ECONOMIC IMPACT OF HIV/AIDS ON BUSINESS
Impact on the Bottom Line
Impact on Macroeconomic Stability
Impact on National Security
Economic Impact Resources
There is evidence from multinational companies, as well as small and medium enterprises, revealing that companies are being forced to address the issues of HIV/AIDS, TB, and malaria not for reasons of good corporate citizenship, but out of sheer self interest. AIDS strikes individuals in their most productive years. Today, over 37 million people living with HIV are between the ages of 15-49. The greatest number of new infections is targeting the future workforce, young adults between the ages of 15 to 24 years of age.
For companies possessing workforces in regions that have high rates of HIV infection or burgeoning epidemics, the growing HIV rates in the workforce and communities in which they operate increase the cost of business as a result of:
Profitability: With a greater number of employees falling sick due to HIV/AIDS, companies are faced with increased costs due to rising costs of health insurance, sick leave and funeral benefits. Companies also have to bear the costs of recruiting and training new staff. HIV also threatens economic prosperity by putting national economies at risk, deterring investment and decreasing output for foreign exchange.
Productivity: Production lines, management structures and cohesion in the workplace are directly undermined by increased absenteeism from sickness, caring for ill family members, and preparing for and attending funerals of AIDS victims. Greater staff turnover also leads to knoweldge and skill loss among employees. Lower morale due to illness and loss of co-workers threatens the stable environment needed to sustain operations.
IMPACT ON MACROECONOMIC STABILITY
HIV/AIDS devastates the fabrics of society in sub-Saharan Africa. The disease is escalating rampantly in the world's fastest growing markets, including China, India and Russia. AIDS stands to alter economic potential and political stability in our world's most fragile economies as a result of:
National Budgetary Constraints: A weakened economy and the increased demand for healthcare services strains public sector capacity. AIDS forces countries to reassess budgeting decisions, as they must decide whether to shift spending priorities to create more available money for growing healthcare needs. Currently, per capita health spending per year in the world's least developed countries is $US 11. In high-income countries, this number increases astronomically to $US 1,907.(i) The decline in consumer spending as a result of HIV/AIDS is also associated with a decrease in government revenue. The growing need for services and declining revenue leaves governments with increasing deficits, deterring the possibility of foreign investment.
Loss of Human capital: Overall losses in GDP have been difficult to model. Some estimates reveal losses of up to 2-3% in nations with HIV infection over 10%. A recent report by Heidelberg University and the World Bank argues that many estimations are modest, failing to account for loss in human capital, the increasing numbers of AIDS orphans worldwide and the loss of skills and education over generations.(ii) Over 15 million children under 15 years of age have lost parents to the disease, a number that is expected to almost double to 25 million by 2010.
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i. Report of the Commission on Macroeconomics and Health 2001. Macroeconomics and Health: Investing in health for economic development. p 56.
ii. Belle, C., Devarajan, S. Gersbach, H., 2002. “Long Run Economic Costs of AIDS: Theory and an application to South Africa.” World Bank.. UN AIDS, 2002. Report on the global HIV/AIDS epidemic. P 47
AIDS is decimating economies and destabilizing armed forces around the world. The cruel irony of the disease is that it spreads faster and is most deadly in countries that are burdened with widespread poverty and armed conflict. Where poverty and armed conflict exist simultaneously, HIV/AIDS becomes a development setback that can erase nearly four decades of economic progress.
Those responsible for governance and the delivery of social services such as teachers, health care workers, military, police and civil servants, are disproportionately impacted by the epidemic. According UNAIDS, in Zimbabwe, 19% of male teachers and almost 29% of female teachers were infected with HIV.
Particularly dangerous and heartbreaking is the widespread presence of abandoned and orphaned children as a result of HIV/AIDS, often unable to get the nutrition, education, and skills transfers required for them to be a fully productive workforce.
AIDS orphans are particularly vulnerable to violence, exploitation and abuse. Orphan exploitation can take the form of child soldiers, laborers or sex workers. By 2010 the number of children orphaned by AIDS in Africa alone will number around 18 million.
On a global level, civil and international conflicts contribute to the spread of HIV as populations are destabilized and armies move across new territories. HIV is attacking the armed forces of African countries at more than double the rate of local populations.
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i. See IWPR.net, 2005, "Politics Shape War on HIV/AIDS". http://iwpr.net/?p=acr&s=f&o=184117&apc_state=heniacr2005
TD Bank Financial Group
The Economic Cost of AIDS: A Clear Case for Action
August 2006
UBS Report
HIV/AIDS Beyond Africa: Managing the Financial Impacts
May 2005
The Brookings Institution
The Economic Impact of HIV/AIDS in Southern Africa
September 2001
Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria
Opportunities for Business in the fight against HIV/AIDS
A framework for analysis of the impact of HIV/AIDS on business and the benefits of direct company action in the global response
January 2004
The Futures Group International AIDS Impact Model (AIM)
www.futuresgroup.com/aim