The Impact of HIV/AIDS on Selected Business Sectors in South Africa, 2004

Transcription

1 The Impact of HIV/AIDS on Selected Business Sectors in South Africa, 2004 A survey conducted by the Bureau for Economic Research, funded by the South African Business Coalition on HIV & AIDS

2 THE IIMPACT OF HIIV/AIIDS ON SELLECTED BUSINESS SECTORS IN I SOUTH AFRICA,, 2004 A survey conducted by the Bureau for Economic Research (BER) and funded by the South African Business Coalition on HIV & AIDS (SABCOHA) Researched and compiled by Linette Ellis and Jenny Terwin Bureau for Economic Research Stellenbosch University October 2004

3 FOREWORD It is with pleasure that I am able to introduce the 2004 SABCOHA Survey on the Impact of HIV/AIDS on Selected Business Sectors in South Africa. As part of an on-going endeavour to measure the impact on and response by the private sector, SABCOHA and the Bureau for Economic Research present this report. SABCOHA thanks the BER for the professional manner in which the survey was conducted. This year s report includes sectors previously not covered, namely the financial services and mining sectors. The 2004 questionnaire also incorporated some additional questions, including an investigation into whether companies reported on HIV/AIDS. Whilst SABCOHA and the BER aim to expand the survey into sectors not covered before, a balance will be maintained to ensure comparability to previous surveys. The fact that the 2004 survey results broadly agree with the 2003 results serves to affirm and validate the findings of the survey. It is clear that the epidemic is experienced differently according to sector, company size and location. In assessing the economic impact of HIV/AIDS, the mining and manufacturing sectors seem to be the hardest hit among the sectors surveyed. Consequently they are also responding the most comprehensively. It is encouraging to see the lengths to which many companies, especially large corporations, are going to mitigate the impact of HIV/AIDS. As a result, significant successes and breakthroughs have been achieved. More disturbing, however, is the lethargic response by certain sectors, such as the retail and building and construction sectors. Whilst this might be because the current effect of the epidemic in these sectors is still relatively small, it must be realized that the impact of HIV/AIDS manifests gradually. SABCOHA also appeals to companies located in areas where HIV prevalence is still low, not to be complacent. The success of an HIV/AIDS workplace intervention is only evidenced over the medium to long term. Along with treatment, the prevention of new infections remains the most effective strategy in the battle against HIV/AIDS. Despite documented effects of HIV/AIDS on small and medium size enterprises (SMEs), SMEs have made little progress towards developing comprehensive strategies to combat the epidemic. Underlying this is the fact that most SMEs are poorly capacitated to deal with the problem and lack sufficient financial resources. Many businesses feel overwhelmed by the disease and are unsure of where to start. To overcome this problem, SABCOHA has developed a comprehensive Toolkit as a step-by-step guide for SMEs to formulate and

4 implement a workplace HIV/AIDS programme. It also affords an opportunity to bigger companies that may already have internal policies in place, but whose supply chains are threatened by HIV/AIDS, to engage smaller partners and associates and extend assistance by providing them with the Toolkit. 1 Challenges that lie ahead include the public sector roll-out of anti-retroviral therapy. Furthermore, as government and the private sector strive to combat the epidemic, clearer definition of how we partner with one another is needed. Another critical element to achieving a more substantive response is leadership. SABCOHA, in its attempt to become the voice of business on HIV/AIDS, has shown leadership, commitment and vision. SABCOHA is confident that, through better co-ordination, sustained endeavours and visionary leadership, meaningful progress will be achieved in the fight against HIV/AIDS. BRAD MEARS Chief Executive Officer South African Business Coalition on HIV/AIDS 1 For more information on the SABCOHA Toolkit, please visit the SABCOHA website at or contact Tracey King at SABCOHA, tel.: or tracey@sabcoha.co.za

5 TABLLE OF CONTENTS EXECUTIVE SUMMARY...i CHAPTER 1: RATIONALE FOR THE SURVEY... 1 Introduction... 1 The Demographic Impact of HIV/AIDS in South Africa... 2 CHAPTER 2: SURVEY METHODOLOGY... 7 Introduction... 7 The Questionnaire... 7 The BER s Business Surveys and the Panel of Participants Limitations of the Research CHAPTER 3: SURVEY RESULTS Introduction Labour Force Details How Has Business Responded To The Epidemic? The Economic Impact of HIV/AIDS on Business in South Africa CHAPTER 4: COMPARISON WITH 2003 SURVEY RESULTS CHAPTER 5: CONCLUDING REMARKS REFERENCES APPENDIX 1: SURVEY QUESTIONNAIRE BER PANEL APPENDIX 2: SURVEY QUESTIONNAIRE MINING SECTOR APPENDIX 3: SABCOHA... 64

