AEGiS-DMG: The economic danger of Aids: The HIV/Aids epidemic will decrease the productivity of labour while increasing its unit costs.

Important note: Information in this article was accurate in 2000. The state of the art may have changed since the publication date.

The economic danger of Aids: The HIV/Aids epidemic will decrease the productivity of labour while increasing its unit costs.

Daily Mail & Guardian - Johannesburg, South Africa. March 2, 2000
Barry Streek

THE HIV/Aids epidemic which has so far infected five million South Africans -- about 11,1% of the entire population -- has serious economic dangers as it would in future decrease labour productivity while increasing unit labour costs, the Department of Finance has warned.

"The economic and social impact of HIV/Aids is hard to predict," said the department in its stark assessment in the budget review, which was released together with Minister of Finance Trevor Manuel's budget speech this week.

"Household structure and behaviour will change as the size, composition and productivity of the labour force are affected," says the department.

It also noted that "HIV/Aids is more prevalent among the economically active part of the population, thus affecting economic activity through a loss of skills and experience" and went on to predict that "labour productivity will decrease owing to absenteeism and illness of workers, and unit labour costs will increase as firms pay more for medical aid and group life or disability coverage.

"Initial evidence suggests that Aids mainly affects lower income or skills groups (such as migrant or mobile labourers) but the future pattern is still unclear. One study predicts an HIV prevalence in 2003 of 12% among highly skilled workers, 20% among skilled workers and 27,2% among low-skilled workers.

"Declining life expectancy and job losses in families will also affect the dependency ratio -- the ratio of non-working-age population to the working population," it said.

"More orphaned children and child-headed households, combined with fewer economically active people, will burden family support systems, with implications for the future development of South Africa's social security systems," the department's review also said.
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