given the position of these executives in their company
and the nature of the questions, respondents would have been able to complete the
questionnaire within a few minutes without consulting detailed financial or other records.
The questionnaires were sent by mail to a panel of 3003 regular participants in the
BER’s quarterly business surveys. This panel comprised 1089 manufacturers, 541 retailers,
317 wholesalers, 183 vehicle dealers and 873 respondents in the building and construction
sector. The questionnaires were mailed to respondents on the 10th of October 2003. By the
20th of November, 1006 completed questionnaires had been returned to the BER, signifying a
response rate of 33%.
The BER’s Business Surveys and the Panel of Participants
The BER has been conducting business surveys since 1954. The BER’s survey method
of the manufacturing, trade and building & construction sectors is modeled on those of the
Munich based IFO Institute and the European Commission. The business surveys are
qualitative in nature. The questionnaires contain a small number of business related questions
and respondents only have to indicate whether a particular activity is “up”, “down” or “the
same”. 10
In respect of the firms surveyed in the BER’s quarterly business surveys (and hence
also in the HIV/AIDS survey), the building and construction survey includes architects, quantity
surveyors, building contractors, sub-contractors and engineers. The trade survey covers
retailers, wholesalers and vehicle dealers, while the manufacturing survey differentiates
between sub-sectors in the manufacturing sector. (For the purpose of the HIV/AIDS survey,
aggregated results are presented for the manufacturing sector and the building and
construction sector. However, results for the trade sector are disaggregated into retail,
wholesale and motor trade.) Instead of surveying only the headquarters of national
companies, the BER’s surveys are conducted at ground level - questionnaires are sent to the
branches of a company in the different regions, allowing a provincial breakdown of the data.
10
For more information on the design an implementing of business surveys, see “Business Tendency Surveys – A
Handbook” by the OECD, 2003. OECD Publications, Paris, France.
16
The BER’s business surveys are conducted quarterly. Given that the same firms are
approached from one survey to the next, a panel is in effect established. Panel based surveys
are the norm internationally for conducting business surveys. In accordance with international
custom, deliberate sampling was used to design the BER’s manufacturing, trade and building
& construction panels. Participants were selected in such a manner that they represent
particular sectors, regions and firm sizes. The deliberate sampling method agrees with
convenience non-probability sampling. Conventional statistical measures, such as sampling
margins of error, cannot be calculated to measure the degree of representation of nonprobability samples. However, the BER’s panel of participants are broadly representative of the
formal manufacturing, trade and building and construction sectors, taking into account the
response rate and the results from a comparison between the composition of the survey panels
and census and other official data.11 (Informal street vendors, emerging builders and
unregistered businesses are not covered.)
11
Details about the composition of the panels and their representation appear in an article “An evaluation of the
BER’s trade and building survey panels” in the Journal for Studies in Economics and Econometrics (SEE) vol. 26
no. 1, April 2002, pp. 33 – 49 by GJ Kershoff.
17
APTER 3
RVEY R
SULTS
C
CHHAPTER
3:: SSUURVEY
REESULTS
INTRODUCTION
This section of the report presents the results of the SABCOHA survey on the impact
of HIV/AIDS on business in South Africa. The survey was conducted by the Bureau for
Economic Research (BER) during October and November 2003 among its respondents in the
manufacturing, retail, wholesale, motor trade and building and construction sectors. Some
1006 companies participated in the survey. Almost 70% of the questionnaires were completed
by the Chief Executive Officer, Managing Director or owner of their company (see figure 6).
Figure 6
Position of executive completing questionnaire
0%
10%
20%
30%
40%
50%
60%
70%
69%
CEO / MD / Owner
Financial Manager /
Accountant
Production / Sales
Manager
Human Resources
Manager
Other
80%
12%
2%
8%
9%
In what follows, the survey questions and employer responses are presented and
discussed (in order of appearance in the questionnaire). Questions and responses are divided
into three broad categories, namely “labour force details”, “how has business responded to
the epidemic” and “the economic impact of HIV/AIDS on business.” For most of the questions,
employer responses are disaggregated to show the results for each of the five sectors surveyed;
the four main provinces (Gauteng, KwaZulu-Natal, the Western Cape and the Eastern Cape);
and per company size. Company size was measured according to employee numbers:
•
Less than 100 employees
Æ
Small company
•
100 to 500 employees
Æ
Medium size company
•
More than 500 employees
Æ
Large company
18
LABOUR FORCE DETAILS
The first section of the questionnaire called for the contact details of the executive
completing the questionnaire and labour force details of the company surveyed. Respondents
were asked to state employee numbers; the percentage of male vs. female employees; the
percentage of employees in each skills category and the percentage of employees in each of
three specified age categories. Table 2 presents the labour force details per company size. Of
the 1006 participating companies, 51 were classified as large, 165 as medium size and 790
as small. The companies surveyed employed some 192 132 workers, of which approximately
68% were male. Only 16% of employees were classified as highly skilled, while 39% and 45%
were classified as skilled and semi-/unskilled respectively. On average, respondents indicated
that close to half of their employees were between the ages of 30 and 45 years. When looking
at these figures, one should keep in mind that females and semi-/unskilled workers are the
most vulnerable groups when it comes to HIV infection and that AIDS mortality is highest
among employees between the ages of 30 and 45 years.
Table 2
Labour Force Details
Large:
More than 500
employees
Medium:
100 to 500
employees
Small:
Less than 100
employees
Total:
All Sizes
Number of respondents
51
165
790
1,006
Total number of full time employees
137,144
34,006
20,982
192,132
Male
69%
72%
67%
68%
Female
31%
28%
33%
32%
Semi- / Unskilled
52%
50%
44%
45%
Skilled
35%
35%
40%
39%
Highly Skilled
13%
15%
16%
16%
Younger than 30 years
21%
23%
25%
24%
30 to 45 years old
51%
47%
49%
49%
Older than 45
28%
29%
26%
27%
Average % of employees:
Average % of employees:
Average % of employees:
19
Table 3 presents the labour force details per sector surveyed, while table 4 presents
labour force details per province. The survey participants consisted of 365 manufacturers, 212
retailers, 100 wholesalers, 52 vehicle dealers and 277 respondents in the building and
construction sector. Gauteng, KwaZulu-Natal and the Western Cape are the best-represented
provinces in the survey. Although provincial labour force profiles do not deviate significantly
from the overall profile, there are some interesting differences between the sectors surveyed.
The building and construction sector employs the largest percentage of males (79%), while
only 51% of employees in the retail sector are male. The manufacturing sector employs the
largest percentage of semi-/unskilled workers (52%). Only 8% of employees in the retail sector
were classified as highly skilled, while 26% of full time employees in the building and
construction sector were classified as highly skilled (e.g. engineers, architects and quantity
surveyors). However, compared to companies in other sectors, building and construction
companies probably employ more workers on a contract basis, particularly semi- and unskilled
workers. If a substantial number of semi- and unskilled employees in the building and
construction sector are indeed casually employed (part time), our survey results would present
an underestimate of the percentage of semi-/unskilled workers and an overestimate of the
percentage of skilled and highly skilled workers in the building and construction sector.
