ABSTRACT
HIV/AIDS is a global epidemic that is crippling economies and markets around the world, particularly in Sub-Saharan Africa, which is the hardest hit region. According to UNAIDS, an estimated 33 million people worldwide were living with HIV in 2007, and the epidemic has already claimed the lives of over 25 million people (UNAIDS and WHO 2007; UNAIDS 2008). In many developing countries, HIV infection is concentrated in the working-age population and those in the prime of their productive lives (15-49 years). The International Labour Organisation (ILO) estimates that over three-quarters of those living with HIV are persons of working age, which implies that most of those who have died from AIDS-related illnesses came from the workforce, whether employed or unemployed (ILO/AIDS 2004 and ILO/AIDS 2006). The impact of AIDS on the workforce results in losses both in the quantity and quality of labour and, consequently, declining productivity and increasing costs in production. HIV/AIDS is recognised by the ILO and its tripartite constituents1 in the organisation’s code of practice for dealing with the epidemic in the workplace as a ‘workplace issue’ (ILO 2001), on account of its effect on the workforce and the potentially devastating impact of the epidemic on enterprises. Losses in labour supply and productivity pose an exceptional challenge for
the private sector, where the survival of a business depends crucially on its workforce as its most important asset. In addition to the direct costs of AIDS-related morbidity and mortality to enterprise, there are indirect costs that are linked to productivity losses and higher than normal output costs which impact negatively on enterprise performance. AIDS-related absenteeism – due to illness of workers, time taken off work to care for sick family members and to attend funerals – could reduce profits and investments, and contribute to loss of competitiveness in domestic and international markets. By the start of the new millennium, there was sufficient evidence that HIV/ AIDS was adversely affecting productivity and the output and delivery of goods and services in manufacturing and agricultural enterprises in highlyaffected countries in southern and eastern Africa (Greener 1997; McPherson et al. 2000; Hacker 2001; Rosen et al. 2003). Some employers in South Africa, Botswana, Swaziland, Uganda and Kenya had already realised the threat of
HIV/AIDS to business and, accordingly, introduced specific measures to address this threat to their companies (Cohen 1998; Bonnel 2000, 2001; UNAIDS 2005). This chapter is about the response of the private sector to the HIV/AIDS
epidemic and governance. Based on a growing body of evidence from national experiences that effective governance is essential for an effective response to the epidemic (Roderick 2004; Lisk 2006c; UNDP 2007), it focuses on the types of interventions adopted by firms and business organisations to deal with the impact of HIV/AIDS on the private sector, and how these interventions contribute to improved governance. The chapter begins with an overview of the impact of HIV/AIDS on the private sector, highlighting how the epidemic affects the interests of the private sector, both business and labour alike. It then presents and analyses the response of the private sector: explaining how and why firms decide to provide HIV/AIDS services to their employees and the local community, including an analysis of the costs to business and the benefits that can be derived from such interventions; and identifying the governance implications of the workplace strategies, policies and programmes adopted, the private sector to respond to the epidemic. The case studies selected have chosen to illustrate how firms have been able to apply the principles promoted in the ILO Code of Practice on HIV/AIDS and the World of Work (ILO 2001)
The impact of the HIV/AIDS epidemic on the private sector will depend on a number of factors, such as the HIV prevalence rate in a country, the capital: labour ratio in production and the extent to which the government is committed and actually takes action against the spread of HIV in the country. It has been noted that the cost of HIV/AIDS to an enterprise could be as high as 10-20 per cent of annual labour cost in a private sector business (UNDP/ Government of Malawi 2002; Vass 2005; Whiteside 2008). This massive increase in production costs in key sectors, and the effects on profits and corporate tax revenues, combine to undermine economic growth and progress towards long-term sustainable development. Such is the concern of the United Nations (UN) and the international community about this wider development impact of the global HIV/AIDS epidemic, that control of the spread of the HIV was declared one of the eight Millennium Development Goals (MDGs)2, which were established in the Declaration adopted by the UN Millennium Summit in September 2000 (UN 2000). The private sector, including subsistence agriculture and the urban informal
economy, is the main provider of employment opportunities in many developing countries, including those most affected by HIV/AIDS. Labour losses in the private sector due to HIV/AIDS include skilled workers and a range of capacities that may be undervalued by conventional classification. Tasks that can be classified as ‘organisational’ – e.g. those undertaken by supervisory
and
workers and management staff, who often play key roles in production and whose skills derive from years of experience – are particularly relevant. The probability is that losses of key personnel with job-specific skills and organisational experience will disrupt production and diminish product/service quality. As already noted, firms are affected not only through the direct effects of absenteeism/sickness and related disruption of production on costs, which limit the ability of employers to retain a stable workforce; they also have to incur additional indirect costs to support viable health insurance and pension schemes for the benefit of workers who fall ill and retire prematurely, and to recruit and train new staff. Profits of firms could shrink as a result of the direct and indirect costs of HIV/AIDS production and the loss of markets due to widespread AIDS-related deaths among the general population. Such had been the impact of AIDS on firms in the private sector that by
the mid-1990s, larger firms in some of the worst hit countries were no longer seeking to justify their involvement by asking, ‘Why should we respond?’, but instead wanted answers to questions such as ‘How should we respond?’, ‘What should we do?’ and, ‘Who can we work with?’ Compelling evidence of the direct and indirect costs of HIV/AIDS to business emerged from a number of empirical studies on the impact of the epidemic on labour productivity and costs (Rosen, et al 2003; Natrass, et al. 2005) helped to convince the private sector employers that on balance there is a good business case for providing comprehensive HIV/AIDS services to their employees. The determinants of decisions by enterprises to provide HIV/AIDS services are influenced largely by an assessment of the impact of HIV/AIDS on the firm’s productivity and production costs in relation to the costs to the firm of providing such services, sickness benefits and recruitment/training of new workers. Because of the costs involved in providing HIV/AIDS services, workplace programmes have been dominated by transnational corporations and larger enterprises whose resource base and institutional capacity enable them to undertake comprehensive action against the epidemic. A study by the Washington think-tank, Center for Global Development (CDG), which analysed data from 860 firms and 4,955 workers in Kenya,Tanzania and Uganda, found that larger firms and those with more highly skilled workers invested more in HIV/AIDS prevention and treatment (Ramachandran et al. 2006).