6 EXECUTIVE SUMMARY The SABCOHA survey on the impact of HIV/AIDS on selected business sectors in South Africa was conducted by the Bureau for Economic Research (BER) among respondents in the mining, manufacturing, retail, wholesale, motor trade, building and construction and financial services sectors. The survey took place from 15 July to 6 September 2004 and 1008 companies participated in the survey. Apart from the fact that the survey was expanded to the mining and financial services sectors and certain new questions were introduced, the 2004 survey is a repetition of the 2003 HIV/AIDS survey by the BER and SABCOHA. The results from the 2004 survey did not differ dramatically from that of the 2003 survey. This serves to affirm the findings of the 2003 survey and validate the findings of the 2004 survey on the impact of HIV/AIDS on selected business sectors in South Africa. The survey results suggest that the mining sector, followed by the manufacturing sector, are the worst affected among the sectors surveyed. Responses also differ significantly between companies of varying sizes and from different provinces. Compared to medium and large companies, a considerably lower percentage of small companies (with less than 100 employees) have noted HIV/AIDS related impacts. Similarly, companies based in the Western Cape have experienced a much smaller impact compared to companies located in KwaZulu-Natal and Gauteng, two provinces with some of the highest HIV prevalence rates. BUSINESS RESPONSE TO THE EPIDEMIC The survey showed that 77% of the mines, 58% of the financial services companies and 50% of the manufacturers surveyed have an HIV/AIDS policy in place. However, less than a third of the retailers, wholesalers, vehicle dealers and building and construction companies have implemented an HIV/AIDS policy. Employer responses to the epidemic appear to be linked to company size, with the majority of medium and large companies indicating that they have an HIV/AIDS policy in place and small companies having done little in the way of action against the epidemic. The vast majority of the respondents who have an HIV/AIDS policy in place indicated that they have also communicated this policy to their employees. Most companies seem to have implemented their HIV/AIDS policies between 2000 and Whereas approximately half of the mines and a third of the manufacturers and financial services companies have implemented a voluntary counselling and testing programme, less than one in six of the respondents in the other four sectors have done so. Mines, manufacturers and financial services companies also outperformed retailers, wholesalers, i

7 vehicle dealers and building and construction companies with regard to the implementation of HIV/AIDS awareness programmes and care, support and treatment programmes. Some 21% of the mines and 15% of the financial services companies indicated that they provide anti-retroviral therapy at the workplace, but 10% or less of the respondents in the other sectors provide this treatment. Apart from mining and financial services companies, very few firms have conducted research to assess the impact of HIV/AIDS on their labour force, production costs and consumer base. Most of this risk assessment applied to the larger companies. THE ECONOMIC IMPACT OF HIV/AIDS Production Costs The survey results suggest that the mining and manufacturing sectors are by far the worst affected among the sectors surveyed. More than 60% of the mines and roughly 50% of the manufacturers surveyed indicated that HIV/AIDS has already reduced labour productivity or increased absenteeism among employees and has led to higher employee benefit costs. The majority of the mines that have experienced these impacts rated the effect of HIV/AIDS on these aspects as moderate or severe, as opposed to only a small impact. Furthermore, more than half of the mines and approximately 40% of the manufacturers surveyed indicated that the epidemic has led to higher labour turnover rates, lost experience and skills and higher recruitment and training costs. Retailers, wholesalers, motor traders and companies in the building and construction and financial services sectors appear to be significantly less affected by HIV/AIDS. Roughly 40% or less of the participants in these sectors indicated that they have had to face any of the abovementioned implications of the epidemic. Those who have been affected, generally rated the impact as small. Supply Whereas 27% of the mines and 25% of the wholesalers surveyed reported that their suppliers have indicated that HIV/AIDS has had an adverse impact on them, only 8% in the financial sector have reported such an effect. Roughly 20% of the respondents in the other sectors reported that their suppliers have been adversely affected by HIV/AIDS. Whereas 16% of the respondents in the mining sector were of the opinion that HIV/AIDS has disrupted the supply of goods and services to their companies, less than 9% of the respondents in the other 6 sectors shared this view. Labour Demand and Fixed Investment The majority of respondents in all but the mining sector indicated that HIV/AIDS has no impact on their decision to employ new workers or terminate current labour contracts. ii

8 However, a significant number of companies, especially in the mining, financial services, manufacturing and building and construction sectors, feel that HIV/AIDS has a net positive effect on their demand for labour. Thirty percent of the mines and 18% of the manufacturers surveyed indicated that they foresee appointing extra employees (also known as work shadowing) to compensate for the impact of HIV/AIDS on labour productivity, absenteeism and mortality. Less than one in seven of the companies surveyed in the other sectors plan to do so. Whereas 23% of the mines and 17% of the manufacturers surveyed reported that they were investing in machinery or equipment to reduce their dependence on labour, 10% or less of the respondents in the other sectors are doing so. Ten percent or less of the respondents in all the sectors surveyed indicated that HIV/AIDS has had an adverse impact on their decision to invest in South Africa. Sales It appears as if HIV/AIDS has had a smaller or less noticeable impact on the demand side than on the production side of business in South Africa. Twelve percent or less of the respondents in all sectors surveyed have noticed that HIV/AIDS has had a negative impact on their sales. However, a significantly larger percentage indicated that they expect HIV/AIDS to have an adverse impact on sales five years from now. Prices and Profitability Overall, very few companies (10% or less in all of the sectors surveyed) expect to be able to pass some of the HIV/AIDS related costs on to their customers by increasing their selling prices. If companies are not able to recover costs by increasing selling prices, profit margins will come under pressure. Sixty-two percent of the mines, 48% of the financial services companies and 42% of the manufacturers surveyed reported that profitability has been adversely affected by HIV/AIDS. Approximately a third of the wholesalers and vehicle dealers and a quarter of the retailers and building and construction companies are of the opinion that HIV/AIDS has constrained their profits. Respondents in all sectors expect the impact to escalate over the next five years. Reporting on HIV/AIDS While most of the companies across all the sectors surveyed indicated that they produce some form of statutory document, few seem to report on the impact of HIV/AIDS on their business. Large companies (and those in the financial services and mining sectors) appear to be leading the way in this regard. iii