Table 3
Labour Force Details - Sectoral Breakdown
Manufacturing
Retail
Number of respondents
365
212
277
Total number of full time employees
92,970
28,227
Male
69%
Female
31%
Building &
Wholesale
Construction
Motor
Total - All
Sectors
100
52
1,006
62,044
5,795
3,096
192,132
51%
79%
65%
77%
68%
49%
21%
35%
23%
32%
Average % of employees:
Average % of employees:
Semi- / Unskilled
52%
48%
38%
36%
38%
45%
Skilled
35%
44%
36%
47%
45%
39%
Highly Skilled
14%
8%
26%
17%
16%
16%
Younger than 30 years
22%
29%
24%
24%
23%
24%
30 to 45 years old
50%
49%
46%
47%
53%
49%
Older than 45
27%
22%
29%
28%
23%
27%
Average % of employees:
20
Table 4
Labour Force Details - Provincial Breakdown
Gauteng
KwaZuluNatal
Western
Cape
Eastern
Cape
Other
Provinces
Total RSA
Number of respondents
348
213
243
101
101
1006
Total number of full time employees
61,189
51,103
42,186
31,789
5,865
192,132
Male
71%
67%
66%
64%
70%
68%
Female
29%
33%
34%
36%
30%
32%
Semi- / Unskilled
46%
46%
43%
48%
43%
45%
Skilled
35%
39%
42%
38%
45%
39%
Highly Skilled
18%
16%
15%
14%
12%
16%
Younger than 30 years
20%
28%
27%
26%
24%
24%
30 to 45 years old
50%
45%
49%
48%
52%
49%
Older than 45
30%
27%
24%
26%
24%
27%
Average % of employees:
Average % of employees:
Average % of employees:
Employer responses were only disaggregated to show the results for each of the four
main provinces, namely Gauteng, KwaZulu-Natal, the Western Cape and the Eastern Cape.
Responses from companies in Mpumalanga, Limpopo, the Free State, the North West and the
Northern Cape were aggregated and are presented under “other provinces”. Apart from being
practical, this decision was based on the fact that the BER’s panels are only representative of
the four main provinces.
21
HOW HAS BUSINESS RESPONDED TO THE EPIDEMIC?
The role of the private sector is critical if efforts to fight HIV/AIDS are to be effective
and sustainable. Businesses have valuable resources that can easily and cost-effectively be
utilized, including financial resources, management and marketing skills and access to
workers, consumers and communities. It provides the ideal forum for the dissemination of
information. No business in South Africa is immune from AIDS. Many South African companies
have HIV/AIDS policies, but these are often inadequate because business leaders fail to react
strategically to the epidemic.
It is vital for companies to bear in mind that sick employees cost the employer money
and treatment costs less. If an employee carries on working throughout most of the disease
cycle and only initiates treatment towards the latter part of the disease, then the company will
have carried the cost of illness (e.g. lower labour productivity and increased absenteeism), as
well as the price of treatment. Furthermore, premature death results in group life, pension and
medical benefits being paid out much earlier than planned, adding to the costs of the disease.
For each new infection a firm’s prevention efforts successfully avoid, the company saves the
costs associated with that infection. Studies have shown that the financial benefits of investment
in prevention and treatment programmes will almost certainly exceed the costs.12
While many businesses seem to have underestimated the future impact of HIV/AIDS
on their own organizations, they are becoming increasingly aware of the costs associated with
HIV/AIDS in the form of increased absenteeism, staff turnover and recruitment and training
costs. Not to mention the direct costs relating to medical care, insurance, retirement funds and
funeral costs.
With rising HIV prevalence rates and more and more employees falling ill and dying
from AIDS, businesses are increasingly concerned about the impact of the disease on their
organizations. The fact that the majority (69%) of the survey questionnaires were completed by
the Chief Executive Officer, Managing Director or owner of the company suggests that the
private sector considers HIV/AIDS as a serious threat. One may pose the question, why should
companies be concerned about HIV/AIDS? Several reasons were provided in an article entitled
12
Metropolitan Group, November 2003. “ Still everybody’s business – The enlightening truth about AIDS.” p.134.
22
“HIV/AIDS and the workplace: forging innovative business responses”.13 In a nutshell, these
were:
•
HIV/AIDS raises the cost of doing business, reduces productivity and lowers the overall
demand for goods and services.
•
It results in a loss of experienced personnel. As younger less experienced staff replace
experienced staff, productivity may be reduced.
•
It raises absenteeism. As HIV infection progresses to AIDS, affected workers will be off
work more regularly.
•
It raises recruitment and training costs.
•
It increases labour turnover.
•
It results in increased health care costs and disability and pension payouts.
The establishment and implementation of an HIV/AIDS policy and workplace
programmes will not only help to reduce the future spread of the epidemic, but will also
reduce the impact on the company. The need for a company HIV/AIDS policy arises out of the
necessity to develop an organized, formalized response to the epidemic. An HIV/AIDS policy is
a written document that sets out an organization’s position and practices as they relate to HIV
and AIDS14. Not only does a policy provide guidelines as to how a business should respond to
HIV positive employees, but it should also provide a framework for action to reduce the spread
of HIV/AIDS and to manage its impact. An HIV/AIDS policy will provide both employers and
employees with an informative point of reference on what they are entitled to and how this
should be applied in practice. Such policies also attempt to strike a balance between
productivity and profitability on the one hand, and a humane, fair and socially responsible
response on the other. The development of a policy is only one part of a larger process; the
real challenge lies in how to translate it into practice. A policy provides and important
framework upon which to base workplace HIV/AIDS programmes.
13
UNAIDS, July 1998. “HIV/AIDS and the workplace: forging innovative business responses.” Available at
http://www.unaids.org
14
“Developing an HIV/AIDS Policy – Content, Process, Challenges and Implementation. Joint project of the African
Center for HIV/AIDS Management in the World of Work (Stellenbosch University) and The POLICY Project (South
Africa)”
23
The function of an HIV/AIDS policy is to:
•
Define an organisation’s position on HIV/AIDS and to set out clear guidelines
on how HIV/AIDS will be managed within the workplace;
•
Align the workplace response to the legal framework;
•
Ensure fairness;
•
Identify and protect the rights and responsibilities of employers and employees
in the context of HIV/AIDS;
•
Set standards of behaviour expected of all employers and employees;
•
Establish consistency within the company;
•
Set the standard for communication about HIV/AIDS;
•
Provide a good foundation upon which to build an HIV/AIDS workplace
programme;
•
Inform employees what assistance is available for HIV and AIDS;
•
Send a strong message that HIV/AIDS is a serious issue in the workplace;
•
Indicate commitment to dealing with HIV and AIDS; and
•
Ensure consistency with national and international practices.15
In what follows, the survey questions and employer responses with regard to
HIV/AIDS policies and other HIV/AIDS workplace programmes are presented and discussed.
Question 3 a:
Does your company/group have an HIV/AIDS policy?
The survey showed that only a quarter of companies in fact have an HIV/AIDS policy
in place (see figure 7). Upon analysis per company size, it becomes evident that the vast
majority (92%) of large companies have HIV/AIDS policies. The problem seems to lie with the
15
The information on policy has been taken, with permission, from “POLICY Project & Stellenbosch University, Post
Graduate Diploma in HIV/AIDS Management in the Workplace, course module 2003.
24
smaller companies, where only 13% have implemented a policy. On a sectoral level, 42% of
manufacturers have already implemented an HIV/AIDS policy, followed by the motor industry
at 31%. It is disappointing to note that only 9% of retailers and 15% of building and
construction companies have implemented an HIV/AIDS policy. The results did not differ
significantly between the different provinces, with between 24% and 27% of companies in each
province indicating that they have an HIV/AIDS policy. Please see the figures below for more
detail.
Figure 7
Percentage of companies that have implemented an HIV/AIDS policy
or the following HIV/AIDS programmes
0%
10%
20%
30%
40%
26%
An HIV/AIDS policy
18%
A voluntary counselling and testing programme
41%
An HIV/AIDS workplace awareness programme
An HIV/AIDS care, support and treatment
programme
13%
Provision of anti-retroviral therapy at the
workplace
6%
Question 3 b:
Has your company/group implemented the following HIV/AIDS programmes?
i)
A voluntary counselling and testing programme
ii)
An HIV/AIDS workplace awareness programme
iii)
An HIV/AIDS care, support and treatment programme
iv)
Provision of anti-retroviral therapy at the workplace
25
50%
Figure 8
Percentage of companies that have implemented an HIV/AIDS policy
or the following HIV/AIDS programmes
0%
20%
40%
60%
80%
100%
# HIV/AIDS policy
Large
92%
Medium
64%
Small
13%
# Voluntary counselling and testing
Large
69%
Medium
46%
Small
9%
# HIV/AIDS workplace awareness programme
Large
94%
Medium
79%
Small
29%
# HIV/AIDS care, support and treatment
Large
55%
Medium
Small
32%
6%
# Provision of anti-retroviral therapy
Large
37%
Medium
Small
9%
3%
In order to achieve significant and sustainable results, business has to put
comprehensive programmes in place. The motivation for a business to respond to HIV/AIDS
varies and is often dependent upon factors such as HIV prevalence within the company and
the area of operation, the employee benefits available to the workforce, as well as the level of
knowledge and awareness of its leadership of the existing and potential impact of the
epidemic on the company.
