BELINDA BERESFORD, Johannesburg | Friday
SOUTH African companies are missing out on lucrative returns by failing to see that money spent on HIV/Aids is an investment, rather than a cost, according to a new study into major Southern African companies.
And while many managers may regard HIV as a personal issue, they are still failing to appreciate the business implications. Without knowing how HIV/Aids is affecting them, companies don’t understand the liabilities they are facing or how to counter them.
As a result businesses are unwittingly facing an “Aids tax” of up to 10% of labour costs per year, says Sydney Rosen from the Centre for International Health at the Boston University School of Public Health.
But this cost can vary widely among companies – in some it is as low as 1% – with profound implications for managerial strategic response. In two of the companies Rosen studied, an infected employee could cost up to six times his or her annual salary, compared to just one year in two other companies.
Her research, funded by USAid, looked at the impact of HIV/Aids on six companies, one in Botswana and the others in South Africa. She points out that while companies acquire a hidden liability with each newly infected employee, many adopt an out of sight, out of mind approach until faced with the rising costs of employees getting sick and dying.
The stored-up liability can have serious implications for the long-term health of the company, even excluding ethical issues about companies caring for their workers. Sharing common corporate shyness that appears to affect even the most proactive company, all six studied to date have declined to be identified. Sectors represented include retail, mining and agriculture.
One problem facing businesses in dealing with HIV/Aids is simply the lack of information. For example, no one knows to what extent anti-retroviral drugs are likely to be able to extend life in a country like South Africa, and so its difficult to know how cost effective such treatment is. This is where the second phase of Rosens study comes in.
Her team will be evaluating the efficacy of intervention programmes, including antiretroviral therapy. Preliminary analysis suggests that if a hypothetical intervention costing R6 600 a year gave employees another six years of productive life, the company could be making a profit by providing such care and preventing other costs associated with HIV, such as replacing stricken employees.
Just three years would also be directly profitable for supervisors and managers, although not for lower ranked workers. Rosen points out, however, that if one takes into account the intangible effects of losing even the lowest paid worker – turnover costs, loss of workforce cohesion and experience – it probably would be profitable, as well as morally more comfortable, to provide such interventions for everyone.
Unions also appear to be waking up to the implications of HIV/Aids for their members, which is likely to see increasing pressure on employers to provide medical related benefits to all workers.
Within the admittedly small sample of companies studied to date, Rosen says there are large differences between the prevalence rates even among companies in the same geographical area. This contradicts the assumption that HIV infection rates tend to mirror the community workers come from.
Costs also widely vary, largely driven by disability and death benefits.
Companies that have chosen to maintain benefit levels at the price of rising premiums are carrying a much higher financial burden than those which have preferred to cut benefits and keep premiums stable.
The research matches similar studies done locally by Clive Evian of Lifeworks, which found that infection levels are highest among the lowest-skilled workers and lowest among the highest job bands. Since so many of the financial costs associated with HIV infection are related to salary – for example, insurance – the cost per employee is highest at managerial levels. But the total burden to the company can be greatest among technical workers, the artisans whose skills and experience are hard to replace and who also tend to have greater infection rates.
Research into businesses emphasises that HIV is not just a black disease.
Even though much lower than among their black colleagues, the levels of infections found among white South Africans would be regarded as a “national disaster” if replicated in a country like the US, for example, Rosen said.