In this heat, Southeast Asia's economies may take a hit

Apart from generating personal complaints about the weather, rising temperatures could have serious impact for national labour productivity, says Verisk Maplecroft’s Richard Hewston.
Richard Hewston Channel NewsAsia 24 Oct 17;

SINGAPORE: If you think it’s hot out there today, spare a thought for the thousands of workers who struggle through their workday without the sanctuary of air conditioning.

As many as 500 million people in Southeast Asia are regularly exposed to a combination of temperature and humidity that can produce severe heat-related health issues.

Workers in agriculture, construction and shipping are particularly vulnerable, but garment workers may also find themselves at risk in sweltering factories with poor or no climate-control.

With heat stress impeding the ability of workers to do their jobs effectively, and costing the global economy an estimated US$300 billion every year, the threat of even warmer conditions in the future with global warming could have serious implications for Southeast Asia’s economies.

FEELING THE HEAT

Heatwaves have claimed tens of thousands of lives in recent years.

In Asia, during the record-breaking heatwave in India and Pakistan in 2015, thousands of people, mainly construction workers and farmers, died as temperatures reached a blistering 50°C.

Spikes in electricity demand for air conditioning led to power failures that disrupted businesses and critical services, while construction work was suspended, taxi drivers stopped driving and farmers watched as their crops wilted.

Exposure to a combination of high temperature and humidity can result in heat stress in humans and animals, with symptoms ranging from confusion and dizziness to fatigue and nausea, and in extreme cases, death.

People most at risk include the elderly, young children and the unwell.

But it is workers in labour-intensive industries who bear the brunt and the impact goes beyond those at the personal level.

Excessive heat and humidity causes workers to slow down. They are prone to making more mistakes and the risk of injuries increases. Ultimately, this can and does reduce the work capacity and labour productivity of countries in hotter regions like Southeast Asia.

Research shows that a combination of temperatures higher than 25°C and humidity in excess of 55 per cent can produce heat stress conditions.

This type of weather prevails about 90 per cent of the time in Singapore.

But the risks to labour capacity in the air-conditioned nation are mitigated by widespread climate-control and a workforce that predominantly resides in office settings.

WILL RISING TEMPERATURES COOL GROWING ECONOMIES?

Although climate change is increasingly viewed through an economic lens, the potential impact of a warmer climate on labour capital has been largely overlooked.

With average temperatures in Southeast Asia set to rise by up to 2°C by mid-century, the impact of heat stress on future productivity levels could be significant.

According to our climate projections and corresponding impact of heat stress on national labour productivity, Southeast Asia is set to experience the greatest loss in labour capacity due to heat stress compared to other regions worldwide, with a projected 16 per cent decrease by 2045.

Singapore faces the greatest potential decline with a projected 25 per cent decrease, followed by Malaysia (24 per cent), Indonesia (21 per cent) and the Philippines (16 per cent).

However, Singapore’s economy is somewhat insulated from these impacts. With the cushion of a wealthy, developed economy and predominantly white collar workforce, it’s estimated that annual heat-related losses in 2030 could be limited to US$0.2 billion, less than 0.02 per cent of Singapore's Gross Domestic Product (GDP).

Not an insignificant amount, but other markets in the region are set to be hit harder.

With around a third of the population employed in agriculture in the Philippines, Thailand and Indonesia, reduced worker productivity is projected to take a serious bite of the economy: US$85 billion (10.7 per cent of GDP) in the Philippines, US$150 billion (7.2 per cent of GDP) in Thailand and US$250 billion (4.3 per cent of GDP) in Indonesia.

While air-conditioning could be Singapore’s saviour, our data suggests its annual number of cooling days, which reflects the amount of energy required each year to maintain a comfortable indoor temperature, is set to increase by 17 per cent over the next three decades.

As one of the world’s biggest per capita energy consumers and a country largely reliant on imported energy, this figure suggests a potential risk posed by global warming to the nation’s continued economic growth.

BEATING THE HEAT

More prevalent heat stress conditions will lead to a drop in productivity, with the associated financial losses felt by the worker, at the corporate level and by the wider economy.

The International Labour Organisation recommends a range of measures to combat heat stress in workers, including access to drinking water, frequent rests and seasonal adjustment of output targets.

But ultimately, as global temperatures increase, there will be no way to win back the lost labour capacity. By 2030, it is estimated that reduced productivity could cost the global economy more than US$2 trillion.

With much of this loss expected to occur in Southeast Asia, there’s an urgent need for new, radical but sustainable techniques to counter heat stress in the future, especially in countries where a sizable portion of the workforce operate outdoors.

Sowing rice at 2am under flood lights? High-rises going up under giant sun-shades and misting machines? Possibly.

But in the meantime, perhaps pause for thought the next time you complain the air conditioning is on too high and the office is too cold.

Dr Richard Hewston is Principal Environmental Analyst at Verisk Maplecroft.

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