26
Any workplace HIV/AIDS programme should consist of two basic elements, namely
programmes that aim to prevent or reduce new HIV infections (e.g. voluntary counselling and
testing and HIV/AIDS awareness programmes) and programmes that provide treatment, care
and support to employees and their families who are infected or affected by HIV/AIDS. For any
of the above to be successful, there must be a good communication strategy to ensure that all
staff is aware of the policy and programmes. The objectives of workplace HIV/AIDS
programmes should include the prevention of new infections, care and support for infected
employees and minimizing the impact on the company. Comprehensive workplace
programmes can be put into place at a fraction of the amount that would otherwise be
incurred due to AIDS-related illness and death16. Companies should therefore view money
spent on HIV/AIDS as an investment rather than a cost.
The number of companies with workplace programmes in place is somewhat low.
Overall, 18% of respondents to the survey indicated that they have implemented a voluntary
counselling and testing programme, 41% an HIV/AIDS awareness programme, 13% a care,
support and treatment programme, while only 6% provide anti-retroviral therapy at the
workplace. A breakdown is provided below per size, sector and region. It is very clear that the
smaller companies still lack a strategic response to HIV/AIDS and for the most part have a
great deal of work to do in rolling out workplace prevention and awareness programmes.
16
SABCOHA has developed an HIV toolkit for small and medium enterprises to help companies implement such
programmes
27
Figure 9
Percentage of companies that have implemented an HIV/AIDS policy
or the following HIV/AIDS programmes
0%
10%
20%
30%
40%
50%
60%
70%
# HIV/AIDS policy
42%
Manufacturing
9%
Retail
15%
Building & construction
26%
Wholesale
31%
Motor
# Voluntary counselling and testing
31%
Manufacturing
8%
Retail
9%
Building & construction
15%
Wholesale
20%
Motor
# HIV/AIDS workplace awareness programme
62%
Manufacturing
Retail
25%
Building & construction
25%
38%
Wholesale
44%
Motor
# HIV/AIDS care, support and treatment
23%
Manufacturing
Retail
6%
Building & construction
6%
9%
Wholesale
10%
Motor
# Provision of anti-retroviral therapy
9%
Manufacturing
6%
Retail
3%
Building & construction
Wholesale
4%
Motor
4%
28
Figure 10
Percentage of companies that have implemented an HIV/AIDS policy
or the following HIV/AIDS programmes
0%
10%
20%
30%
40%
50%
# HIV/AIDS policy
25%
Gauteng
27%
KwaZulu-Natal
25%
Western Cape
24%
Eastern Cape
27%
Other Provinces
# Voluntary counselling and testing
19%
Gauteng
21%
KwaZulu-Natal
15%
Western Cape
18%
Eastern Cape
17%
Other Provinces
# HIV/AIDS workplace awareness programme
43%
Gauteng
46%
KwaZulu-Natal
38%
Western Cape
34%
Eastern Cape
36%
Other Provinces
# HIV/AIDS care, support and treatment
13%
Gauteng
15%
KwaZulu-Natal
11%
Western Cape
12%
Eastern Cape
14%
Other Provinces
# Provision of anti-retroviral therapy
5%
Gauteng
8%
KwaZulu-Natal
6%
Western Cape
7%
Eastern Cape
6%
Other Provinces
29
60%
Question 3 c:
Have these prevention, treatment or support programmes increased labour costs to your
company/group?
Figure 11
Have prevention, treatment or support programmes increased labour
costs to your company?
0%
15%
30%
45%
60%
75%
67%
No effect
No effect
27%
Small Increase
5%
Moderate Increase
Increase
Large Increase
Bearing in mind that only a small proportion of the companies surveyed have
implemented any sort of workplace programme, only 32% indicated that these prevention,
treatment or support programmes had increased their labour costs. The majority of these
companies indicated that the cost implications of these programmes had been small (see
figure 11).
Question 3 d:
Has your company/group conducted research (e.g. an HIV/ AIDS risk assessment) to assess
the impact of HIV/AIDS on your:
i)
labour force
ii)
production costs
iii)
consumer base
All companies, however large or small, should plan for the impact of HIV/AIDS.
HIV/AIDS risk assessments are important in order to show senior management the business
rationale for action against the epidemic. Of all the companies surveyed, only 14% reported
having conducted research to assess the impact of HIV/AIDS on their labour force, 8% on their
production costs and only 6% on their consumer base.
30
Figure 12
Percentage of companies that have conducted research (e.g. risk
assesment) to assess the impact of HIV/AIDS on:
0%
3%
6%
9%
12%
labour force
15%
14%
production costs
8%
6%
consumer base
Most of this risk assessment applied to the larger companies. Less than 10% of the
small companies surveyed have done any type of research into the impact of HIV/AIDS on
their business.
Figure 13
Percentage of companies that have conducted research (e.g. risk
assesment) to assess the impact of HIV/AIDS on:
0%
10%
20%
30%
40%
50%
60%
# LABOUR FORCE
57%
Large
Medium
27%
9%
Small
# PRODUCTION COSTS
31%
Large
12%
Medium
Small
5%
# CONSUMER BASE
22%
Large
Medium
Small
7%
5%
31
Figure 14
Percentage of companies that have conducted research (e.g. risk
assesment) to assess the impact of HIV/AIDS on:
0%
5%
10%
15%
20%
25%
# LABOUR FORCE
22%
Manufacturing
10%
Retail
7%
Building & construction
16%
Wholesale
4%
Motor
# PRODUCTION COSTS
13%
Manufacturing
Retail
4%
Building & construction
4%
8%
Wholesale
Motor
2%
# CONSUMER BASE
Manufacturing
8%
Retail
8%
Building & construction
3%
6%
Wholesale
Motor
2%
The survey results suggest that manufacturers are likely to be better prepared for the
impact of the epidemic on their labour force, with at least one in five having conducted
research into the impact of HIV/AIDS on their labour force. KwaZulu-Natal and Gauteng,
where the impact of the epidemic is most evident, seem to have conducted more research into
the impact on their labour forces than the other regions. Overall, surprisingly few companies
have undertaken any research on the likely impacts of HIV/AIDS to their consumer base.
32
Figure 15
Percentage of companies that have conducted research (e.g. risk
assesment) to assess the impact of HIV/AIDS on:
0%
4%
8%
12%
16%
20%
# LABOUR FORCE
Gauteng
17%
KwaZulu-Natal
17%
11%
Western Cape
12%
Eastern Cape
10%
Other Provinces
# PRODUCTION COSTS
8%
Gauteng
10%
KwaZulu-Natal
Western Cape
5%
8%
Eastern Cape
9%
Other Provinces
# CONSUMER BASE
6%
Gauteng
7%
KwaZulu-Natal
Western Cape
5%
Eastern Cape
5%
8%
Other Provinces
33
THE ECONOMIC IMPACT OF HIV/AIDS
ON BUSINESS IN SOUTH AFRICA
This section of the report presents the survey questions and employer responses with
regard to the economic impact of HIV/AIDS on business. As mentioned earlier, previous
surveys have focused mainly on “workplace responses” to the epidemic (e.g. prevention,
treatment and response programmes, HIV/AIDS risk assessment). The SABCOHA survey
expands on previous research conducted in this area, as it also considers the impact of
HIV/AIDS on, among other, productivity, labour turnover rates, production costs, sales, prices,
profits and the investment and employment decisions of firms.
