Determinants and Composition of the Economic Impact of HIV in Seven Southern African Firms

Abstract

Rationale: Anecdotal evidence suggests firms in Southern Africa are currently experiencing an increase in the impact of HIV. Some studies have been done to estimate workforce impact but few have measured economic impact. The economic impact on a firm is dependant on a number of factors. It is important that firms understand the determinants, quantify the potential impact and understand how this can be mitigated.

Objectives: To explore the level, trends and primary determinants of HIV's economic cost across a number of firms in high, medium and low HIV-prevalence settings in the absence of antiretroviral treatment. This also provides a basis for the evaluation of the cost effectiveness of treatment programmes.

Methodology: We collected data from seven Southern African companies from 2002 - 2005 on economic cost of HIV/AIDS and its determinants. Costs were classified into human resource, health care, programme and productivity costs. Programme costs included VCT, peer education, wellness and other awareness programmes. The data has been used to develop a model to estimate total current and future workforce and economic cost of HIV to the firm over time.

Results: The average prevalence in the companies was 24% in 2006 (range 3.2% to 31.1%). Average annual economic impact as a percentage of payroll was 5.58% (range 0.4% to 6.7%). Health care constituted the largest component (45.7%), followed by productivity (32.4%), human resource (15.5%) and programme costs (6.4%).

Conclusions: Impact across the firms varies significantly, predominantly according to prevalence. It appears to be stabilising within the individual firms but is predicted to continue to increase in the absence of antiretroviral treatment. Medical care costs dominate where prevalence is higher and comprehensive health care is provided. Programme costs are the major component in lower prevalence firms whilst absenteeism and human resource costs were major contributors throughout.

Keywords: HIV/AIDS Workforce Cost of Illness

JEL Classification: J32, I10