9 CHAPTER 1:: RATIONALLE FOR THE SURVEY INTRODUCTION According to UNAIDS 2, almost five million people worldwide became newly infected with HIV in 2003, the greatest number in one year since the beginning of the epidemic. A staggering 20 million people have been killed by AIDS since the first cases of AIDS were diagnosed in By far the worst affected region, sub-saharan Africa is home to an estimated 25 million people living with HIV/AIDS. In South Africa, between fifteen and twenty percent of all adults are estimated to be infected with HIV. Given our high HIV infection rate and the size of our population, South Africa has the largest number of people (±5 million) living with HIV/AIDS in the world. The social and economic consequences of these figures are far reaching and will affect almost every facet of life in South Africa. As in the case of any business related risk, HIV/AIDS must be proactively managed. In order to effectively assess and manage risk, it is essential to have adequate information regarding both the nature and the extent of the risk. 3 The hesitancy of many companies to invest in comprehensive HIV/AIDS workplace programmes may be due to a lack of reliable data to show the economic impact of the epidemic. Sustainable private sector responses to the epidemic will only be achieved if senior management is convinced of the business rationale for action. This study strives to give a snapshot view of how and to what extent HIV/AIDS has affected the mining, manufacturing, trade, building & construction sectors and financial service sectors in South Africa, as well as to assess business' awareness and response to the epidemic. While much of the focus and information in the past has been on the response of large enterprises, this survey hopes to supplement with evidence on the impact of HIV/AIDS on small and medium enterprises. The survey results are not only presented on a national basis, but are also disaggregated to show how employer responses differed per company size, per province and for seven economic sectors. By providing evidence of the impact that HIV/AIDS has on the economic bottom line, this report reiterates the case for further action against HIV/AIDS in the workplace and beyond. 2 UNAIDS, June 2004: 2004 Report on the Global AIDS epidemic. 3 SABCOHA, August 2003: HIV/AIDS and Private Sector Employers in Southern Africa. 1

10 THE DEMOGRAPHIC IMPACT OF HIV/AIDS IN SOUTH AFRICA The main source of information concerning the HIV epidemic in South Africa is the National HIV And Syphilis Antenatal Sero-Prevalence Survey, an annual survey conducted by the Department of Health. This chapter contains a brief discussion of the results from the latest antenatal clinic survey, as well as projections produced by the ASSA model - the HIV/AIDS model developed by Professor Rob Dorrington and the Actuarial Society of South Africa (ASSA). Antenatal Survey Data Currently, the annual survey of women attending antenatal clinics by the Department of Health provides the most representative and reliable set of data concerning the HIV epidemic in South Africa. 5 The anonymous testing of a sample of women at selected public sector antenatal clinics during October each year provides information on HIV prevalence rates among women attending these clinics. As the vast majority of the women attending public sector antenatal clinics are black, the survey results provide good coverage of pregnant black women. Unfortunately, the white, coloured and Asian population groups, as well as the wealthier part of the black population group, are under-represented in this survey, as they generally tend to attend private sector clinics. 6 The latest antenatal clinic survey (Department of Health 2003) revealed that 27.9% of women attending public sector antenatal clinics were infected with HIV by late 2003 (see figure 1). The survey results suggest that the epidemic is most advanced in KwaZulu-Natal, with HIV prevalence of women visiting antenatal clinics estimated at 37.5% (see table 1). Other provinces with very high infection rates are Mpumalanga, the Free State, the North West and Gauteng, where close to 30% of women visiting public sector antenatal clinics tested HIV positive. The Western Cape s epidemic seem to be at a relatively early stage of development, with only 13.1% of women visiting antenatal clinics in this province testing positive for HIV. 4 The ASSA2002 model is available online at 5 Although reports from hospitals confirm that the number of HIV/AIDS related illnesses and deaths are rising rapidly, there is no reliable data available on the actual number of AIDS cases or AIDS deaths in South Africa. One reason for this is that AIDS cases are not notifiable (people are not legally bound to report an AIDS case). However, even if the disease was legally notifiable, under-reporting could still take place, as many victims are never diagnosed with HIV/AIDS before they die. Furthermore, due to fear of social rejection, those who are correctly diagnosed may decide not to reveal their status. (Official reports from Statistics SA confirm that there has been a steady increase in young, adult mortality over the last decade.) 6 Abt Associates, February 2000: HIV/AIDS in South Africa Implications for Investors. 2