Question 4.a
Has HIV/AIDS affected the production side of your company? Please rate the impact of
HIV/AIDS on the following factors:
i)
Lower labour productivity and/or increased worker absenteeism
ii)
Higher labour turnover rates
iii)
Loss of experience and vital skills
iv)
Higher recruitment and training costs
v)
Higher employee benefit costs (e.g. medical aid; pension, life and
disability insurance; funeral benefits)
Figure 16
Percentage of companies reporting that HIV/AIDS has had the
following impacts:
0%
5%
10%
15%
20%
25%
30%
35%
40%
Lower labour productivity / increased
absenteeism
Higher employee benefit costs
Higher labour turnover rates
Loss of experience and vital skills
Higher recruitment and training costs
Small impact
34
Moderate impact
Large impact
Figure 16 shows that 39% of respondents indicated that HIV/AIDS has already
reduced labour productivity or increased absenteeism among employees. Close to one in
three of the companies surveyed indicated that HIV/AIDS has increased the cost of employee
benefits and has led to higher labour turnover rates. Some 27% of respondents reported that
they have lost experience and skills due to HIV/AIDS, while 24% feel that they have incurred
recruitment and training costs due to the epidemic. Most of the companies that have had to
face these cost implications of the epidemic indicated that the impact had been “small”.
However, a significant percentage of companies are already experiencing moderate or large
impacts, especially on employee benefit costs.
Figure 17
Percentage of companies reporting that HIV/AIDS has had the
following impacts:
0%
15%
30%
45%
60%
75%
90%
# Lower labour productivity / increased absenteeism
Large
Medium
Small
# Higher labour turnover rates
Large
Medium
Small
# Loss of experience and vital skills
Large
Medium
Small
# Higher recruitment and training costs
Large
Medium
Small
# Higher employee benefit costs
Large
Medium
Small
Small impact
35
Moderate impact
Large impact
Figure 17 above shows that there is a clear difference between the responses of
large, medium and small companies. The results indicate that, compared to medium and
large companies, a significantly lower percentage of small companies have noted that
HIV/AIDS has affected the production side of their business in some or other way. The majority
of medium and large companies in South Africa indicated that the epidemic has had a
noticeable impact on production costs. In fact, more than 75% of the large companies
surveyed indicated that HIV/AIDS has led to lower labour productivity or increased
absenteeism, higher employee benefit costs and higher labour turnover rates. In sharp
contrast, less than a third of small companies reported that HIV/AIDS has had these impacts.
Figure 18 below shows the breakdown of the results per sector. The results show that
close to half of the manufacturers surveyed indicated that HIV/AIDS has led to lower labour
productivity or increased absenteeism and higher employee benefit costs and labour turnover
rates. As demonstrated in table 3, the manufacturers surveyed by the BER employ significantly
more workers than, for example, retailers. Most of the manufacturers were therefore classified
as medium or large firms. It is therefore not surprising that, like large firms, the majority of
manufacturers have experienced lower labour productivity or increased absenteeism due to
HIV/AIDS. Retailers appear to be the least affected, with less than 20% of respondents in the
retail trade indicating that HIV/AIDS has had an impact on any of these cost factors. The
impact of HIV/AIDS on the building and construction, motor trade and wholesale sectors rated
somewhere between that of the high-risk manufacturing and lower-risk retail sectors.
A study by ING Barings (1999) on the impact of HIV/AIDS on the different sectors of
the South African economy identified the mining, transport, building and construction and
manufacturing sectors as the most vulnerable to the AIDS epidemic, as a large proportion of
their workforce falls within the high-risk semi- and unskilled categories.17 Although productivity
losses will be substantial, one might argue that these industries have a larger pool of available
workers to draw from and employee benefit and replacement costs will not be as high as in the
skills intensive industries. Medium-risk sectors identified by ING Barings included retail, metals
and chemicals, while the financial, business services and communication sectors are generally
regarded as low risk sectors. However, these industries cannot afford to be complacent, as
HIV/AIDS will exacerbate the skills shortage in South Africa and may impact significantly on
employee benefit and replacement costs in these skills intensive sectors.
17
Kristina Quattek, 1999. “The demographic impact of HIV/AIDS on the South African economy.” ING Barings.
36
Our survey results showed that, compared to manufacturers, a significantly smaller
percentage of building and construction companies have experienced HIV/AIDS related
impacts such as lower labour productivity, increased absenteeism or higher turnover rates. In
recent years, many building and construction companies have downscaled their permanent
workforce. Skilled workers are retained, but semi-and unskilled workers are often casually
employed and are likely to move from one site to another to find work. In a labour surplus
sector with casual employment, such as the building and construction sector, the impact of
HIV/AIDS on production lines is likely to be less apparent, as there is a large pool of available
workers to draw from and replacement costs are relatively low.
Figure 18
Percentage of companies reporting that HIV/AIDS has had the
following impacts:
0%
10%
20%
30%
40%
50%
60%
# Lower labour productivity / increased
absenteeism
Manufacturing
Retail
Building & construction
Wholesale
Motor
# Higher labour turnover rates
Manufacturing
Retail
Building & construction
Wholesale
Motor
# Loss of experience and vital skills
Manufacturing
Retail
Building & construction
Wholesale
Motor
# Higher recruitment and training costs
Manufacturing
Retail
Building & construction
Wholesale
Motor
# Higher employee benefit costs
Manufacturing
Retail
Building & construction
Wholesale
Motor
Small impact
37
Moderate impact
Large impact
Figure 19
Percentage of companies reporting that HIV/AIDS has had the
following impacts:
0%
10%
20%
30%
40%
50%
60%
# Lower labour productivity / increased
absenteeism
Gauteng
KwaZulu-Natal
Western Cape
Eastern Cape
Other Provinces
# Higher labour turnover rates
Gauteng
KwaZulu-Natal
Western Cape
Eastern Cape
Other Provinces
# Loss of experience and vital skills
Gauteng
KwaZulu-Natal
Western Cape
Eastern Cape
Other Provinces
# Higher recruitment and training costs
Gauteng
KwaZulu-Natal
Western Cape
Eastern Cape
Other Provinces
# Higher employee benefit costs
Gauteng
KwaZulu-Natal
Western Cape
Eastern Cape
Other Provinces
Small impact
Moderate impact
Large impact
The provincial breakdown of the results is shown in figure 19. The results indicate
that companies located in KwaZulu-Natal and Gauteng - the powerhouse of the South African
economy - are worst affected by the disease. More than 40% of companies operating in
KwaZulu-Natal and Gauteng indicated that HIV/AIDS has affected the production side of their
38
business in some or other way. Companies based in the Western Cape have experienced a
much smaller impact – less than 20% of all companies operating in the Western Cape noted
an AIDS induced adverse impact on the production side of their business. These results are
consistent with estimates of HIV prevalence among pregnant women visiting antenatal clinics –
the latest antenatal clinic survey suggested that HIV prevalence is highest in KwaZulu-Natal,
followed by Gauteng, and lowest in the Western Cape.
Question 4.b
If you are able to do so, please rank the following HIV/AIDS related costs according to the
impact that they have had on company costs.
Figure 20
Average ranking of HIV/AIDS related costs according to the
impact they have on company costs
1 = Smallest
2
3Impact4
Largest
5
6Impact7=
Lower labour productivity / increased worker
absenteeism
8
6.9
6.3
Higher employee benefit costs
5.8
Loss of experience and vital skills
5.5
Higher labour turnover rates
5.2
Higher recruitment and training costs
Voluntary counselling and testing programme /
HIV/AIDS workplace awareness programme
4.9
HIV/AIDS care, support and treatment programme
/ provision of anti-retroviral therapy at workplace
4.7
Research into the impact of HIV/AIDS on
company / business sector
3.6
Overall, respondents indicated that lower labour productivity and increased
absenteeism, followed by higher employee benefit costs as a result of the epidemic, are the
factors that have had the largest impact on company costs. Very few companies rated research
39
into the impact of HIV/AIDS, VCT and AIDS awareness and treatment programmes as
important factors that affect company costs, probably because only a few companies have
done this type of research or have implemented these programmes.
