Socio-Economic Issues

Socio-Economic Issues

• Socio-economic challenges negatively impact people and the economy.
• These challenges stem from social and economic/money-related circumstances.

Challenges to Businesses

• Socio-economic issues can affect consumer spending because of poverty and unemployment levels.
• Businesses face extra burdens and increased expenditure to create policies, support systems and informative programs.
• Businesses must create job opportunities to assist the government, placing a financial burden on them.
• Businesses should educate employees on social issues and how to get involved in addressing them in the community.

Types of Socio-Economic Issues

• Inequality and poverty impact people and businesses.
• Inclusivity encourages diversity and equal opportunities.
• HIV/Aids affects the workforce and increases costs for businesses.
• Gambling can lead to addiction, financial problems, and crime.
• Piracy and counterfeiting reduce sales and profits for businesses.
• Bootlegging infringes on copyright and affects legitimate businesses.
• Strikes and political disturbances disrupt operations and productivity.
• Crime leads to losses, increased costs, and a negative business environment.

Inequality

• Inequality is when people do not have the same opportunities and are treated differently because of social status.
• It means that some people have more money/access to education, while others are desperately poor.

Poverty

• Poverty occurs when people has little or no money to buy basic needs, leading to poor living conditions, hunger, and increased susceptibility to disease.

Effects of Inequality and Poverty on Businesses

• People cannot participate fully in the economy because of inequality/poverty.
• Businesses spend more money on social responsibility programmes to address these issues.
• Poverty shrinks the market because people cannot afford to buy items.
• Poverty leads to crime, such as shoplifting and robberies on businesses.
• Violence increases between groups competing for better status and social positions.
• Companies spend more on security measures due to robberies and shoplifting.
• More money is spent on alleviating poverty through social responsibility programmes.
• Inequality limits skills and job opportunities.

Inclusivity

• Inclusivity involves giving everyone opportunities without discriminating based on age, race, gender, sexual orientation, disabilities/HIV status, etc.
• It means valuing individual differences and consciously encouraging diversity in the workplace.

Purpose of Inclusivity in the Workplace

• Inclusivity enables businesses to maximize the use of all human resources.
• It promotes equal opportunity, allowing every employee to gain skills leading to promotion and career advancement.
• Respect is promoted for each person and their contributions in the workplace.
• Healthy working environments are promoted that increase job satisfaction and productivity.
• There is increased tolerance of each other's ideas and beliefs.
• Communication within the workplace improves, helping business goals/objectives to be achieved.
• Businesses benefit from a variety of talents and skills.
• Inclusivity increases education and training, reducing poverty.
• The number of middle-class people participating in the economy goes up.

HIV/Aids

• Aids is a disease caused by the HIV virus which attacks the immune system, lowering the body's natural ability to fight infections.

Negative Impacts of HIV/Aids on Businesses

• There is a loss of skilled staff due to HIV-related illnesses.
• Profits are lower as production decreases when the workforce is affected by disease.
• There is higher absenteeism from illness, leading to a decrease in productivity.
• Conflict can arise among staff if they discover that a worker is HIV positive.
• Businesses struggle to maintain production levels and meet deadlines because of poor staff morale.
• Businesses face increased costs for finding/recruiting/training replacements.
• The pool of available skilled workers is getting smaller due to the high rate of HIV infection.
• There are high costs of finding replacement employees and recruiting.
• Businesses need to invest money in programmes to educate the workers regarding AIDS.
• A drop in the demand for goods and services is caused by a decrease in the number of consumers.
• Costs such as insurance/retirement funds/health/safety are higher as a result of HIV for the business.
• Businesses face increased costs of paying benefits like housing subsidies, medical care, funeral care and pension funds.
• Staff morale may be low, thus lowering productivity as they are concerned about their health.

Gambling

• Gambling means to bet on something of which the outcome is not sure.
• It can take on form of playing games in the hope that some money could be won.
• Although gambling is legal, it gives false hope.

Types of Gambling

• Pyramid schemes involve unsustainable financial structures.
• Money laundering conceals the origins of illegally obtained money.
• Card games can lead to addiction and financial losses.
• Casinos offer a variety of gambling activities.
• National lottery, Scratch cards, Slot machines, Horse betting, Fafi/Mochina, Unofficial lottery type schemes, Bingo halls
• Unlicensed casinos, Internet gambling, Unlicensed operations offering gambling to the public.