11 Figure 1 30% 25% 20% 15% 10% 5% 0% 0.7% HIV prevalence among antenatal clinic attendees in South Africa (Department of Health) 1.7% 2.2% 4.0% 7.6% 10.4% 14.2% 17.0% 26.5% 27.9% 24.5% 24.8% 22.8% 22.4% Table 1 HIV prevalence among antenatal clinic attendees by province (Department of Health) KwaZulu-Natal Mpumalanga Free State North West Gauteng Eastern Cape Limpopo Northern Cape Western Cape RSA

12 ASSA Model Projections Due to a lack of comprehensive data on HIV prevalence in the general South African population, demographers extrapolate from this antenatal clinic survey data to the total population by making assumptions about HIV infection rates in the sub-groups of the population not covered by the survey (e.g. men). In extrapolating from the antenatal clinic survey data to the general population, researchers need to take note of the fact that the HIV prevalence among women attending public sector antenatal clinics will likely be higher than HIV prevalence among the general population. Certain sub-groups of the population that are not covered by the survey may have lower levels of HIV infection. These include people who are not sexually active and more affluent people that attend private sector clinics. On the other hand, there are smaller sub-groups of the total population that may have higher infection rates, such as sex-workers and migrant workers. The estimates from the antenatal clinic survey are used in combination with assumptions with regard to HIV infection rates in the sub-groups of the population not covered by the survey to develop demographic models to project the future course of the epidemic. Figure 2 below presents projections of HIV prevalence from the well-recognised ASSA2002 model. The ASSA2002 model was developed by Professor Rob Dorrington and the Actuarial Society of South Africa (ASSA). This model allows for the roll-out of five interventions that should help to curb the spread of the disease, namely information and education; improved treatment of sexually transmitted diseases; voluntary counselling and testing; mother-to-child-transmission prevention; and anti-retroviral treatment (ART). As illustrated in figure 2, HIV/AIDS will have a disproportionate impact on the working age population. ASSA2002 model estimates suggest that ±18% of adults between the ages of 20 and 64 are currently infected with HIV. For the total population, the ASSA2002 model estimates that roughly 10.8% or 4.93 million South Africans will be HIV positive in the calendar year starting 1 July (In comparison, Statistics South Africa 7 estimates that HIV prevalence among the total population is closer to 8.2%.) Just over half a million South Africans are estimated to be sick with AIDS. Prof. Dorrington warns, By 2010, despite interventions and treatments, we estimate that nearly 3.5 million South Africans will have died of HIV/AIDS related causes. Whether it turns out to be 2.9 million or 3.8 million in practice, we still have a major challenge on our hands. 8 7 According to StatsSA, differences between their estimates and ASSA model estimates may be related to differences in assumptions about the rapidity with which HIV will spread and the future of the South African society. However, StatsSA noted that their assumptions with regard to HIV/AIDS may change once their study on the causes of death is completed (Statistics South Africa Mid-year population estimates, South Africa: 2004 ). 8 ASSA Press Release, July 2004: New AIDS Model Reflects Significant Impact of Interventions. 4

13 Figure % ASSA2002 model projections: HIV Prevelance 18.0% 15.0% 12.0% 9.0% 6.0% 3.0% 0.0% Adult women (ages 20-64) Adult men (ages 20-64) Total population Although no reliable data of HIV infection per sector or per skills category is available, it is believed HIV prevalence is significantly higher among semi- and unskilled workers than among highly skilled and white-collar workers. If this is indeed the case, the mining, transport, building and construction and manufacturing sectors could be particularly vulnerable to the AIDS epidemic, as a large proportion of their workforce falls within the semi- and unskilled categories. Harmony, one of South Africa s gold mining giants, estimates that 33.9% of its labour force is currently infected with HIV and that HIV/AIDS related costs could cost their company between US$2 to US$5 per ounce of gold produced. 9 Harmony implemented Highly Active Anti-Retroviral Therapy (HAART) for their employees on 15 September Harmony originally estimated that HAART would cost them approximately R1000 per mineworker per month (or an estimated R a month in total), but due to various factors (e.g. lower negotiated prices with drug companies and continuous lowering of treatment costs), the cost of HAART has decreased to approximately R554 per employee per month. According to Harmony, their HIV/AIDS-related costs for the 2003/2004 financial year amounted to R7.6 million. 9 Harmony Annual Report 2004: Sustainability Report. 5

14 Similarly, AngloGold estimates that 30% of their employees in South Africa are infected with HIV. AngloGold estimated that the financial impact of HIV/AIDS amounted to 1.9% of their payroll, or R71.9 million in The corresponding figures for 2002 were 1.8% and R62.5 million. This includes increased benefit payments, training and recruitment costs due to higher labour turnover rates, costs of additional healthcare utilization and HIV/AIDS related absenteeism, but does not include the costs related to diminishing labour productivity. 10 It is believed that the high HIV prevalence rate among mineworkers is related to their long separations from their regular partners and relatively easy access to commercial sex workers. A number of studies also found high HIV prevalence levels among truck drivers, security forces and other occupations that require long separations from regular partners. Migrant labour has therefore been identified as a key HIV risk factor. 11 In sharp contrast to the high HIV infection rates estimated for the mining sector, an HIV prevalence survey amongst employees of South Africa s four major banks (ABSA, FirstRand, Nedcor and Standard Bank) revealed an HIV prevalence rate of only 3.4%. This survey, which was conducted between June and September 2003 and tested bank employees, is believed to be one of the biggest HIV-prevalence surveys among a target group consisting mainly of whitecollar workers AngloGold Report to Society 2003: HIV/AIDS. 11 L. Johnson & D. Budlender, January 2002: HIV Risk Factors: A Review of the Demographic, Socio-Economic, Biomedical, and Behavioural Determinants of HIV Prevalence in South Africa. CARE Monograph No The Banking Council South Africa, Media Release on 27 November 2003: Banks HIV AIDS prevalence survey. 6