Figure 21 below presents the results from question 4.b. in a different way – it shows
the percentage of companies that rated the specified AIDS cost as having the largest, second
largest or third largest impact on company costs. More than a third of all the companies
surveyed considered lower labour productivity or increased absenteeism to have had the
largest impact on company costs and close to 70% regarded it as one of the top three factors
impacting on company costs. The second and third most important cost factors are higher
employee benefit costs and loss of experience and vital skills due to HIV/AIDS.
Figure 21
Percentage of companies rating specified HIV/AIDS related cost
as having the largest, 2nd largest or 3rd largest impact on
company costs
0%
10% 20% 30% 40% 50% 60% 70%
Lower labour productivity / increased worker
absenteeism
Higher employee benefit costs
Loss of experience and vital skills
Higher labour turnover rates
HIV/AIDS care, support and treatment programme
/ provision of anti-retroviral therapy at workplace
Voluntary counselling and testing programme /
HIV/AIDS workplace awareness programme
Higher recruitment and training costs
Research into the impact of HIV/AIDS on company
/ business sector
Largest
40
2nd Largest
3rd Largest
Table 5 below shows how the responses differed between companies of different
sizes. In contrast to small and medium companies, large companies generally considered
higher employee benefit costs as the most important cost factor, followed by the cost of VCT or
HIV/AIDS awareness programmes. On average, large companies ranked lower labour
productivity or increased absenteeism as third most important, followed by the cost of
providing treatment programmes and conducting research. Whereas many large companies
have implemented VCT and treatment programmes and conducted research, few medium and
small companies have done so – this is probably the reason why these factors did not receive
higher (more important) rankings from medium and small companies. Furthermore, some
small companies may not provide employee benefits to their labour force, which may explain
why this factor received a lower (less important) ranking when it comes to the impact on
company costs from smaller companies than from large companies.
Table 5
Ranking of HIV/AIDS related costs according to the impact
they have on company costs
Importance
of cost
factor
Small companies:
Less than 100
employees
Medium companies:
100 to 500
employees
Large companies:
More than 500
employees
Total:
All Sizes
Higher em ployee
benefit costs
Lower productivity /
increased absenteeism
VCT or HIV/AIDS
awareness program m e
Higher em ployee
benefit costs
M ost
i m p o rta n t
Lower productivity /
Lower productivity /
increased absenteeism increased absenteeism
2n d m o s t
i m p o rta n t
Loss of experience and
vital skills
3rd m o s t
i m p o rta n t
Higher labour turnover Loss of experience and
Lower productivity /
Loss of experience and
rates
vital skills
increased absenteeism
vital skills
4th m o s t
i m p o rta n t
Higher em ployee
benefit costs
5th m o s t
i m p o rta n t
Higher recruitm ent and
training costs
Higher em ployee
benefit costs
Higher labour turnover HIV/AIDS treatm ent /
rates
provision of ART
Higher recruitm ent
and training costs
41
Research into the
im pact of HIV/AIDS
Higher labour turnover
rates
Higher recruitm ent and
training costs
Question 5.a
Table 6
Will your company be able to pass some of the HIV/AIDS related costs
on to customers by increasing your selling prices?
Small companies:
Less than 100
employees
Medium companies:
100 to 500
employees
Large companies:
More than 500
employees
Total:
All Sizes
Yes
7%
11%
17%
8%
No
75%
73%
68%
74%
Don't Know
18%
16%
14%
17%
Overall, only 8% of all the companies surveyed expected to be able to pass some of
the HIV/AIDS related costs on to their customers by increasing their selling prices. Of the 8% of
companies that felt confident that they would be able to raise their prices, the majority were
unsure as to exactly how much they would be able to pass on, or expected to pass on less than
a quarter of the costs (see table 7). If companies are not able to recover costs by increasing
their selling prices, their profit margins will come under pressure. The results suggest that
larger companies may be in a slightly better position to shield their profitability from HIV/AIDS
induced costs, as a larger percentage of large companies expect to be able to recover some
of these costs by hiking their prices.
Question 5.b
Table 7
If yes, what percentage of these costs do you think could be recovered
by increasing your selling prices? (Total - All Sizes)
0% to 25%
25% - 50%
50% - 75%
75% to 100%
Don't know
37%
6%
1%
7%
49%
42
HIV/AIDS can affect a company’s employment decision in diverse ways. Lower labour
productivity, increased absenteeism and higher employee benefit and other HIV/AIDS related
costs may encourage some companies to invest in technology, machinery or equipment in
order to reduce their dependence on labour. On the other hand, in order to maintain
production at the optimal level, some companies may decide to appoint extra employees or
train two employees for the same position (also known as shadowing) to compensate for the
impact of HIV/AIDS on labour productivity, absenteeism and mortality. When respondents
were asked what they considered the net effect of HIV/AIDS to be on their demand for labour,
39% indicated that the epidemic increases their demand for labour (e.g. via work shadowing
or replacement of AIDS sick workers). Only 12% indicated that the epidemic is negatively
affecting their employment decisions, while 48% feel that HIV/AIDS has no impact on their
demand for labour.
Question 6
Table 8
What would you say the net effect of HIV/AIDS will be on your company's demand for
labour (your decision to employ new workers or terminate current labour contracts)?
Small companies:
Less than 100
employees
Medium companies:
100 to 500
employees
Large companies:
More than 500
employees
Total:
All Sizes
Increases
labour
demand
35%
49%
62%
39%
No effect
53%
32%
32%
48%
Reduces
labour
demand
12%
17%
6%
12%
Again, the responses differed between companies of different sizes. Whereas 35% of
small companies indicated that HIV/AIDS increases their demand for labour, the
corresponding figures for medium and large companies are 49% and 62% respectively.
Compared to small companies, a significantly larger percentage of large companies have
experienced lower labour productivity or increased absenteeism and higher labour turnover
rates due to HIV/AIDS (see question 4.a.). Due to the sheer number of workers infected, some
of South Africa’s larger companies may suffer substantial productivity losses. Production
volumes will be negatively affected if these companies do not employ more workers to
compensate for the adverse impact of HIV/AIDS. This, combined with the fact that large
43
companies have relatively more resources to finance work shadowing, probably explains why
more large companies indicate that the epidemic has increased their demand for labour.
Figure 22 below shows that, overall, 18% of the companies surveyed indicated that
they foresee appointing extra employees (also known as work shadowing) to compensate for
the impact of HIV/AIDS on labour productivity, absenteeism and mortality. A breakdown of the
results revealed interesting differences in responses between different sectors. Almost 30% of
manufacturers foresee implementing work shadowing, while only 10% of retailers plan to do
so. Most of the manufacturing firms surveyed by the BER were classified as medium or large
firms. Manufacturers, and large firms in particular, have generally noted greater productivity
losses and higher labour turnover rates due to HIV/AIDS than retailers, which may be one
reason why more manufacturers foresee implementing work shadowing to compensate for the
impact of HIV/AIDS. Similarly, a larger percentage of the companies operating in KwaZuluNatal and Gauteng, the provinces with the highest HIV prevalence rates, foresee implementing
work shadowing.
Question 7
Does your company/group foresee appointing extra employees (also known as shadowing) to
compensate for the impact of HIV/AIDS on labour productivity, absenteeism and mortality?
Figure 22
Percentage of companies reporting that they foresee appointing extra
employees to compensate for the impact of HIV/AIDS on productivity,
absenteeism and mortality
0%
5%
10%
15%
20%
30%
28%
Manufacturing
Retail
25%
10%
Building & Construction
15%
12%
Wholesale
13%
Motor
Total - All Sectors
18%
44
Figure 23 shows that less than 15% of all companies surveyed reported that they
were investing in machinery or equipment to reduce their dependence on labour. Again, a
sectoral breakdown of the results proved to be most informative. Whereas one in four
manufacturers reported that they were investing in machinery or equipment to reduce their
dependence on labour, less than 10% of respondents in other sectors are doing so. This may
again be ascribed to the fact that a significantly larger percentage of manufacturing
companies have experienced lower labour productivity, increased absenteeism or higher
labour turnover rates due to HIV/AIDS compared to companies in the other sectors.
