KEY CONCEPTS

  • Inequality: refers to the difference in income levels and wealth between groups of people.
  • Poverty: defined as the lack of resources to meet basic human needs.
  • Inclusivity: meaning all designated race groups should have access to the same opportunities despite their colour, creed or gender.
  • Gambling: a risk that people take by taking a chance with money in the hope to win money or a prize.
  • Counterfeiting/imitations: the process of fraudulently manufacturing, altering, or distributing a product that is of lesser value than the original product.
  • Bootlegging: referred to as the illegal production of counterfeit goods for sale.
  • Piracy: illegal copying of somebody’s product that affects businesses operations.
  • Strikes: a form of industrial action where workers refuse to work.
  • Political disturbances: occurs when a group of people protest to show their disapproval of the handling of a situation in the country.
  • Labour disputes: when the employer and employee disagree on important issues, for example yearly salary or wage increases.
  • Go slows: a form of industrial action where workers go to work but perform their daily tasks very slowly, restricting the rate of production.
  • Lockouts: when the business owners do not allow the workers to work and prevent them from entering the workplace in order to prevent damage.
  • Crime: any illegal act or activity that is punishable by law.

Socio-economic issues are issues that involve both social and economic factors that affect people and communities. These social and economic factors influence society and businesses in a negative manner. In present day South Africa, homeless people living on the street, unemployed people waiting alongside the road for work or standing at traffic lights asking for assistance to support themselves and their families, is a daily occurrence.

Meaning of socio-economic issues
Socio-economic issues are aspects that have a negative effect on the individual, communities and business. These issues are societal and economic factors in the macro environment. Some of the socio-economic issues that South Africans face include inequality, poverty, inclusivity, HIV/AIDS, gambling, counterfeiting, bootlegging, strikes, political disturbances and crime.
Why socio-economic issues pose a challenge to businesses

Socio-economic issues can cause challenges for businesses. These challenges include:

  • Businesses may not be well supported by customers because of their limited disposable income.
  • Absenteeism of employees affected by HIV/AIDS will result in a decrease in productivity of the business.
  • Counterfeiting, bootlegging and crime may lead to loss of profit for businesses.
  • Businesses may feel pressurised to offer corporate social responsibility projects in disadvantaged communities. This in turn could lead to increased business costs and decreased profitability.

  1. Inequality and poverty

Inequality and poverty are terms that remind us that there is a disparity in the income levels and opportunities to better oneself between the rich and poor people in the country. Many people feel excluded from opportunities to access good jobs and live a good quality standard of living. For example, when two people who have similar qualifications but from different educational institutions apply for the same promotion post in an organisation, but only one of the two applicants are shortlisted and successfully appointed in the position.


Inequality

  • Inequality arises when some individuals are more prosperous than others or are given better opportunities than other individuals in society.
  • Some people have more money than others and can therefore access education, basic health care and social services.
  • Inequality contributes to poverty in the country.

Poverty

  • Poverty is defined as the lack of resources to meet basic human needs.
  • People are not able to meet their basic human needs when they become unemployed or are retrenched. This leads to poverty in families and society.
  • Some people have a low level of education and limited skills. Therefore, they only qualify for low paying jobs. Due to the high cost of living, these people cannot afford to pay their bills and struggle to provide for all their basic needs.
  • Poverty often gives rise to crime.

Watch this video about poverty

 

 

The impact of inequality and poverty in businesses

  • Individuals and customers have less or no money to spend to buy basic goods and services which will influence the profitability of business.
  • Poverty results in the continuation of the cycle of unemployment and homelessness which can lead to an increase in crime affecting businesses negatively.
  • Some people do not have the financial means to buy goods as they have little to no disposable income leading to limited profitability of the business as a result of limited or no customer spending.
  • Limited customer spending means that businesses record lower sales figures.
  • Businesses may not grow because of reduced sales figures.
  • Businesses are pressurised by the media attention to poverty into investing in
    poor communities.

2. Inclusivity

Defining inclusivity in the workplace
Inclusivity in business is based on a policy that is meant to assist all employees to
feel welcome and part of the business. This means that staff will be willing to share their thoughts and ideas with their managers.
The meaning of inclusivity
Inclusivity means that everyone should have access to equal opportunities irrespective of their race, gender, sexual orientation, disabilities, religion and education. It aims to address imbalances such as businesses only employing male staff members in management and top positions – a practice that was prevalent before the onset of democracy. It also aims to address discrimination of persons based on gender and disability.

The purpose of inclusivity in the workplace

  • The goal of inclusivity is to ensure that the business implements fair labour practices.
  • It seeks to redress the inequalities of the past. 
  • Ensure that workplaces are created where people of different races, genders
    and religions can work together to the benefit of the business.
  • Ensure that their workforce is representative of the demographics of
    the country.
  • Try to ensure that the physical business setting makes provision for individuals
    with disabilities.