15 CHAPTER 2:: SURVEY METHODOLLOGY INTRODUCTION This section provides an overview of the methodology that was used to conduct the 2004 SABCOHA survey on the impact of HIV/AIDS on selected business sectors in South Africa. Limitations of this type of research are also discussed. During 2003, the BER designed a questionnaire to survey the economic impact of HIV/AIDS on selected business sectors in South Africa and to determine how business has responded to the epidemic. The questions were evaluated in a pilot study and the BER s first HIV/AIDS survey was conducted in October and November 2003 among the BER s survey panels in the manufacturing, retail, wholesale, motor trade and building and construction sectors. With 1006 companies having participated in the 2003 survey, it was the largest survey on the impact of HIV/AIDS on business in South Africa. In 2004, the survey was expanded to include the mining and financial services sectors and two of the questions from the 2003 questionnaire were replaced with new questions. The 2004 survey was conducted between 15 July and 6 September Some 1008 completed questionnaires were returned to the BER, signifying an overall response rate of 25.5%. THE QUESTIONNAIRE The 2003 questionnaire was designed to survey the economic impact of HIV/AIDS on selected business sectors in South Africa and to determine how they have responded to the epidemic. In order to allow for the measurement of changes in the impact of HIV/AIDS over time (i.e. comparison of results between years), it was decided to keep most of the questions unchanged for the 2004 survey. 13 Two of the questions from the 2003 questionnaire were replaced with new questions - the new questions consider the impact of HIV/AIDS on suppliers; when companies implemented their HIV/AIDS policies; whether their HIV/AIDS policies have been communicated to 13 In 2003, a pilot study was conducted to evaluate the original questionnaire. The questionnaire was faxed to 20 companies and follow-up phone calls were made. Respondents were asked to point out the questions that they found ambiguous or difficult to understand, to suggest ways to simplify the questionnaire and to indicate whether important issues with regard to the impact of HIV/AIDS on business had been omitted. Respondents were also given the opportunity to suggest further questions and to give general comments on the survey. Telephonic interviews with the respondents revealed an overwhelmingly positive response to the survey. Valuable information was gained from the pilot study and some questions were adapted to prevent ambiguity. 7

16 employees, as well as whether companies discuss the impact of HIV/AIDS in their annual reports or financial statements. The methodology that was used to conduct the 2004 survey was very similar to that which was applied in The questionnaire was designed to serve a postal survey approach and, for the most part, the questions were qualitative (as opposed to quantitative) in nature. Furthermore, although some of the questions survey fact or intent, most survey the perceptions of the respondents. Since individuals and business people often base decisions on perceptions (i.e. behaviour is affected by perceptions), the fact that some of the responses may portray subjective views does not diminish the value of the findings. In order to optimise participation in the study, few figures were called for and questions were kept simple most of the questions required that the respondent simply tick the appropriate box. Furthermore, individual responses are treated as strictly confidential. Given the BER s longstanding relationship of trust and cooperation with the panel of participants, we believe that respondents were forthcoming and had no reason other than time constraints not to take part in the survey. Telephonic interviews were conducted with some of the respondents that participated in the 2003 survey but not in the 2004 survey most of these respondents cited a lack of time as the reason for not participating again in In order to ensure the integrity of the results, respondents were urged to complete the questionnaire even if they thought that HIV/AIDS has had no impact on their business. Respondents were also given the choice to answer that they Don t Know whether HIV/AIDS has affected the factors listed in the questionnaire. In a letter accompanying the questionnaire, it was requested that the CEO, owner or manager of the organisation, or the executive that knows best about the impact of HIV/AIDS on the business, complete the questionnaire. Given the position of these executives in their company and the nature of the questions, respondents would have been able to complete the questionnaire within a few minutes without consulting detailed financial or other records. Apart for the mining sector, the same questionnaire was sent to all the sectors. The mining questionnaire only differed from the questionnaire that was sent to the other sectors in the sense that it contained fewer questions: mines were not asked whether they have conducted research on the impact of HIV/AIDS on their consumer base, nor how HIV/AIDS has affected the demand for their products (i.e. sales). The reason for the omissions is twofold. Firstly, since primary minerals are generally not sold to consumers, the impact of HIV/AIDS on the demand for primary minerals is likely to be very indirect and difficult to measure. Secondly, the mining sector in South Africa is 8

