Heat stress can cut labour productivity in SE Asia by 25%

31 Oct '15

5 min read

SE Asia is expected to undergo some of the greatest economic growth in the coming decades: the region's GDP is set to increase 50 per cent to $9 trillion, accounting for 13 per cent 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.

Verisk Maplecroft has also calculated the risk of lost labour capacity through heat stress for 1300 commercial centres. South East Asia hosts 45 of the 50 highest risk cities, including the key manufacturing centres of Kuala Lumpur (ranked 6th), Singapore (16th), and Jakarta (17th). The Colombian cities of Cartagena (1) and Barranquilla (23), along with Panama City (43) and Arraijan (42) in Panama, and Manaus (11) in Brazil are the only cities included from outside the region.

Malaysia is home to 20 of the 50 global cities identified as losing the most labour capacity to heat stress, while 13 are found in Indonesia – far more than the neighbouring Philippines (5), Vietnam (4), Thailand (3), or Cambodia (0). This suggests resilience to heat stress could become a differentiator for nations seeking inward investment.

Far-sighted companies are already implementing policies addressing heat stress across their operations and supply chains to reduce the impact of absences and sickness. Verisk Maplecroft 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.” (SH)

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