Tighter tobacco use control will boost economy and jobs – scientists

Tighter tobacco control legislation will boost the economy and jobs contrary to the narrative peddled by the tobacco industry. Scientists say stronger tobacco control legislation will not result in extensive job losses and negative economic impacts.

In fact, various South African and international studies suggest that reduced tobacco and e-cigarette use could actually stimulate job growth and bolster the economy, experts from Protect our Next, a coalition of South Africa’s health and research organisations, say.

“With South Africa’s proposed new proposed tobacco control legislation, the Control of Tobacco Products and Electronic Nicotine Delivery Systems Bill, currently undergoing public consultation, these debates are in the foreground of swaying public opinion.”

Prof Lekan Ayo-Yusuf, director of the National Council Against Smoking, counters the industry’s assertions that stricter policies would lead to job losses and reduced economic growth. He points out that these claims ignore the fact that a decline in spending on smoking often leads to increased spending on other goods and services in the economy.

This shift, he argues, means that tobacco-related job losses do not necessarily equate to overall employment decreases.

“The money consumers save by not smoking is spent on other goods and services, creating jobs in those sectors,” he says.

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Tobacco industry’s evidence based on simulations only

Research from Tobacconomics supports this view. The majority of the tobacco industry’s empirical evidence, based primarily on simulations of sharp consumption declines, show either no or net-positive effects of tobacco tax and other tobacco control policies on overall employment, particularly in net-importing countries like South Africa, he says.

In the case of South Africa, the total world imported value of tobacco and manufacturing tobacco substitutes in 2018 was approximately R3 267 713, while the exported value was R2 856 203 in the same financial year according to Agriseta data.

Ayo-Yusuf also points out that according to the Tobacco Institute of South Africa, approximately 3 000 people are employed in the South African tobacco industry. This figure includes those involved in both leaf production and manufacturing.

“As for the e-cigarette industry, a 2019 study commissioned by the Vapour Products Association of South Africa suggests that the industry created about 9 500 jobs. It is important to note that this figure also includes jobs created indirectly and through induced effects.”

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Tighter control of tobacco use will not have such a bad effect on jobs in SA

Ayo-Yusuf says while the net effect on employment may be negative in countries heavily dependent on tobacco, South Africa is not one of them.

“Even in net-exporting countries the impact of global tobacco control policies on employment is gradual, allowing economies time to adjust and governments to allocate resources in ways that support transitions to other livelihoods.”

Frank Chaloupka, director of Tobacconomics, further challenges the tobacco industry’s narrative. He highlights that despite the economic shock the Covid-19 pandemic caused, the big four multinational tobacco companies continue to enjoy stable global profits.

“Instead of allowing the tobacco companies to capture additional profits while imposing substantial burdens on public health, governments should raise tobacco taxes,” Chaloupka argues.

He says job losses in the sector are more often due to mechanisation and advances in farming and manufacturing processes, than the impact of tobacco control laws or tax increases.

In 2016, the economic cost of smoking in South Africa was estimated at R42 billion and this includes healthcare costs, productivity loss and the cost of premature death. In contrast, the tobacco industry generated just R12 billion in excise taxes over the 2016/2017 period.

“This discrepancy highlights the economic downside of tobacco use and underscores the need for stronger control legislation,” Ayo-Yusuf says.

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Bill also seeks to regulate e-cigarettes

The Control of Tobacco Products and Electronic Nicotine Delivery Systems Bill further recognises the growing threat e-cigarettes pose and will regulate them for the first time. Without banning access for adults, the regulations aim to reduce the growing prevalence among youth and never-smokers.

According to the 2021 Global Adult Tobacco Survey for South Africa, the highest prevalence of e-cigarette use was observed in the 15-24 age group, pointing to a potential public health crisis among the youth, as e-cigarettes are not harmless and can lead to nicotine addiction.

Corne Van Walbeek, director of REEP and professor at the School of Economics at the University of Cape Town, argues that the health and economic costs of e-cigarette use far outweigh any potential job creation.

A study commissioned by the Vapour Products Association of South Africa (VPASA) anticipates that the restrictions on e-cigarettes the Bill proposes will decrease the use of these products by 34%. According to the report, 17% of e-cigarette sales are through online, postal and pharmaceutical sales channels, which would be closed down once the Bill is implemented.

The ban on public use would see a 5.8% reduction in sales, while the ban on promotions, advertising and sponsorship would cause a reduction of 11.4%.

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A decrease in tobacco sales will just prove the legislation is effective

Prof Van Walbeek says that while the predicted drop in sales is likely a gross exaggeration, if it is true that the sale of e-cigarettes will decrease as the report suggests, this would simply prove that the proposed tobacco control law is effective.

“The law aims to reduce the demand for e-cigarettes and the associated health burdens that a younger generation addicted to nicotine would pose. If the proposed bill effectively reduces the demand for e-cigarettes, as predicted by the industry’s own report, it will validate the legislation’s intent to guard public health.”

Ayo-Yusuf says the evidence is clear: not only does stronger tobacco control legislation not harm the economy or cause job losses, but it could also actually stimulate job creation in other sectors, generate government revenue and reduce the economic costs associated with tobacco use.

“It is high time that we challenged the misleading narrative pushed by the tobacco industry and embraced policies that promote both public health and economic prosperity.”