Small business is underestimating the impact of HIV/Aids on the workforce.
South Africa’s private sector is living in a state of bliss, with almost universal ignorance of the real impact of HIV/Aids on their workforce and bottom line. Nor is there any cohesive response to the epidemic, with businesses taking their own strategic line on what to do – and not do.
These are the findings of a new survey into workplace responses to HIV/Aids funded by the British government’s Department for International Development (DFID) and published by the South African Business Coalition on HIV/Aids (Sabcoha).
”Uncoordinated, expensive, palliative and marginal,” is how one industry expert described the formal sector business response to HIV/Aids.
The Sabcoha report sums up the situation: ”Employers are consequently implementing policies and strategies without any real understanding of the extent or precise location of their risks.”
The perception of a majority of employers that HIV/Aids will have a small or moderate impact on their businesses comes from ”an uninformed knowledge base indicated by the low levels of risk assessment and lack of any studies of the behaviours or conditions among the workforce”.
A striking point about the survey is the differentiation between large (more than 500 employees), medium (100 to 500 employees) and small (less than 100 employees) companies.
While more than half of the big companies surveyed had trained managers or supervisors on managing HIV/Aids related matters in the workplace, this figure dropped to just over 16% for small companies.
Despite the calls for voluntary testing and counselling as a way of curbing the spread of the epidemic and helping infected individuals, only half the companies offered their workers these services.
No small company had a compulsory HIV/Aids education session, and only 6,5% had extended the voluntary education sessions to dependants of employees.
Although only the preliminary results of a much larger study, the Sabcoha/DFID survey indicates that the private sector has been almost as dilatory as the state in addressing the issue of HIV/Aids.
Murray Coombs of Deloitte & Touche human capital corporation, one of the authors of the report, says: ”Some of the large companies were doing so much that it was extraordinary to find – and some of the small companies have done nothing. The spectrum is far wider than we thought. We thought there would be a coherence somewhere in the middle.”
Most of the companies surveyed said they expected either a moderate (53,3%) or little/no impact (38,1%) on their business. Only 8,6% thought there would be an ”extreme” impact.
Despite the steady trickle of rumour about the extent of HIV in the mining sector, no mining houses felt the impact of HIV on their workforce would be extreme. Maybe the mines feel they can manage the effects of HIV. Alternatively, Coombs suggests ignorance: ”Virtually no one has done a risk assessment [of HIV/Aids in the workplace] but they all think there are no serious impacts. To us that was a profound finding in this study, that people have accepted the risk on a perceived level of risk assessment.”
Without knowing prevalence rates of HIV-positive workers, it is impossible to know costs. And without coordinated information sharing, prevalence rates have to be gleaned from bits of information released in isolation.
Clive Evian, a medical consultant and a director of LifeWorks, has estimated that among unskilled people prevalence is about 25%, falling to 12% to 20% for moderately skilled people and to 5% to 12% for skilled workers.
Coombs says that many companies still look at the impact of HIV/Aids in terms of medical costs – and if they don’t have a medical scheme they therefore feel they have no risks.
Sixty-three per cent of the companies surveyed said they provide medi-cal scheme benefits to all their staff, while 20% provide them only to some of their employees. Again there was a wide variance depending on the company size. While all the large companies provide medical scheme benefits, just under 42% of small businesses said they did not provide such benefits.
More than 80% of large companies reported that their medical scheme included a disease management programme that handled HIV/Aids. This figure dropped to 76% for medium-sized companies and 48% for small ones. What the report fails to answer is the real effectiveness of such disease management programmes.
The hidden, indirect costs of the epidemic are thought to be potentially more explosive than the obvious medical costs.
Stephen Kramer from Metropolitan Life last year estimated that indirect costs could add 10% to the wage bill of a typical manufacturing company by 2005, and 15% by the end of the decade. Of these costs, he estimated that 45% would be due to losses in turnover or profit, 20% in management and labour meetings, and 10% each for recruitment and training, legal costs, and sick and compassionate leave. Loss of productivity or motivation would contribute the final 5%.
The Sabcoha/DFID study found that just more than 9% of the companies said that they needed to budget for higher training costs owing to the impact of HIV/Aids deaths.
Just more than 38% of companies report their actions on HIV/Aids to shareholders in their annual reports, although this rose to 64% for larger employers. Encouragingly the Sabcoha/DFID report says ”unusually”, almost 12% of chief executive officers take an active role in combating HIV/Aids among their workforce.
In curtailing risk, one obvious move for business is to curb employee benefits. The Sabcoha/DFID study found that more than 57% of businesses surveyed claimed that there had been no direct impacts on employee benefits. Only 3,6% said that benefits had decreased, while 9,1% reported an increase in contributions. This is a surprising result since reducing liabilities in terms of employee benefits has been widely seen as a logical business way of curtailing risk. Coombs advances two theories: ”Either they are in the early phase of the epidemic … and they haven’t seen the direct cost come through yet and therefore the impact is very little. Or, there’s never going to be an impact because they are just a low-level prevalence company and we are just seeing that. There are just going to be demographies in this country which won’t see more than 2% or 3%.
”We’ve got insurance information that proves that [pattern] over the last five to six years, so I’m of the second opinion and not of the first, which says everybody is going to reach 30% and if you’re now at 2% it’s going to be another five years and you’re going to be at 30%.”
One company that has very publicly stepped forward is financial services giant Old Mutual, by having a company-wide voluntary and anonymous HIV prevalence survey at the cost of about R60 per person. Management thinks that between 4% and 6% of its staff are HIV-positive, but accepts that this could be higher or lower.
Old Mutual human resources general manager Nicky Bicket says the group also intends to send a symbolic message to customers and shareholders: ”If we are not seen to be managing HIV the confidence rating of our shareholders and customers will drop.” And that has an unpleasant effect on both business and share price.