17 primarily export-driven, with close to 80% of primary mineral sales exported to world markets. 14 Since roughly 90% these exported minerals are destined for Europe, where HIV/AIDS infection levels are relatively low, the impact of HIV/AIDS on the demand for minerals mined in South Africa is likely to be negligible or immeasurably small. The HIV/AIDS questionnaire for the mining sector was sent by mail to the 977 operating mines, quarries and mineral processing plants listed on the Department of Minerals and Energy s directory. A number of questionnaires were returned without having been completed, as some addresses were incorrect, while other mining operations had closed down. (The directory was provided by the Department of Minerals and Energy and contains, among other, the name, district, contact details and commodities mined by each mining operation.) In addition, the Chamber of Mines offered to contact the mine representatives on their Labour Policy Committee Group in order to encourage participation in the survey. There are 21 mines represented in this committee, including most of South Africa s largest mines. The HIV/AIDS questionnaire for the other 6 sectors was sent to a panel of 2975 regular participants in the BER s quarterly business surveys. This panel comprised 1062 manufacturers, 845 building and construction companies, 521 retailers, 309 wholesalers, 158 vehicle dealers and 80 respondents in the financial services sector. Apart from the financial services sector, the HIV/AIDS survey was conducted at ground level - questionnaires were sent to the branches of a company (or mining operations) in the different regions, allowing for a provincial breakdown of the data. However, as is the case for our regular business survey in the financial services sector, the HIV/AIDS survey in the financial services sector surveyed the national headquarters or divisional heads of financial services companies. (The BER s panel of participants and regular business surveys are discussed in more detail in the next section.) The questionnaires were mailed to respondents between 14 and 23 July By the 6th of September, 1008 completed questionnaires had been returned to the BER. The overall response rate for the survey was 25.5%. The response rate for the BER s regular panel was 30.3%, but the response rate in the mining sector was significantly lower. Since it is unclear precisely how many of the mines on the DME s database are in fact dormant, have closed down or have inaccurate contact details (i.e. questionnaires did not reach their intended destinations), it is impossible to calculate an exact response rate for the mining sector. If the sample is not adjusted to reflect these shortcomings, 14 Department of Minerals and Energy, December 2003: South Africa s Mineral Industry 2003/

18 the mining sector response rate is only ±11% (106 mines 15 participated in the survey), but this is probably an underestimate of the true response rate. On a more positive note, employment figures reported by participants suggest that a relatively higher percentage of South Africa s larger mines participated in the survey. The total number of full-time workers employed by the mines that participated in the survey amounted to , which is estimated to be about 40% of the total number of employees in the mining sector. 16 Nevertheless, the response rates in all the other sectors surveyed were significantly higher than that of the mining sector. This is not surprising, as it takes time and dedication to build a panel of participants that are willing to participate in postal surveys on a regular basis. Were it not for the BER s longstanding relationship of trust (i.e. they know from experience that individual responses are kept confidential) and cooperation (e.g. respondents are always sent a summary of the survey results) with the respondents in the manufacturing, retail, wholesale, motor trade, building and construction and financial services sectors, response rates in these sectors would in all likelihood have been similar to that of the mining sector. Table 2 below shows a comparison between the 2003 and 2004 response rates for the different sectors. As the table demonstrates, the 2004 response rates were lower for all the sectors compared to the 2003 response rates (the survey was not conducted in the mining and financial services sectors in 2003). Of the 1006 companies that participated in the 2003 survey, 535 (or 53%) participated again in It seems as though some companies may be suffering from AIDS fatigue. Telephonic interviews with respondents who participated in 2003 but not in 2004 revealed that time constraints were still the main reason for not taking part. Some respondents also indicated that they did not participate again in 2004 because there had been no change in the impact of HIV/AIDS since the time of the previous survey. Table 2. Response Rates Manufacturing Building & Construction Retail Wholesale Motor Financial Services Mining % 31.7% 39.2% 31.5% 28.4% % 29.0% 35.7% 26.5% 25.9% 32.5% 10.8% 15 The survey respondents mine a whole range of different minerals, including diamonds, gold, silver, platinum group metals, coal, industrial minerals (e.g. sand, clay and limestone), non-ferrous metals and minerals (e.g. aluminium and copper), ferrous minerals (e.g. iron ore, chromium and manganese) and other minerals. 16 According to estimates from the Survey of Employment and Earnings by Statistics South Africa, workers were employed in the mining and quarrying sector in the first quarter of

