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Good Practice Note
HIV/AIDSintheWorkplace
What’s Inside:
2 Costs and Benefits4 Getting Started7 Taking Action9 Education and Prevention Programs11 IFC Against AIDS16 Care and Treatment Programs18 Monitoring Effectiveness19 Extending the Reach of the Private Sector22 A Corporate Road Map on HIV/AIDSEnvironment and Social Development Department
ccording to the United Nations, the past two decades have seen 60 million peopleinfected by HIV/AIDS and 20 milliondeaths. Ninety-five percent of the infectedpopulation currently live in developing countries. While Africa continues to be theregion most severely impacted by the pandemic, infection rates inother regions (notably Eastern andCentral Europe and Asia) areclimbing rapidly. The UN predicts68 million more deaths over thenext twenty years unless efforts atprevention and treatment areincreasedThe social and economic impact of the disease isintensified by the fact that AIDS kills primarily youngand middle-aged adults during their peak productive and reproductive years. At the macrolevel, an effect of this nature on the workforce canimpact the economies of entire countries. Byreducing the labor supply and disposable incomes, AIDS impacts markets, savings rates, investmentand consumer spending. While assessing theeconomic impact of AIDS is very difficult, studiessuggest that some of the hardest-hit countries may forfeit 2% or more of GDP growth per year as aresult of the epidemic. At the micro level, businesses will feel the impact of HIV/AIDS most clearly through their workforce, with direct consequences for a company's bottomline. These include increased expenditures on
(”Report on the GlobalHIV/AIDS Epidemic”, July 2002,UNAIDS).
medical and health insurance costs, funeral costsand death benefits, as well as recruitment and training needs due to lost personnel. In addition, firms experience decreased revenues as a result of higher absenteeism and staff turnover, reducedproductivity, declining morale and ashrinking consumer base. While acompany's revenues decrease, itscosts of doing business increasebecause its suppliers, distributorsand the public sector are alsoaffected, leading to similar disruptions in the supply chain.This Good Practice Note is anintroduction to the issue of HIV/AIDS in the workplace and is targeted at the private sector indeveloping countries. As part of IFC’s ongoingcommitment to sustainable development, the Noteseeks to provide companies with practical guidanceand a range of options, based on corporateexperiences, for designing and implementingprevention and care programs in support of employees and the communities in which they work and live.This is a learning process for many companies which means that good practice approaches arecontinually evolving. The examples in this Notecome from publicly available sources such as agencypublications and company websites. IFC has not verified the accuracy of such information nor thecompanies' practices, and in certain cases it is simply too soon to judge the success of various programsand initiatives.
 A
"It is inevitable that a firm doing business inthe developing world will pay for AIDS. It is just aquestion of when andhow much."
 — Lee Smith, Former President,Levi Strauss International
Page OneGood Practice Note December 2002 Number 2
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HIV/AIDS
It is difficult to generalize about the costs andbenefits to companies of implementing workplaceprograms to address HIV/AIDS because there areso many variables to consider. For example, abusiness operating in an existing high prevalenceregion or locality where the epidemic is well-advanced may have a very different cost-benefitscenario than a business located in an area whereHIV incidence is relatively low but increasing. The former may see care and treatment programs for its workforce as a priority whereas, for the latter, aneducation and prevention campaign would bringcost-effective benefits. Other variables affecting costmay include: size of company, setting, industrysector, cost margin, ratio of skilled to unskilled workers, risk factors, HIV prevalence in the workforce, availability of government or NGOsupported programs and facilities, etc.Companies themselves are at varying stages withrespect to engagement on workplace HIV/AIDSissues. Some know they have a problem and are taking action on multiple fronts to address it, otherssuspect they may have a problem but don't knowhow or where to start, and still other companiesare unaware that a problem exists even when itmay already be having a negative impact on their bottom line. In order to accurately weigh the costsand benefits of taking action, it is critical for acompany to understand the extent of the threatHIV/AIDS poses in its area of operation and the fullrange of direct and indirect costs associated with the impacts of the disease on its workforce (seebox p. 3 on “Progression of HIV/AIDS Impacts on the Workforce and Associated Costs”). For example, businesses may not make the connectionbetween such things as decreased