Furthermore, the manufacturing sector is probably more capital intensive and may be better
suited for this practice than some of the other sectors surveyed.
Question 8
Is your company/group investing in machinery and/or equipment to reduce its dependence on
labour/employees because of HIV/AIDS?
Figure 23
Percentage of companies reporting that they are investing in machinery
or equipment to reduce their dependence on labour because of
HIV/AIDS
0%
5%
10%
15%
Manufacturing
Retail
25%
30%
25%
7%
Building & Construction
Wholesale
20%
9%
7%
Motor
10%
14%
Total - All Sectors
As mentioned before, AIDS deaths will reduce the absolute number of consumers in
the economy and will therefore in all likelihood also reduce the size of a company’s target
market. Furthermore, HIV/AIDS will affect household spending patterns, as HIV/AIDS infected
households will be burdened by higher health care costs, transport costs to and from health
services and funeral expenses. Households may have to divert funds away from savings or
45
other non-essential expenditure categories in order to finance HIV/AIDS related spending,
implying changing consumer spending patterns in favour of health care products and services.
As mentioned in the previous section of the report, the vast majority of respondents indicated
that they have not done any research on the impact of HIV/AIDS on their consumer base or
target market. When asked how HIV/AIDS has affected their sales, three in four companies
indicated that the epidemic has had no impact on the demand for their company’s products or
services. However, only about 30% indicated that they still expect no impact on sales in 5
year’s time.
Question 9.a
How has HIV/AIDS affected the demand for your company/group’s products or services (i.e.
sales)?
Question 9.b
What do you expect the (sales) impact of HIV/AIDS will be in 5 years time?
Figure 24
The impact of HIV/AIDS on demand (i.e. sales):
Current impact vs. expected impact
0%
10%
20%
30%
40%
50%
60%
Lower sales
Expect lower sales in 5 year's time
No impact
Expect no impact in 5 year's time
Higher sales
Expect higher sales in 5 year's time
Don’t Know
Don’t Know impact in 5 year's time
Severely reduced demand
Moderately reduced demand
No Effect
Moderately increased demand
Sharply increased demand
Don't know
46
70%
80%
Whereas a very small percentage of companies reported that HIV/AIDS has already
had a negative impact on sales, 30% indicated that they expect HIV/AIDS to have an adverse
impact five years from now. Less than 10% expect higher sales in five year’s time due to
HIV/AIDS (e.g. pharmaceutical companies and funeral parlours). Uncertainty about the sales
impact increased, with close to one in three indicating that they don’t know how sales would
be affected in 5 year’s time.
Figure 25 and 26 below respectively portray the percentage of companies that
indicated that HIV/AIDS has had an adverse impact on sales per sector and per province. It is
interesting to note that, whereas almost half of the manufacturers surveyed have experienced
lower labour productivity or increased absenteeism and higher labour turnover rates due to
HIV/AIDS, less than 10% indicated that the epidemic has had a negative impact on their sales.
Figure 25
Percentage of companies reporting that HIV/AIDS is adversely affecting
demand (i.e. sales): Current vs. expected
0%
5%
10%
15%
20%
25%
30%
35%
40%
# MANUFACTURING
Current sales impact
Expected sales impact
# RETAIL
Current sales impact
Expected sales impact
# BUILDING & CONSTRUCTION
Current sales impact
Expected sales impact
# WHOLESALE
Current sales impact
Expected sales impact
# MOTOR
Current sales impact
Expected sales impact
Moderately reduced demand
Severely reduced demand
The differences are small, but the results show that a slightly larger percentage of
retailers indicated that HIV/AIDS has had a negative impact on their sales. More than 35% of
manufacturers, wholesalers and motor dealers expect HIV/AIDS to have an adverse impact on
47
sales in 5 year’s time. However, only about 18% of building and construction companies and
29% of retailers foresee an adverse impact. This is somewhat surprising, as the slower growth
in the population as a result of the epidemic is bound to constrain private residential
investment and the demand for public sector housing projects, as well as overall consumer
spending. Products and services aimed at the mass consumer market or markets that are close
to saturation will be particularly vulnerable to the impact of the epidemic.
A provincial breakdown of the results shows that 10% or more of the companies in
KwaZulu-Natal and the “other” provinces (Mpumalanga, Limpopo, the Free State, the North
West and the Northern Cape) indicated that HIV/AIDS has had a negative impact on their
sales. The corresponding figure for the Western Cape is only 3%.
Figure 26
Percentage of companies reporting that HIV/AIDS is adversely affecting
demand (i.e. sales): Current vs. expected
0%
5%
10%
15%
20%
25%
30%
35%
40%
# GAUTENG
Current sales impact
Expected sales impact
# KWAZULU-NATAL
Current sales impact
Expected sales impact
# WESTERN CAPE
Current sales impact
Expected sales impact
# EASTERN CAPE
Current sales impact
Expected sales impact
# OTHER PROVINCES
Current sales impact
Expected sales impact
Moderately reduced demand
48
Severely reduced demand
45%
Question 10.a
Has the HIV/AIDS epidemic impacted adversely on your company/group’s fixed investment
decisions?
Question 10.b
If yes, please indicate the seriousness of the adverse impact on your company/group’s fixed
investment decisions?
Figure 27
Has HIV/AIDS had an adverse impact on your company's fixed
investment decision?
0%
2%
4%
6%
8%
10%
Yes
Undecided
Don't know extent of impact
Small impact
Moderate impact
Large impact
Undecided
No impact
Approximately 88% of all the companies surveyed reported that HIV/AIDS has not
adversely affected their decision to invest in South Africa. Figure 27 shows that only 6%
indicated that HIV/AIDS has had an adverse impact on their fixed investment decision. The
remaining 6% were undecided. Of those who feel less likely to invest due to HIV/AIDS, the
majority admitted that the impact on their investment decision had been small, or that they
were uncertain how negative the impact had been.
49
Question 11.a
Which of the following percentages represent your estimation of the impact of
HIV/AIDS on your company/group’s profits?
i)
More than 5% lower
v)
Between 0% and 2.5% higher
ii)
Between 2.5% and 5% lower
vi) Between 2.5% and 5% higher
iii)
Between 0% and 2.5% lower
vii) More than 5% higher
iv)
No impact
Question 11.b
What do you expect the impact of HIV/AIDS on profits to be in 5 year’s time?
Figure 28
The impact of HIV/AIDS on company profits:
Current impact vs. expected impact
0%
10%
20%
30%
40%
50%
60%
Lower profits
Expect lower profits in 5 year's time
No impact
Expect no impact in 5 year's time
Higher profits
Expect higher profits in 5 year's time
0% to 2.5% lower
2.5% to 5% lower
More than 5% lower
0% to 2.5% higher
2.5% to 5% higher
More than 5% higher
No impact
HIV/AIDS will put profitability under pressure, not only due to HIV/AIDS induced cost
increases, but also because it will reduce the size of a company’s target market and hence
shrink sales compared to a no-AIDS scenario. When asked how HIV/AIDS has affected
company profits, the majority of respondents indicated that the epidemic has had no impact
on profits. Approximately a third of the companies surveyed reported that profitability has been
adversely affected by HIV/AIDS, while only 7% indicated that profits were higher (e.g.
50
pharmaceutical companies and funeral parlours). However, respondents were a lot more
pessimistic when they were asked what they expect the impact on profits to be in five year’s
time. More than half of the companies surveyed expect that HIV/AIDS will adversely affect their
profits: 23% expect profits to be down by 0% to 2.5%, 16% expect profits to be between 2.5%
and 5.0% lower and another 13% foresee that profits will be more than 5% lower than what
would have been possible in the absence of HIV/AIDS.
