How AIDS will hurt SA where it matters most
The prospect of sacrificing 1% a year in GDP growth to AIDS within 10 years is now in view, writes ZILLA EFRAT
AIDS threatens to knock a full 1% a year off South Africa's GDP growth rate by 2005.
So says Southern Life AIDS management actuary Janina Slawski, who bases her figures on what is happening in other African countries and on emerging trends in South Africa.
She says mortality rates from AIDS among SA employees are expected to increase by four to five times over the next decade.
While the prevalence of AIDS deaths will be higher in labour-intensive industries, the impact of the disease will be as severe in capital-intensive industries.
This is because semi-skilled and skilled labour used in capital-intensive industries will have to be replaced, pushing up the costs of training and recruiting new employees.
The looming AIDS epidemic may have positive throwbacks for some sectors of the economy, such as the pharmaceutical industry, but not for many.
Slawski says within the next five to 10 years, 25% of the SA working population is expected to be infected with AIDS.
When this happens, the average company can expect productivity to fall by about 5%. This is because there will be a large number of ill people in the workforce, as well as those taking compassionate leave to attend funerals and care for sick friends and family members.
To counter this problem, Slawski says companies may switch away from capital-intensive production methods to more labour-intensive ones as they have done in Zimbabwe - moves which could affect South Africa's global competitiveness.
"In some African countries, companies employ two or three people to run machines. If one dies, the others can continue to work the machine," she says.
Other expenses which may hit bottom-line profits could include workplace safety measures, AIDS education programmes, employee counselling and employee care facilities.
Slawski says AIDS is expected to drive consumption levels up and reduce savings, as people dip into their nest eggs to pay for drugs, nurses and hired assistance.
It is also expected to affect many companies' target markets, rendering some strategic plans useless.
For example, a luxury goods manufacturer planning a major expansion into the middle income or emerging market will have to go back to the drawing board. This is because many of those in these markets will have less to fork out on luxury goods as their money increasingly goes into health care.
"The proportion of people aged between 30 and 40 in the population is also set to fall and companies which target this age group will have to examine what AIDS means to them," says Slawski.
On a sectoral basis, Metropolitan Life AIDS researcher Thomas Muhr expects the mining industry to be harshly affected because it makes use of migrant labour and provides health services for its employees.
Transport companies will be hurt because of the relatively high incidence of the disease among truck drivers, but the impact on industries like agriculture will be lower.
The AIDS epidemic could also have devastating effects on company medical aid schemes. "We expect medical costs to increase significantly with young members, who have traditionally been low claimers, increasing their claim rates," says Slawski.
"The cross-subsidy that has existed between young and old members will no longer be possible. The overall scenario for employee benefits is that limited resources will have to be carefully allocated to accommodate spiralling costs."
She believes that medical schemes will increasingly turn to primary health care to keep contributions affordable. This means that schemes will limit high-cost treatments like transplants and cancer therapy.
Benefit scheme trustees will also have to reconsider their group life and disability benefits, the costs of which could potentially increase four to five times and become unaffordable within five to 10 years, says Slawski.
Her comments follow the release of figures by the Department of Health which show that South Africa's HIV infection rate has risen to 6% of the population from about 4.6% a year ago. The estimated number of people infected with HIV was up to 2.4-million at the end of 1996 from 1.8-million a year earlier.