productivity,increased absenteeism, staff turnover, higher recruitment and training costs on the one hand, andincreasing incidence of HIV on the other. In suchcases, taking no action may prove the bigger risk.UNAIDS estimates that the annual cost to acompany of prevention per employee is $5, whereas the costs of AIDS can be far higher.The key is to find the most affordable solution to fita company's particular needs. With this in mind,studies have been undertaken to explore the costsand benefits associated with business action onHIV/AIDS. Researchers from the Center for International Health at Boston University havedeveloped a costing model that estimates thepresent value of new HIV infections in the formalbusiness sector in southern Africa. The study found that new infections can cost between 3.4 percentand 10.7 percent of annual salaries depending onskill level, associated benefits, and prevalence in thearea. While treatment costs will vary considerablyamong companies depending on what segment of  the workforce is targeted and the type of careoffered, the researchers concluded that even for low-cost companies, the benefits associated withinterventions appeared to outweigh the costs. (For more details go to:)Similarly, a University of California-San Franciscostudy used an economic model to compare HIV-related business costs for large Ugandan companies(500+ employees) with the cost of providingprevention, care and treatment to employees. Thestudy concluded that even programs offering themost expensive treatment — anti-retroviral care —can be cost-effective especially in light of 85% pricereductions offered by drug manufacturers for sub-Saharan Africa (UCSF electronic newsletter Daybreak, 7/14/2000,
 www.international-health.org/  AIDS_Economics .http://www.ucsf.edu/ daybreak).
Costs and Benefits
The social andeconomic impact of the disease isintensified by the factthat AIDS kills primarily young andmiddle-aged adultsduring their most productive years.
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Good Practice Note December 2002 Number 2
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Progression of HIV/AIDs Impacts on the Workforce and Associated Costs
Source: HIV/AIDS in the Commonwealth 2000/01, London: Kensington Publications, 2000. The Response of African Businesses to HIV/AIDS, Jonathan Simon,Sydney Rosen, Alan Whiteside, Jeffrey R. Vincent and Donald M. Thea, Final, 2000, p. 4.
Progression of HIV/AIDSin the Workforce
Employee becomes infectedwith HIV virusHIV/AIDS-related morbiditybeginsEmployee leaves workforcedue to death, medicalboarding, or voluntaryresignationCompany recruits areplacement employeeCompany trains the newemployeeNew employee joins theworkforce
Economic Impact ofIndividual Case
No costs to company at this stageSick leave and other absenteeism increaseWork performance declines due toemployee illnessOvertime and contractors’ wages increaseto compensate for absenteeismUse of company’s on-site health clinicsincreasesPayouts from medical aid schemesincreaseEmployee requires attention of humanresource and employee assistancepersonnelPayout from death benefit or life insurancescheme is claimedPension benefits are claimed by employee or dependentsOther employees are absent to attendfuneralFuneral expenses are incurredCompany loans to employee are not repaidCo-workers are demoralized by loss of colleagueCompany incurs costs of recruitmentPosition is vacant until new employee ishiredCost of overtime wages increases tocompensate for vacant positionsCompany incurs costs of pre-employmenttraining (tuition, etc.)Company incurs costs of in-service training tobring new employee up to level of old oneSalary is paid to employee during trainingPerformance is low while new employeecomes up to speedOther employees spend time providing on-the-job training
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Economic Impact of All Cases
No costs to company at this stageOverall productivity of workforcedeclinesOverall labor costs increase Additional use of medical aid benefitscauses premiums to increase Additional medical staff must be hiredat the company health clinicsManagers begin to spend time andresources on HIV-related issuesHIV/AIDS interventions are designedand implementedPayouts from pension fund causeemployer and/or employeecontributions to increaseReturns to training investments arereducedMorale, discipline, and concentration of other employees are disrupted byfrequent deaths of colleagues Additional recruiting staff and resourcesmust be brought onWages for skilled (and possiblyunskilled) employees increase as labor markets respond to the loss of workers Additional training staff and resourcesmust be brought onThere is an overall reduction in theexperience, skill, institutional memory,and performance of the workforceWork unit productivity is disrupted asturnover rates increase
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Businesses will feel theimpact of HIV/AIDSmost clearly throughtheir workforce, withdirect consequences for a company’sbottom line.
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