annexure four & five: socio-economic impact of hiv/aids on kwazulu natal the management...
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ANNEXURE FOUR & FIVE: Socio-Economic Impact
of HIV/AIDSon
KwaZulu NatalThe Management Challenge
Peter Badcock-Walters & Lucinda Franklin
HEARD(Health Economics & HIV/AIDS Research Division)
University of Natal
ANNEXURE FOUR: Socio-Economic Impact
Lucinda Franklin
Research Fellow
HEARD
Presentation Structure
• HIV in South Africa• The Demographic Impact• Economic Impact • Social Impact• Socio-Economic Determinants for KZN• Summary and Conclusions
HIV in South Africa
ANC Results
0
5
10
15
20
25
30
35
40
94 95 96 97 98 99 '00
KwaZulu-Natal
Mpumalanga
Free State
North-West Province
Gauteng
South Africa
Eastern Cape
Northern Cape
Northern Province
Western Cape
Age Specific ANC Results
05
1015
20253035
<20 20-24 25-29 30-34 35-39 40-44 45-49
1996
1997
1998
1999
2000
HIV Positive South Africans
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
1995 2000 2005 2010
Demographic Impact
AIDS and non-AIDS Deaths
0
200000
400000
600000
800000
1000000
1200000
1995 2000 2005 2010 2015
Other deaths AIDS Deaths
Forecast Mortality
0.00
0.01
0.02
0.03
0.04
0.05
0.06
No AIDS AIDS 1995AIDS 2000 AIDS 2010
AIDS Orphans
Economic Impact
MORTALITY
MORBIDITY
Smaller population
Change in age structure
INDIVIDUAL
FIRM/SECTOR
GOVERNMENT
MACROECONOMY
HOUSEHOLD
LABOURMARKET
HIV/AIDSHIV/AIDS
Channels of Economic Impact
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
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
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
Impact of HIV/AIDS in urban householdsImpact of HIV/AIDS in urban households
General populationGeneral population Families living with AIDSFamilies living with AIDS
Source: Source: Simulation based on data from Cote d’Ivoire (Bechu, Delcroix and Guillaume) 1997Simulation based on data from Cote d’Ivoire (Bechu, Delcroix and Guillaume) 1997
Monthly income per capitaMonthly income per capita
Monthly consumptionper capitaMonthly consumptionper capita
00
5 0005 000
10 00010 000
15 00015 000
20 00020 000
25 00025 000
– 5 000– 5 000
30 000 Francs CFA30 000 Francs CFA
Savings/DisavingsSavings/Disavings
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
Company costs
Effect on production costs, production process, demand for capital/labour, output prices and competitiveness
Progression of HIV/AIDSin the Workforce
Economic Impact on the Company
Morbidity begins
Employee becomes infected
Employee leaves workforce (resigns or dies)
Company hires replacement employee
No costs to company at this stage
Morbidity-related costs are incurred(e.g. absenteeism, individual & workforce productivity, management resources, medical care & insurance)
Termination-related costs are incurred(e.g. payouts from pension or provident fund, funeral expenses, loss of morale, experience, & work-unit cohesion)
Turnover costs are incurred (e.g. recruiting, training, reduced productivity)
Timeline
Year 0
Year 1-5
Year 6or 7
Year 7 or 8
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
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
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
Social Impacts
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
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?
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
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
Summary and Conclusions
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
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