19 THE BER S BUSINESS SURVEYS AND THE PANEL OF PARTICIPANTS The BER has been conducting business surveys since The BER s survey method of the manufacturing, trade and building & construction sectors is modeled on those of the Munich based IFO Institute and the European Commission. The business surveys are qualitative in nature. 17 In respect of the firms surveyed in the BER s quarterly business surveys (and hence also in the HIV/AIDS survey), the building and construction survey includes architects, quantity surveyors, building contractors, sub-contractors and engineers. The trade survey covers retailers, wholesalers and vehicle dealers, while the manufacturing survey differentiates between sub-sectors in the manufacturing sector. (For the purpose of the HIV/AIDS survey, aggregated results are presented for the manufacturing sector and the building and construction sector. However, results for the trade sector are disaggregated into retail, wholesale and motor trade 18.) The financial services survey is conducted amongst retail, merchant and investment banks, as well as asset managers and life insurers. 19 The BER s business surveys are conducted quarterly. Given that the same firms are approached from one survey to the next, a panel is in effect established. Panel based surveys are the norm internationally for conducting business surveys. In accordance with international custom, deliberate sampling was used to design the BER s manufacturing, trade and building & construction panels. Participants were selected in such a manner that they represent particular sectors, regions and firm sizes. The deliberate sampling method agrees with convenience non-probability sampling. Conventional statistical measures, such as sampling margins of error, cannot be calculated to measure the degree of representation of non-probability samples. However, the BER s panel of participants are broadly representative of the formal manufacturing, trade, building and construction and financial services sectors, taking into account the response rate and the results from a 17 For more information on the design and implementing of business surveys, see Business Tendency Surveys A Handbook by the OECD, Please note that the motor trade survey only covers vehicle dealers and not manufacturers motor manufacturers form part of the manufacturing sector survey. 19 South Africa has relatively few banks, asset managers and life insurers. For example, four banks dominate the retail and six the merchant and investment banking sector. Likewise, two companies dominate the life insurance industry. The number of potential participants in a financial sector survey is therefore relatively low in South Africa. However, the divisional heads of all the major retail banks, merchant & investment banks, asset managers and life insurers operating in South Africa are on the BER s panel of participants. Respondents were carefully selected and approached on the basis of their position in the financial world. The head of retail banking or the head of group life assurance is quizzed and not the chairperson of the board of directors of the group or holding company. Divisional heads tend to be best informed about their business units. The confidentiality of the responses adds to their honesty and candour. Furthermore, respondent quality is monitored. 11

20 comparison between the composition of the survey panels and census and other official data. 20 (Informal street vendors, emerging builders and unregistered businesses are not covered.) LIMITATIONS OF THE RESEARCH Before the survey results are presented, it is important to consider the limitations of this type of research. Firstly, since only 25.5% of the companies that were approached actually participated in the survey, one has to consider that there may be a selection bias in the sample. A selection bias would have occurred if the companies that participated in the survey were significantly different from the companies that declined to participate. For example, if the companies that participated are more concerned about the impact of HIV/AIDS, are more likely to have conducted research on the impact of HIV/AIDS or if they are more likely to have experienced adverse impacts as a result of the epidemic, they would probably have reported different impacts compared to the ones that did not take part in the survey. If this were the case, the survey results would not be a true reflection of the impact of HIV/AIDS on the sectors surveyed. In an attempt to prevent a selection bias and ensure the integrity of the results, respondents were urged to complete the questionnaire (in a letter accompanying the questionnaire) even if they thought that HIV/AIDS has had no impact on their business. As mentioned above, respondents were also given the choice to answer that they Don t Know whether HIV/AIDS has affected the factors listed in the questionnaire. The reason most often cited (in follow-up telephonic interviews) for not participating was simply a lack of time to complete the questionnaire. Furthermore, the 2004 response rates were only slightly lower from those we achieve in our regular business surveys (roughly 35%). This can in all likelihood be ascribed to the fact that the HIV/AIDS questionnaire is about 3 times longer than our regular business survey questionnaires. Moreover, since this is the second year that this survey has been conducted, we were able to compare the 2004 responses of companies that participated in both the 2003 and 2004 surveys with the responses of companies that only participated in the 2004 survey (i.e. members of the panel that refused to participate in 2003). The survey results derived from the first-time participants did not differ significantly from those derived from second-time participants. These factors all support the assumption that a selection bias did not occur. A second limitation of the survey that needs some consideration is the fact that many of the questions in the survey test the perceptions of the executives completing the questionnaire, rather 20 Details about the composition of the panels and their representation appear in an article An evaluation of the BER s trade and building survey panels in the Journal for Studies in Economics and Econometrics (SEE) Vol. 26(1), April 2002: by GJ Kershoff. 12

21 than hard data. Since very few companies have conducted research to assess the impact of HIV/AIDS on their business, it is unlikely that many companies would be able to quantify the impact of HIV/AIDS on different aspects of their business. Since business decisions are often influenced by the perceptions of executives, the subjectivity of their views does not invalidate the findings of the survey. Finally, since the survey does not cover all the sectors in the economy, the results should not be generalised to the South African economy as a whole. Table 3 below shows the South African Reserve Bank s estimates 21 of the gross value added by kind of economic activity in 2003, as well as Statistics South Africa s estimates 22 of the number of people employed in the formal nonagricultural sectors (on average in 2003). The purpose of this table is simply to give an indication of the comparative sizes of the relevant sectors. Table 3. Gross value added at current prices (GVA) by kind of economic activity and formal non-agricultural employment (2003) GVA (R million) % of total GVA Employment % of total employment Mining and quarrying % % Manufacturing % % Construction (contractors) % % Retail, wholesale, catering & accommodation % % Financial intermediation, insurance, real-estate & % % business services Other sectors Not % % surveyed Total (All sectors) % % It should be noted that the SARB and StatsSA data show statistics for the combined retail (which includes motor trade), wholesale, catering and accommodation sectors, while the BER only surveys the retail, wholesale and motor trade sectors (i.e. not catering and accommodation). The actual retail sector comprises approximately 46% of the SARB total shown for the retail, wholesale, catering and accommodation sectors, while wholesale accounts for ±34% and motor trade for ±13% of this total. Similarly, we only survey banks, asset managers and life insurers in our financial services survey, which constitutes approximately 44% of the SARB total shown for financial intermediation, insurance, real-estate and business services. 21 SARB Quarterly Bulletin, September 2004 p. S-113. South African Reserve Bank. 13

