ANNEXURE FOUR

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ANNEXURE FOUR FIVE Socio-Economic Impact of
HIV/AIDSonKwaZulu NatalThe Management
Challenge

• Peter Badcock-Walters Lucinda Franklin
• HEARD
• (Health Economics HIV/AIDS Research Division)
• University of Natal

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ANNEXURE FOUR Socio-Economic Impact

• Lucinda Franklin
• Research Fellow
• HEARD

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Presentation Structure

• HIV in South Africa
• The Demographic Impact
• Economic Impact
• Social Impact
• Socio-Economic Determinants for KZN
• Summary and Conclusions

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HIV in South Africa
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ANC Results
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Age Specific ANC Results
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HIV Positive South Africans
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Demographic Impact
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AIDS and non-AIDS Deaths
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Forecast Mortality
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AIDS Orphans
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Economic Impact
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Channels of Economic Impact
INDIVIDUAL
Smaller population
HOUSEHOLD
MORTALITY
LABOUR MARKET
MACRO ECONOMY
Change in age structure
HIV/AIDS
FIRM/SECTOR
MORBIDITY
GOVERNMENT
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Individual level

• Incubation period (HIV)
• 5-8 years from infection until the onset of AIDS
• Very little economic impact during this time
• AIDS phase
• Period of escalating illness
• Ability to work is reduced
• Cost of care increases

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Household level

• Often more than one household member is infected
  (sexually transmitted)
• Infections are concentrated among the primary
  carers and earners
• Double impact of reduced income and increased
  costs of care

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Household level cont.

• Less money available for other consumption
• Increased need for care diverts time and effort
  from other tasks
• children, often girls, may be removed from school
  to provide care or generate income
• Death(s), often multiple, lead to funeral costs
  which are usually large
• Disaving may result

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Impact of HIV/AIDS in urban households
General population
Families living with AIDS
30 000 Francs CFA
25 000
Monthly income per capita
20 000
15 000
Monthly consumption per capita
10 000
5 000
Savings/Disavings
0
5 000
Source Simulation based on data from Cote
dIvoire (Bechu, Delcroix and Guillaume) 1997
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Labour Market

• AIDS impacts on the sexually / economically
  active population
• AIDS related illness leads to
• reduced productivity due to absenteeism, high
  turnover etc
• AIDS related death leads to
• change in labour force and labour participation
• change in age structure of labour force
• change in available skills and experience

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Company costs
Progression of HIV/AIDS in the Workforce
Economic Impact on the Company
Timeline
Year 0
Employee becomes infected
No costs to company at this stage
Morbidity begins
Morbidity-related costs are incurred (e.g.
absenteeism, individual workforce productivity,
management resources, medical care insurance)
Year 1-5
Employee leaves workforce (resigns or dies)
Termination-related costs are incurred (e.g.
payouts from pension or provident fund, funeral
expenses, loss of morale, experience, work-unit
cohesion)
Year 6 or 7
Company hires replacement employee
Turnover costs are incurred (e.g. recruiting,
training, reduced productivity)
Year 7 or 8

• Effect on production costs, production process,
• demand for capital/labour, output prices and
• competitiveness

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Consumer Markets

• The absolute number of consumers will be reduced
  from what it would have been
• The age structure of the market will change
• The structure of demand will also change
• eg increase in demand for medical goods and
  services
• Consumption in South Africa is constrained more
  by spending power than by consumer numbers. Who
  is infected will play a major role in determining
  the degree of impact

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Sectoral Impact

• Impact will vary in degree across sectors
• Some sectors are susceptible to infections
• While others are vulnerable to the impact
• Those sectors that are both vulnerable and
  susceptible will be the most seriously hit
• The impact on critical sectors in the economy
  will play a major role in determining the macro
  economic impact

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Government Finance

• Increased demand on government services
• Health
• Welfare
• Poverty reduction
• Although demand will increase, the level of
  spending on services will be determined by policy
  decisions

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Social Impacts
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Systems

• Health care
• Increased demand
• Decreased ability to offer services as a result
  of staff loss
• Crowding out
• Similar impact on Welfare services
• Education
• Reduction in demand
• Greater reduction in ability to offer services

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Socialisation

• Psychological impact on children
• Parental illness and death
• Educator illness and death
• Increased death in the community
• Care of orphans
• The need to care for orphans will increase
• Ability of traditional arrangements to cope will
  be eroded
• Long term impact?

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Socio-Economic Determinants for KZN

• High mobility rates
• Migrancy
• Well-developed transport infrastructure
• High poverty rates
• Women among the poorest in province
• Female-headed households poorest
• Rights and status of women
• Rape and domestic abuse rates
• Cultural barriers deny basic rights and
  privileges

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Socio-Economic Determinants for KZN

• Labour migration rates
• Direct result of lack of employment opportunities
  in rural areas
• Apartheid labour system
• Men obliged to leave homes/families to reside in
  single-sex hostels
• Concentrated development efforts in cities
• Commercial sex work
• Prospers in these conditions

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Summary and Conclusions
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Conclusions

• HIV has already reached very high levels in South
  Africa and is set to rise for a few more years
• The resultant increase in death will change the
  structure of the population
• Households and individuals will feel the greatest
  economic impact
• The impact on companies and sectors will vary
• The macroeconomic impact will be felt in the long
  term

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Conclusions

• Health care, welfare and education systems will
  be adversely affected
• HIV/AIDS is the single greatest threat to
  development in South Africa
• Our greatest concern is the impact that HIV will
  have on our children
• HIV/AIDS not simply a public health problem it
  demands a committed innovative multisectoral
  response