Impact of Gambling on Businesses

• Employees may not work overtime at short notice.
• There is high rate of employee absenteeism.
• Local businesses are forced out of business.
• Gambling hides criminal activities and can lead to workplace violence.
• Compulsive gamblers cannot focus on work and often are preoccupied with gambling.
• Relationships in the workplace become strained because someone is gambling.
• Addicted employees could also steal to get money for gambling.
• Productivity reduces as it encourages crime and corruption.
• There is less to spend on goods and services when gamblers lose their money, which affects businesses negatively.
• A decrease in savings leads to a decrease in future production.
• Less buying power as people lose their money on pyramid schemes, casino gambling, etc.

Counterfeiting

• Counterfeit goods are copies/imitations of genuine goods such as clothing/shoes marked with a fake logo/trade mark.
• They are products that are imitated and packed to resemble the original, high-priced goods.

Impact of Counterfeiting on Businesses

• Prices of original goods are often higher because of counterfeiting.
• Consumers often buy because of the considerable price differences.
• Counterfeiting reduces sales and profits of businesses.
• Businesses lose money that could have been used for expansion and the creation of job opportunities.

Bootlegging

• Bootlegging is the recording of live/broadcast performance without the permission of the performers/songwriters/ record company, which are copied and sold.
• An example of bootlegging is selling of illegal copied DVDs of latest movies on street corners.
• Criminals go to great extremes to record movies with handheld devices during a live cinema screening.

Impact of Bootlegging on Businesses

• Businesses lose out on profit.
• Businesses may experience decline in sales due to fake/imitated distribution of products.
• Businesses may be forced to implement price adjustment strategies to minimise the impact.
• Businesses expenses will increase if legal actions are taken.

Strikes

• A strike/labour dispute is a collective refusal of employees to work because of an issue in the workplace, aimed at forcing the employer to give in to demands.
• It is a collective action taken by a group of unhappy employees to accept their demands.
• Strikes may take form of a go slow, lock outs and sympathy strikes.
• It is a dispute between the employer and employees when they cannot agree on wage increases/changes in working conditions, even after negotiations.

Impact of Strikes on Businesses

• This could make the business to be unable to meet its contractual obligation and the business losing contracts.
• The cost of making up all the working hours is too high.
• Strikes can be violent because strikers intimidate those employees who do not want to go on a strike
• Scares off potential investors.
• May result in losses of production as employees stay absent from work during strikes.
• Strike actions may lead to production losses and decline in sales.
• Businesses may be forced to close down operations after strike actions.
• May lead to unhealthy working relationships between the management and workers.
• May force businesses to retrench some of its skilled workers to recover from losses.

Political Disturbance

• It is a form of protest by a group of people showing their displeasure on lack of service delivery/proper housing/poor pay/poor work conditions/etc.
• Political disturbance reflects frustration on the part of communication who may not feel that they have an effective voice in formal political processes.
• It is when a group of people protest against a socio-economic problem and feel that the government is not doing enough to solve the issue.

Impact of Political Disturbance on Businesses

• People in township/informal settlement areas may block roads preventing employed people from going to work due to service delivery protests.
• Scares off potential investors.
• Businesses may be forced to close, especially those located in townships.
• May result in losses of production as employees stay absent from work during political disturbances.
• Many businesses suffer losses as a result of damage to property.
• Riots can result in increased unemployment if shopkeepers are forced to shut down.

Crime

• Crime is any unlawful and harmful act related to loss of goods in a business because of burglaries/ robberies/theft/corruption/hijackings, etc.
• Theft is the unlawful taking of someone else's property to make it your own.

Impact of Crime on Businesses

• Loss of staff and customers.
• Insurance/security costs become expensive.
• Loss of profits due to stolen goods from businesses.
• Business loose skilled people resulting to a decline in productivity.
• Increased medical expenses as workers are injured during the break ins
• Businesses spent money on installing effective security measures e.g. alarms, burglar proofing.
• Loss of goods in a business can happen as a result of burglaries, shoplifting, customer theft and employee theft.
• Cost of damage to property increases as businesses pay higher insurance premiums to protect themselves.
• High rate of absenteeism due to affected employees having to go for trauma counselling
• Loss of essential equipment causing temporary closure of the business
• Employees can become involved in fraud, bribery, corruption, and kickbacks
• Any potential court case can create negative publicity for the business.
• Smaller businesses often cannot afford insurance and have to replace the stolen goods themselves at greater loss.
• Lower profits affect the decision to expand and employ more people/pay higher wages.
• Crime causes increase in health costs of employees due to injuries or stress.
• Discourages foreign investment and reduces tourism which impacts negatively on business.
• Crime brings about unfair competition from stolen goods resold at a lower price.