3. HIV/AIDS

The negative impacts of HIV/AIDS on businesses
The Human Immuno-deficiency Virus (HIV) is a virus that attacks the body’s immune system. The virus weakens the body’s immune system, which can then lead to infection or diseases such as tuberculosis (TB). At this stage a person is said to have Acquired Immune Deficiency Syndrome (AIDS). The economic and social impact of HIV/AIDS on businesses is noticeable as staff members who may be infected are not able to contribute to the success of the business.

Being infected with HIV can lead to:

Reduced productivity of affected employees
Increased employee absenteeism because of medical appointments for doctor or clinic visits.

Trained and experienced employees often die due to complications caused by HIV before they can grow old. This causes an increase in staff turnover for the
business. This in turn creates additional expenses for businesses when they need to hire and train new employees.

Businesses face high levels of nonattendance of employees who become ill or request to attend funerals.

Employees may experience low morale because of sick colleagues. This could lead to a decrease in productivity as workloads increase. The business will be affected adversely and this could lead to a decline in profits.

4. Gambling 

Types of gambling and their impact on businesses
Gambling is a risk that individuals take by taking their money and placing bets hoping that they will win more money or a prize. People often risk losing their money they bet and could even lose their belongings.

Types of gambling


Pyramid Schemes

Pyramid schemes refers to businesses that may potentially yield high revenues for people who invest their money in them. Individuals invest more and more money, but often only the individuals at the top of the pyramid receive large sums of money. 

Illegal gambling

Illegal gambling is when unlicensed businesses offer gambling to the public. Illegal gambling activities can also take place in poor communities such as
when people play with die (dices) on street corners for money, or when individuals frequent unlicensed casinos.

Money laundering

Money laundering is the process by which unlawful profits from crimes are invested in valid businesses to cover up their wrongdoing. The source of money is camouflaged and made to seem as if it was lawfully gained. An example of money laundering is when the proceeds from illicitly earned money through drug trading is invested in a restaurant or laundry business.

The impact of gambling on businesses

  • Employees who gamble themselves into financial difficulties may be absent from work regularly.
  • Employees who gamble compulsively may adhere strictly to their working hours only and be unwilling to work overtime hours when required.
  • The consequences of regular gambling may disrupt the work setting due to staff absenteeism and potentially unproductive employees.
  • Individuals losing cash can display lower morale levels at work and this will influence their work relationships and responsibilities.
  • The employees may suffer from depression and thereby not be able to focus on their work tasks and responsibilities.
  • Gambling, such as money laundering, promotes corruption in businesses.

5. Piracy


Piracy is an unlawful activity that has become popular in some communities as people try to find the easiest and cheapest way to acquire goods that would
normally be very expensive.
The meaning of piracy
Illegal copying or reproduction of somebody’s product that affects businesses operations. Piracy is also illegal copying of music, videos, movies or computer programs and trademarks registered by another company.
The negative impact of piracy on businesses

  • Businesses may experience a decline in sales due to copied or imitation
    products being distributed.
  • Businesses may be forced to implement price adjustment strategies to reduce
    the impact that this has on its sales figures.
  • Businesses will spend money if they need to take legal action against people
    who copy their products or music.


Methods of dealing with piracy
Copyright

  • Businesses can sue someone who infringes the copyright
  • They can also sue someone who sells or distributes work that they knew were
    infringements of copyright.
  • Businesses can take legal action against people who copy their products.

Patent

  • Businesses can take out a patent for new inventions and include a sample of
    their invention with application.
  • Businesses must register a patent with the patents office in South Africa.
  • The invention must comply with the Patent Act No. 57 of 1978.
  • A patent prevents other businesses/people from producing or selling the same
    product/specific service.
  • They can bring legal proceedings against anyone who uses their invention.
    Trademarks
  • Businesses can use trademarks to identify themselves and their products.
  • They must register their trademarks with the register of trademarks at the
    companies and intellectual property registration.
  • A registered trademark is protected forever, provided it is renewed every ten
    years and a renewal fee is paid.
  • A registered trademark may not be used by another person/business.
  • Damages may be claimed from someone who infringes the trademark.

Trademarks

  • Businesses can use trademarks to identify themselves and their products.
  • They must register their trademarks with the register of trademarks at the
    companies and intellectual property registration.
  • A registered trademark is protected forever, provided it is renewed every ten
    years and a renewal fee is paid.
  • A registered trademark may not be used by another person/business.
  • Damages may be claimed from someone who infringes the trademark.

Last modified: Wednesday, 14 May 2025, 1:43 AM