The AIDS epidemic is worsening

Personal suffering that has an economic impact: In Africa people of working age die as a result of AIDS. The older generation has to look after the grandchildren. Photo: VISA
The micro- and macroeconomic effects of the immune deficiency disease are often underestimated - also in Germany.

As difficult as the HIV virus is for vaccines and therapeutics to grasp - it can also easily escape the economy. Different macroeconomic studies come to different, even contradicting results - depending on the assumptions made about the effects of AIDS epidemics.
There is a clear international trend towards discussing economic issues related to AIDS. There are 40 million people infected with HIV worldwide, 740,000 of them in Western and Central Europe; a further 1.7 million in Eastern Europe and Central Asia, in Germany around 50,000. The majority of those affected are of reproductive - and thus working - age; an economic factor that cannot be underestimated.
Aids has different economic dimensions: Effects on the company level, on national economies, on the attractiveness of investment locations, on bilateral development cooperation, on marketing strategies and on corporate social responsibility. These facets of “Aids & Economy” all also have an impact on Germany.
Depending on the industry, AIDS can have different effects on companies. A distinction is made between direct, indirect and systemic costs. Direct costs include increasing spending on health programs, social and health insurance, or recruiting and training employees. Some companies in southern Africa have even started to fill each position with two to three employees in order to prepare for the high fluctuation due to illness.
Indirect costs arise, for example, from being away from work or being uncomfortable at work, which has an impact on productivity. Systemic effects are negative effects on cohesion in the workplace and the burden on the working atmosphere. This also includes the general level of training and experience, the ability to retain and pass on in-house knowledge.
In order to better deal with the consequences of the AIDS epidemic, larger companies with branches in high-prevalence countries have come together internationally: The Global Business Coalition (GBC) and the Global Health Initiative (GHI) of the World Economic Forum (WEF) are the best-known forums for companies who want to deal with HIV / AIDS. Members also include well-known German companies such as Volkswagen, BMW and Deutsche Post World Net.
However, companies act more intuitively than in a structured manner, as a global survey of more than 10,000 company representatives in 117 countries showed (WEF / GHI 2006). Only around nine percent carried out a quantitative risk analysis of the effects of HIV on their own company. Every second company (46 percent) assumes that AIDS influences corporate activities, 17 percent even expect a strong influence.
In this respect, German companies, with their mostly moderate interest in the topic, are in line with international trends, because even in the countries that are severely affected today, companies only began to face the challenge when AIDS really became visible and large numbers of people began to die.
The GHI report showed: Only when the national HIV prevalence exceeds 20 percent can companies be persuaded to adopt strategy papers that stipulate how to deal with AIDS in the workplace and in which further programs such as counseling, tests and therapy are recorded, if necessary . Given the incubation period of several years, prevention comes too late for many and the answers are at best reactive.
Since the focus of media coverage is on old and new high prevalence areas in Africa, Asia and Eastern Europe, employers from industrialized nations can easily get the impression that AIDS is “far away” and has nothing to do with their companies. In addition, thanks to good therapeutic options, people infected with HIV can increasingly be better integrated into working life. A cohort study from Switzerland
from 2003 it was found that 70 percent of those affected are in paid employment, 68 percent of them full-time.
In Germany there is no precise overview of how many HIV-infected people are integrated into working life. However, the data from the Competence Network HIV / AIDS offer a clue. According to this study, a majority of 7,283 employed 13,728 patients on initial admission (5,920 of them full-time and 1,363 part-time or by the hour). 5,221 people are currently not in employment, 75 are trainees and 99 have a temporary leave of absence (1,050 unknown; as of August 2007).
As the Swiss study shows, people infected with HIV keep their illness secret from their employer whenever possible. The positive integration of HIV patients in the world of work is a real win-win situation: Productive participation in working life can have a positive effect on the course of the disease. Patients repeatedly report that they are more satisfied and balanced when they can participate in social life in this way. In the end, this also saves expenditure on health services, and companies benefit from a highly motivated workforce. The exact relationships need to be substantiated with specific data.
At the same time, it would be desirable if the public were more committed to integrating infected people into working life. Employers who consciously hire people with HIV sometimes complain that they have to bear the consequences - immune deficiency in their employees - on their own.
Tight health budgets
The real impact of the epidemics on the national economy is difficult to grasp. Most models determine only a relatively moderate decline in gross domestic product (GDP) for endemic areas. Nevertheless, a decline of only one to two percentage points per year means that GDP after 25 years is around 30 percent lower than without AIDS. The influences of the epidemic become even more clearly visible if they are differentiated for individual areas. In high prevalence areas, the health sector is particularly affected. There, the need for investment in the fight against HIV / AIDS exceeds the total public health budget available to date. In South Africa, for example, the government plans to include 80 percent of all South Africans in need of therapy in treatment programs within five years. This is estimated at 45 billion South African rand (4.7 billion euros); this sum exceeds the entire previous health budget by 20 percent.
Insurance premiums are rising
