South African Journal of Economic and Management Sciences, Vol 17, No 2 (2014)

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South Africa’s private sector investment in training and its erosion as a result of HIV and AIDS

Gavin George, Gavin Surgey, Jeff Gow

Abstract


South Africa’s economic prospects depend on the productivity of its labour, and productivity can only be maximised when the labour force possess the appropriate skills. Business is playing its part by offering training opportunities to employees. Collectively, they are spending more than the government’s mandated level on training. However, the HIV and AIDS epidemic is eroding this investment in southern Africa where the HIV epidemic is at its worst. While there has been empirical work that provides estimates on the cost of HIV and AIDS to business, there is very little data on the actual amounts large companies spend on training, and how much of this investment is eroded as a result of HIV and AIDS deaths. Using an estimate of the HIV and AIDS death rate in the private sector and survey data which identifies training expenditure by sector, the authors estimate the extent to which HIV and AIDS has potentially eroded this investment. The loss for all sectors was estimated at almost R10 million (R9,871,732) during the study year, which equates to USD1,183,661 per annum. This amount represented on average 0.73 per cent of the actual investment in training. The real costs of HIV and AIDS on business, which includes absenteeism, declining productivity and other costs are difficult to quantify, but they are likely to significantly exceed this lost training investment as a result of increasing morbidity and mortality rates due to HIV. It is therefore in a company’s best interest to: (1) ensure that a sound HIV and AIDS policy is in place; (2) invest in effective prevention programmes; and (3) provide the appropriate ARV treatment to infected employees if this treatment is not easily accessible through the public health sector.


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EISSN 2222-3436 (Online)