The figures below portray the percentage of companies that indicated that HIV/AIDS
has had an adverse impact on profits per company size, per province and per sector.
Figure 29
Percentage of companies reporting that HIV/AIDS is adversely
affecting profits: Current vs. expected
0%
15%
30%
45%
60%
75%
90%
# LARGE
Current impact
Expected impact
# MEDIUM
Current impact
Expected impact
# SMALL
Current impact
Expected impact
0% to 2.5% lower
2.5% to 5% lower
More than 5% lower
More than 45% of medium and large companies indicated that the epidemic has
already had an adverse impact on profits, while 30% of small companies reported lower
profits due to HIV/AIDS. Four out of five large companies surveyed foresee that HIV/AIDS will
have a negative impact on profits in five year’s time. The corresponding figures for medium
and small companies are 69% and 46% respectively.
Figure 30 shows that a larger percentage (close to 40%) of companies in KwaZuluNatal and Gauteng indicated that HIV/AIDS has already had a negative impact on profits. The
manufacturing sector has been the worst affected, with more than 40% of manufacturers
reporting that HIV/AIDS has reduced profits.
51
Figure 30
Percentage of companies reporting that HIV/AIDS is adversely
affecting profits: Current vs. expected
0%
10%
20%
30%
40%
50%
60%
70%
# GAUTENG
Current impact
Expected impact
# KWAZULU-NATAL
Current impact
Expected impact
# WESTERN CAPE
Current impact
Expected impact
# EASTERN CAPE
Current impact
Expected impact
# OTHER PROVINCES
Current impact
Expected impact
0% to 2.5% lower
2.5% to 5% lower
More than 5% lower
Figure 31
Percentage of companies reporting that HIV/AIDS is adversely
affecting profits: Current vs. expected
0%
10%
20%
30%
40%
50%
60%
# MANUFACTURING
Current impact
Expected impact
# RETAIL
Current impact
Expected impact
# BUILDING & CONSTRUCTION
Current impact
Expected impact
# WHOLESALE
Current impact
Expected impact
# MOTOR
Current impact
Expected impact
0% to 2.5% lower
2.5% to 5% lower
52
More than 5% lower
70%
Question 12.a
All in all, has HIV/AIDS had a significant adverse impact on your business (e.g. on production,
sales or profits)?
Question 12.b
Do you expect HIV/AIDS to have a significant adverse impact on your business in 5 year's
time?
Figure 32
Percentage of companies reporting that HIV/AIDS is having a
significant adverse impact on their business:
Current vs. expected
0%
10%
20%
30%
40%
50%
60%
# CURRENT IMPACT
Large
4%
Medium
Small
Total - All sizes
13%
8%
9%
# EXPECTED IMPACT (in 5 year's time)
Large
58%
55%
Medium
Small
39%
Total - All sizes
43%
Only 9% of all companies surveyed indicated that HIV/AIDS has already had a
significant adverse impact on their business. However, 43% envisage a significant negative
impact on their business in the near future.
A provincial breakdown of the results for this question proved to be most informative
and is presented in figure 33. Whereas only 2% of companies operating in the Western Cape
felt that their business has been adversely affected by the epidemic, 16% of those in KwaZuluNatal have had to face significant adverse consequences. A breakdown of the results per
sector is presented in figure 34.
53
Figure 33
Percentage of companies reporting that HIV/AIDS is having a
significant adverse impact on their business:
Current vs. expected
0%
10%
20%
30%
40%
50%
60%
# CURRENT IMPACT
7%
Gauteng
16%
KwaZulu-Natal
Western Cape
Eastern Cape
2%
9%
14%
Other Provinces
# EXPECTED IMPACT (in 5 year's time)
45%
Gauteng
50%
KwaZulu-Natal
34%
Western Cape
35%
Eastern Cape
54%
Other Provinces
Figure 34
Percentage of companies reporting that HIV/AIDS is having a
significant adverse impact on their business:
Current vs. expected
0%
10%
20%
30%
40%
50%
60%
# CURRENT IMPACT
Manufacturing
10%
Retail
10%
Building & construction
Wholesale
Motor
6%
8%
6%
# EXPECTED IMPACT (in 5 year's time)
52%
Manufacturing
34%
Retail
35%
Building & construction
49%
Wholesale
48%
Motor
54
APTER 4
NCLUDING R
MARKS
C
CHHAPTER
4:: C
ONCLUDING
REEMARKS
CO
Effective management of HIV/AIDS requires an understanding of the nature and the
extent of the impact of HIV/AIDS on business. Sustainable private sector responses to the
epidemic will only be achieved if senior management is convinced of the business rationale for
action. The hesitancy of many companies to invest in comprehensive HIV/AIDS workplace
programmes may be due to a lack of reliable data to show the economic impact of the
epidemic. By providing evidence of the impact of HIV/AIDS on business in South Africa, the
SABCOHA survey strives to fill this gap.18 With more than a 1000 companies participating in
the survey, it is the largest survey on the impact of HIV/AIDS on business in South Africa to
date. While much of the focus and information in the past has been on the response of large
enterprises, this survey hopes to supplement with evidence on the impact of HIV/AIDS on small
and medium enterprises. Employers were asked how and to what extent HIV/AIDS is affecting
their businesses and what they are doing to combat the disease. The survey results are not only
presented on a national basis, but are also disaggregated to show how employer responses
differed per company size, per province and for five economic sectors. The survey will be
conducted annually, allowing for the measurement of the impact of HIV/AIDS over time.
The survey results reveal that many businesses are already facing the consequences
of the epidemic. All in all, 9% of the companies surveyed indicated that HIV/AIDS has already
had a significant adverse impact on their business and another 34% envisage a significant
negative impact in five year’s time.
HIV/AIDS is undoubtedly a bottom line issue for business, as it impacts on production
costs and consumer markets. Approximately a third of the companies surveyed reported that
HIV/AIDS has already had a negative impact on profits, while more than half expect an
adverse impact on profitability in five year’s time. It seems as though HIV/AIDS has had a
larger or more noticeable impact on the production side of business, with more than 30% of
all firms surveyed reporting that HIV/AIDS has reduced productivity or increased absenteeism,
raised the cost of employee benefits or increased labour turnover rates. Less than 10% of the
companies surveyed have noticed a negative impact on their sales. However, three times as
many expect the epidemic to have an adverse impact on sales in five year’s time.
The survey results show that manufacturers and companies operating in KwaZuluNatal and Gauteng are worst affected, while retailers and companies based in the Western
55
Cape have experienced the smallest impact. However, business in the Western Cape should
not take this as a reason for complacency, as HIV prevalence rates in the province are rising
rapidly. Valuable lessons can be learned from the experience of business in Gauteng and
KwaZulu-Natal. The impact of HIV/AIDS on the building and construction, motor trade and
wholesale sectors rated somewhere between that of the high-risk manufacturing and lower-risk
retail sectors. The impact of HIV/AIDS on production costs in the building and construction
sector may be less apparent than for the manufacturing sector, as building and construction
companies often employ semi- and unskilled workers on a contract basis (part time) and
workers are likely to move from one site to another to find work. Given the high
unemployment rates among semi- and unskilled labour and the fact that many building and
construction companies have downscaled their permanent workforce, there is large pool of
available workers to draw from and replacement costs may be relatively low.
The global spread of HIV/AIDS and increasing evidence of the associated impacts on
business has highlighted the need for business to step up to the challenge and take action
against the epidemic. However, results from the SABCOHA survey suggest that most
companies in South Africa have failed to respond to the epidemic. Only a quarter of all the
firms surveyed have implemented a formal HIV/AIDS policy, while less than a fifth have a
voluntary counselling and testing programme or provide care, support and treatment to
infected workers. Employers are doing slightly better on the softer, less resource intensive
interventions, such as the implementation of an HIV/AIDS workplace awareness programme.