The AIDS epidemic is also changing solidarity-based insurance systems. In some countries, for example, the middle - working - generation has been severely decimated. Instead of the adults looking after the grandparents, they now have to take care of their grandchildren. In high-prevalence countries, the ratio of contributors to beneficiaries also changes. Insurance companies are therefore changing their offers more and more frequently: premiums rise or the range of services is reduced. In Germany, too, HIV infection requires high-priced therapies that put a strain on solidarity systems.
Even the attractiveness of a country as an investment location is influenced by its HIV prevalence: because higher costs for health services, falling demand for certain goods (because household income is falling) or strained public budgets that are unable to invest in infrastructure do not appear economically attractive . The result: international rating agencies give badly affected countries a lower rating. For example, South African companies have a higher risk premium due to AIDS.
One might assume that foreign investors are leaving the country in droves; but the opposite is the case: with economic growth of five percent, South Africa is extremely attractive; 600 German companies alone have set up locations in the country at the Cape. A South African study confirms that in more than 90 percent of companies the investment decision was not influenced by HIV. At the same time, 56 percent of the large, 46 percent of the medium and 27 percent of the small companies stated that the epidemic was already having a negative impact on profitability.
Concern about the effects of AIDS is more evident in the fact that individual companies are trying to minimize their individual risk (“burden shifting”): A tight staff of highly qualified workers who are well embedded in education and insurance programs is promoted while the pool of less skilled workers is being reduced. Or individual work areas are outsourced, and the risk of HIV infection is thereby externalized and individualized. A direct causal connection between such restructuring measures and AIDS can only rarely be demonstrated.
Government action
can create trust
It is almost impossible to assess the impact of HIV / AIDS on FDI. It can hardly be determined whether a company has decided against a high prevalence country as a location because of AIDS. Various factors usually play a role here. In South Africa, from the point of view of western investors, the politics of “black economic empowerment”, the fear of disadvantages for whites and the high level of crime may affect the attractiveness of the location.
Important, according to development economist Prof. Dr. Michael Grimm (International Graduate School in Development Studies, The Hague) is also the government strategy in the fight against AIDS. If pro-active measures are taken, the confidence of the international economy grows. What is explosive, however, is that new epidemics are currently emerging in those countries that occupy key positions in the international economy: China, India and Russia. A destabilization of the economy in these countries will very likely soon be felt in Germany and Europe in the tightly networked global economic system.
Development cooperation
The politicians of the G-8 countries must also have been aware of this when they recently agreed additional activities against the international AIDS crisis in Heiligendamm. Germany agreed to increase the funds for the international fight against AIDS and to provide a total of four billion euros (500 million per year) from 2008 to 2015. For German development cooperation, AIDS has a priority that is taken into account as a "cross-sectional task" in all projects.
Aids suddenly wipes out numerous developmental successes that have been painstakingly achieved over decades. Life expectancy is falling in some cases by more than ten years, the educational situation - especially for girls - deteriorates, and other areas of health are affected. Overall, the effectiveness of German development funds suffers as a result.
In addition to direct bilateral development projects, German money is also used to support multilateral programs such as the Global Fund to Fight AIDS, Malaria and Tuberculosis. The financial requirements calculated there and the funds actually available are glaring apart. The Global Fund estimates that by 2010 it will take six to eight billion US dollars a year to find universal access to AIDS therapy and to achieve further goals in the prevention of malaria and tuberculosis control. By comparison, in 2007 the Global Fund had $ 2.3 billion at its disposal.
This affects another economic aspect: the question of the financial viability of international development programs. As long as the Global Fund and other international AIDS aid programs are underfunded, national and international groups, governments and activists will again and again turn to the financially strong countries of the world and demand that more resources be contributed - this also makes AIDS an economic policy issue for the Federal Republic of Germany.
In the search for financial means for the fight against AIDS, more and more creative paths are being taken. The “Product Red” campaign is currently causing a stir, in which various brand providers have developed red products, some of which will benefit the fight against AIDS. For example, the fashion companies GAP and Armani took part. Apple developed the red iPod, Motorola a red cell phone, and American Express customers can opt for a credit card in which one percent of the credit card sales go to the global fund.
In the past it was difficult to get companies to focus on an ambivalent topic such as AIDS when it comes to corporate social responsibility measures, but today big brands are positioning themselves in a very targeted manner. Thomas Spar, marketing strategist at the agency Deep Thought (Frankfurt / Main), observes a “moralization of the markets” and a new need for the “good economy”. This is expressed in the willingness of an increasing number of people to consume sustainably and responsibly, also in Germany.
The saying of the Nobel Peace Prize laureate and founder of the Grameen Bank, Mohammed Yunus, has become well known: "Every social problem is a business opportunity". One may find this cynical: Now the misery of the world is supposed to be turned into profit. At the same time, it describes a reality: AIDS is economic and the economic effects of the epidemic penetrate all societies - in high-prevalence countries as well as in Germany. New coalitions are needed to bring medicine, politics and the HIV self-help community to one table. A place for the economy should also be reserved.

Viviane Brunne
Responsible for international and political relations in the competence network HIV / AIDS
HIV / AIDS: How AIDS is weakening the global economy

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