Health Minister Aaron Motsoaledi
Health Minister Aaron Motsoaledi

Economists count cost of longer lives

By Londiwe Buthelezi Time of article published Mar 3, 2014

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Johannesburg - Minister of Health Aaron Motsoaledi has no doubt that the government is on the right track in its struggle against HIV/Aids. And because HIV interventions are bearing fruit, Motsoaledi will continue to place much of his focus on the pandemic and on tuberculosis even when some people have started to call him the minister of HIV/Aids.

“I have no doubt that we’ve taken the right path,” he said during the social cluster’s briefing a week ago.

But what does this victory and the resultant rise in longevity mean for the economy?

Economists say it is cause for celebration, but only if the people living longer can contribute to the economy and not compete for jobs with the younger, working-age population.

Econex senior health economist Mariné Erasmus said: “Because our retirement age is 65, we are still gaining working years unlike in countries like Japan where life expectancy is 82 years, which puts a strain on the economy because those people cannot work any more.”

Last year, Statistics SA’s mid-year population survey showed that overall life expectancy had lifted to 59.6 years last year, from 56.8 years in 2009. Life expectancy at birth was put at about 57.7 years for males and 61.4 years for females.

Much of the improvement can be attributed to new medical technologies and the Health Department’s HIV interventions, which have reduced Aids-related deaths significantly since scaling up the antiretroviral (ARV) treatment programme in 2010.

South Africa has the largest ARV programme, benefiting 2.4 million people. The overall HIV prevalence rate in South Africa is now estimated at about 10 percent.

“In recent decades in Africa particularly, the prevalence of HIV compromised longevity. The increased effectiveness in challenging HIV boosted life expectancy,” Standard Bank chief economist Goolam Ballim said.

But Ballim said apart from HIV interventions, the combination of more economic opportunities and a broad social safety net also played a big role in the increased life expectancy.

In his State of the Nation address last month, President Jacob Zuma boldly declared: “Life expectancy is now firmly on an upward trend. South Africans are now living longer.”

He added that the target for the next administration was to ensure that at least 4.6 million people received ARVs.

Even so, Ballim pointed out that longevity could present developmental challenges if a country had more older people than youths.

“South Africa’s challenges are somewhat different from Europe because we have a youthful population but the challenge is they struggle to find employment,” Ballim said.

According to the World Economic Forum’s 2014 global risk report, South Africa has the third-highest unemployment rate for people aged 15 to 24.

Old Mutual general manager of corporate customer solutions Craig Aitchison said many of its customers intended to work for pay after they retired.

But the insurer’s membership data for last year show the retirement age has not changed much over the past years. The average retirement age was 62.

The National Development Plan targets a life expectancy of at least 70 years by 2030, which means this trend must change for this longevity to not put a strain on the economy.

While the net effects of increased life expectancy are difficult to determine, effects on health-care expenditure are already proving adverse.

According to Econex research done in 2012, people above the age of 65 were spending, on average, 45 percent more per admission in private hospitals.

“It does place a burden on the health-care and social grants systems,” Erasmus said.

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