22 CHAPTER 3:: SURVEY RESULLTS INTRODUCTION This section of the report presents the results of the 2004 SABCOHA survey on the impact of HIV/AIDS on selected business sectors in South Africa. The survey was conducted by the Bureau for Economic Research (BER) during July and August 2004 among companies in the mining, manufacturing, retail, wholesale, motor trade, building and construction and financial services sectors. Some 1008 companies participated in the survey. In what follows, the survey questions and employer responses are presented and discussed (in order of appearance in the questionnaire). The results were not weighted and therefore reflect the actual percentages of respondents that answered a question in a certain way. Questions and responses are divided into three broad categories, namely labour force details, how has business responded to the epidemic and the economic impact of HIV/AIDS on business. For each question, employer responses are disaggregated to show the results for each of the 7 sectors surveyed. For certain questions, employer responses for all but the mining and financial services sectors are also disaggregated to show how responses differed between the four main provinces (Gauteng, KwaZulu-Natal, the Western Cape and the Eastern Cape) and per company size. Since the financial services survey essentially surveys national headquarters, these responses cannot be broken down into provincial results. Furthermore, if the mining and financial services results were also to be considered when disaggregating into provinces and company sizes, one would not be able to draw comparisons between the 2003 and 2004 results for each province or company size, as the mining and financial services sectors were not surveyed in Company size was measured according to employee numbers: Less than 100 employees Small company 100 to 500 employees Medium size company More than 500 employees Large company Figure 3 below shows that roughly 70% of the respondents in the retail, wholesale, motor trade and building and construction sectors are Chief Executive Officers (CEOs), Managing Directors (MDs) or company owners. In the financial services sector, CEOs, MDs or owners and human resource managers each accounted for about 40% of the participants. Only a third of the 22 Statistics South Africa, June Survey of Employment and Earnings. Statistical Release P

23 mining sector participants classified themselves as CEOs, MDs or owners of mines, while mine managers and human resource managers each accounted for ±20% of the of the mining sector respondents. Figure 3 Position of the executive that completed the questionnaire: 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Motor Retail Building & Construction Wholesale Manufacturing Financial Services Mining CEO / MD / Owner Mine / Production / Sales Manager Other Financial Manager / Accountant Human Resources Manager Figure 4 Large: More than 500 employees Medium: 100 to 500 employees Small: Less than 100 employees Position of the executive that completed the questionnaire: 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CEO / MD / Owner Mine / Production / Sales Manager Other Financial Manager / Accountant Human Resources Manager A breakdown of the respondents per company size (see figure 4) reveals that the majority of questionnaires that were received from small enterprises were completed by the CEO, MD or owner of the company, but for large companies this responsibility often fell on the human resources manager. Approximately 60% of the participants from large companies are human resource managers and only 14% are CEO s, MD s or owners. 15

24 LABOUR FORCE DETAILS The first section of the questionnaire called for the contact details of the executive completing the questionnaire and labour force details of the company surveyed. Respondents were asked to state employee numbers; the percentage of male vs. female employees; the percentage of employees in each skills category and the percentage of employees in each of three specified age categories. Table 4 presents the labour force details per sector surveyed. The survey participants consisted of 322 manufacturers, 245 building and construction companies, 186 retailers, 82 wholesalers, 41 vehicle dealers, 106 mines and 26 financial services companies. The survey results suggest that the mining sector is the sector that employs the largest percentage of males (80%), while the financial services sector employs the most females (54%). Similarly, mines employ the largest percentage of semi-/unskilled workers (53%). In contrast, only 14% of employees in the financial services sector were classified as semi-/unskilled, while 48% of them were classified as highly skilled. On average, respondents indicated that about 45% of their employees were between the ages of 30 and 45 years. When looking at these figures, one should keep in mind that females and semi-/unskilled workers are relatively more vulnerable when it comes to HIV infection and that AIDS mortality is highest among employees between the ages of 30 and 45 years. Table 4: Labour Force Details - Sectoral Breakdown Manufacturing Building & Construction Retail Wholesale Motor Mining Financial Services Number of respondents Total number of full time employees 92,749 25,853 41,924 5,399 1, , ,140 Average % of employees: Male 69% 76% 49% 64% 75% 80% 46% Female 31% 24% 51% 36% 25% 20% 54% Average % of employees: Semi- / Unskilled 51% 37% 43% 36% 35% 53% 14% Skilled 34% 31% 41% 44% 46% 26% 38% Highly Skilled 15% 32% 16% 20% 19% 21% 48% Average % of employees: Younger than 30 years 20% 20% 27% 20% 21% 18% 27% 30 to 45 years old 48% 39% 41% 49% 53% 45% 55% Older than 45 31% 40% 32% 30% 26% 37% 18% 16