Overall, 41% of respondents indicated that they have implemented an HIV/AIDS awareness
programme.
Employer responses to the epidemic appear to be linked to company size, with most
large companies indicating that they have an HIV/AIDS policy in place and small companies
having done little in the way of action against the epidemic. Small and medium enterprises are
an important source of employment in South Africa, and since their existence may be
threatened as the epidemic peaks, it is imperative that they react strategically to HIV/AIDS.
The perception of most companies seems to be that HIV/AIDS will have a small to
moderate impact on their business and some companies have implemented HIV/AIDS policies
and programmes to reduce the impact of the epidemic. However, these perceptions and
employer strategies may well be based on insufficient or inaccurate information, as less than
18
The SABCOHA survey on “the impact of HIV/AIDS on business in South Africa” is freely available on the
SABCOHA and BER websites.
56
15% of all employers surveyed have conducted research to assess the impact of HIV/AIDS on
their labour force, production costs or consumer base.
Overall, the response of business to HIV/AIDS needs to be speeded up. With rising
HIV prevalence and clear evidence of the adverse impact of the epidemic on business in South
Africa, companies should not be lagging behind with regard to the implementation of
HIV/AIDS policies and programmes. It is our hope that the results from this survey will assist
the private sector in recognising the business case for further action against HIV/AIDS in the
workplace and beyond.
Researched and compiled by
Linette Ellis and Jenny Terwin
Bureau for Economic Research
December 2003
57
PENDIX 1
VEY Q
ESTIONNAIRE
A
URRVEY
RE
APPPENDIX
1:: SSUR
QUUESTIONNAIR
SSABCOHA
RRV
EE IIIMPACT
N
U
RRIIC
ABCOHA SSU
IV/AIDS O
M
U
FF H
N
U
H
O
O
N BBBUSINESS
UTTH
VEEYY:: TTH
HA
CA
MPPA
USSIIN
A
AC
CTT O
NEESSSS IIIN
O
N SSO
URVEY
HE
HIV/AIDS
ON
OUTH
AFFFRICA
OF
Please fill in the missing information or tick the appropriate box. All information will be
treated as confidential. Individual replies will not be published or quoted.
1.) Further contact details
1.a) Position of executive completing questionnaire:
CEO / MD /
Owner
Financial Manager
/ Accountant
Production /
Sales Manager
1.b) Telephone number
Area code
Human Resources
Manager
…………..
No.
Other
…………………….
2.) Labour force details
2.a) Number of full time employees
2.b) Percentage of employees
………………...
Male
……….. %
Semi- /unskilled
2.c) Percentage of employees
.…………%
.…………%
58
Female ……….. %
Skilled
+
Younger than 30
2.d) Percentage of employees
+
……..…%
Highly skilled
+
30 to 45 Years
+
……..…%
= 100%
+
…………%
= 100%
Older than 45
…………%
= 100%
3.a) Does your company/group have an HIV/AIDS policy?
Yes
No
Don’t
Know
3.b) Has your company/group implemented the following
HIV/AIDS programmes?
Yes
No
Don’t
Know
i)
A voluntary counselling and testing programme
ii)
An HIV/AIDS workplace awareness programme
iii) An HIV/AIDS care, support and treatment programme
iv) Provision of anti-retroviral therapy at the workplace
3.c) Have these prevention, treatment or support programmes increased labour costs to your
company/group? Please rate the impact by ticking the appropriate box:
No Effect
Small increase
Moderate increase
3.d) Has your company/group conducted research (e.g. an HIV/
AIDS risk assessment) to assess the impact of HIV/AIDS on your:
Large increase
Yes
No
Don’t
Know
i) labour force
ii) production costs
iii) consumer base
4.a) Has HIV/AIDS affected the production side of your company? Please rate the impact of
HIV/AIDS on the following factors by ticking the appropriate boxes:
HIV/AIDS has led to:
i)
No
impact
Lower labour productivity and/or
increased worker absenteeism
ii) Higher labour turnover rates
iii) Loss of experience and vital skills
iv) Higher recruitment and training
costs
v) Higher employee benefit costs (e.g.
medical aid; pension, life and
disability insurance; funeral benefits)
59
Small
impact
Moderate
impact
Large
impact
Don't
know
4.b) If you are able to do so, please rank (from 1 to 9) the following HIV/AIDS related costs
according to the impact that they have had on company costs, where
1 = the factor that has had the largest impact on costs, and
9 = the factor that has had the smallest impact on costs.
Rank
1) Lower labour productivity and/or increased worker absenteeism
2) Higher labour turnover rates
3) Loss of experience and vital skills
4) Higher recruitment and training costs
5) Higher employee benefit costs (e.g. medical aid; pension, life and
disability insurance; funeral benefits)
6) Voluntary counselling and testing programme and/or HIV/AIDS
workplace awareness programme
7) An HIV/AIDS care, support and treatment programme and/or the
provision of anti-retroviral therapy at the workplace
8) Research into the impact of HIV/AIDS on your company or business sector
9) Other: Please name ……………………………………………………………..
5.a) Will your company/group be able to pass some of the
HIV/AIDS related costs mentioned above on to
customers by increasing your selling prices?
Yes
No
Don't
know
5.b) If yes, what percentage of these costs do you think could be recovered by increasing your
selling prices?
0% to 25%
25% - 50%
50% - 75%
75% to 100%
Don't know
6.) What would you say the net effect of HIV/AIDS will be on your company’s demand for
labour (i.e. your decision to employ new workers or to terminate current labour contracts)?
Severely
reduces labour
demand
Moderately
reduces labour
demand
No Effect
Moderately
increases labour
demand
Sharply increases
labour demand
7.) Does your company/group foresee appointing extra employees
(also known as shadowing) to compensate for the impact of
HIV/AIDS on labour productivity, absenteeism and mortality?
Yes
No
8.) Is your company/group investing in machinery and/or equipment to
reduce its dependence on labour/employees because of HIV/AIDS?
Yes
No
60
9.a) How has HIV/AIDS affected the demand for your company/group’s products or services
(i.e. sales)?
Severely
reduced
demand
Moderately
reduced
demand
Moderately
increased
demand
No Effect
Sharply
increased
demand
Don't know
9.b) What do you expect the (sales) impact of HIV/AIDS will be in 5 years time?
Severely
reduced
demand
Moderately
reduced
demand
Moderately
increased
demand
No Effect
Sharply
increased
demand
10.a) Has the HIV/AIDS epidemic impacted adversely on your
Yes
Don't know
No
company/group’s fixed investment decisions?
Don't
know
10.b) If yes, please indicate the seriousness of the adverse impact on your company/group’s
fixed investment decisions?
Small impact
Moderate impact
Large impact
Don't know
11.a) Which of the following percentages represent your estimation of the impact of HIV/AIDS
on your company/group’s profits?
More than
5% lower
Between
2.5% and
5% lower
Between
0% and
2.5% lower
No impact
Between 0%
and 2.5%
higher
Between
2.5% and
5% higher
More than
5% higher
11.b) What do you expect the impact of HIV/AIDS on profits to be in 5 year’s time?
More than
5% lower
Between
2.5% and
5% lower
Between
0% and
2.5% lower
No impact
Between 0%
and 2.5%
higher
Between
2.5% and
5% higher
More than
5% higher
12.a) All in all, has HIV/AIDS had a significant adverse impact on your
business (e.g. on production, sales or profits)?
Yes
No
12.b) Do you expect HIV/AIDS to have a significant adverse impact
on your business in 5 year's time?
Yes
No
61
South African Business Coalition on HIV & AIDS
Website: www.sabcoha.co.za
Email: tracey@sabcoha.co.za
Tel: +27 (0)11 880 4821
Fax: +27 (0)11 880 6084
Bureau for Economic Research
Website: www.ber.sun.ac.za
Email: elle@ber.sun.ac.za
Tel: +27 (0)21 887 2810
Fax: +27 (0)21 883 9225