Rising temperatures and humidity will adversely impact on the productivity of national labour forces over the next 30 years, with the effects felt most acutely in South East Asia according to a newly-released study.
The ‘Heat Stress Index’ (HIS), issued annually by Verisk Maplecroft, is based on research conducted by the global risk analytics and business advisory group to help business respond to risks to the operations, assets and supply chains
The HIS used the latest future climate projections to calculate the drop in labour capacity for each country based on the increasing occurrence of conditions that prompt heat stress, and reduce the ability of a workforce to undertake physical activity.
Among its key findings:
- South East Asian countries, including Singapore, Malaysia, Indonesia and the Philippines, will see likely drops in productivity of up to 25% due to the impact of heat stress on workers.
- Singapore and Malaysia are predicted to experience the heaviest toll, with 25% and 24% decreases from current levels, while Indonesia could see a 21% drop and Cambodia and the Philippines 16%.
- Manufacturing, agriculture and construction are the sectors that will be most exposed.
- South East Asia hosts 45 of the 50 highest risk cities for labour loss to heat stress, including the key manufacturing centres of Kuala Lumpur (ranked 6th), Singapore (16th), and Jakarta (17th).
- South East Asia will experience almost double the shortfall of the two next worst affected regions, the Caribbean and West Africa.
- Investors in ‘extreme risk’ countries may face rising costs for manufacturing and health care provisions for workers, alongside disruption risks in their supply chains
Verisk Maplecroft comments that SE Asia is expected to undergo some of the greatest economic growth in the coming decades: the region’s gross domestic product (GDP) is set to increase 50% to US$9 trillion, accounting for 13% of the projected rise in global GDP.
However, the potential impact of heat stress on labour capital in the region has been largely overlooked in financial modelling and the challenges heat stress presents national workforces in ‘extreme risk’ countries may need to be addressed if these forecasts are to be met.
Investors in ‘extreme risk’ countries may also be exposed to rising costs for manufacturing and health care provisions, alongside disruption risks in their supply chains.
Far-sighted companies are already implementing policies addressing heat stress across their operations and supply chains to reduce the impact of absences and sickness. The group believes that organisations incorporating climate threats into risk analyses, investment decisions, and employee health guidelines will better prepare themselves for the future business environment.
“Climate change will push heat stress impacts to boiling point with significant implications for both national economies and the health of vulnerable workers,” said Dr James Allan, head of environment at Verisk Maplecroft. “Governments and business need to identify which assets, sectors, commodities and groups are most at risk and what protective measures should be put in place.”
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