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Rising Temperatures Threaten to Cut Labor Productivity in SE Asia by 25% in 30 Years

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The fashion industry’s adverse impact on the environment has been no secret, but now, it seems, the environment is in fact weighing on the fashion industry.

In a report released Wednesday, UK-based risk analytics firm Verisk Maplecroft said rising temperatures and extreme heat stress could contribute to significant dips in productivity over the next 30 years, and South East Asian nations stand to be the biggest losers.

Within one generation, economies in Singapore, Malaysia, Indonesia and the Philippines could be as much as 25 percent less productive, according to the company’s 2016 Climate Change and Environmental Risk Analytics. Labor productivity was calculated by determining how high temperatures and humidity can lower a person’s ability to engage in physical activity.

The news follows predictions by climate scientists that 2015 will be the hottest year on record. Nine of the 10 warmest years on record have now occurred in the 21st Century and Verisk expects that by 2045, 47 percent of the global population will live in countries categorized as “extreme risk” for heat stress.

And heat stress can lead to a host of problems.

For one, too-high temps could increase the number of unworkable work days as employees would otherwise be subject to dizziness, fatigue, nausea or even death in extreme cases. Crops and livestock would also suffer, making room for food shortages, poverty and ultimately migration—all of which can increase the risk of instability and conflict, especially in countries that depend on manufacturing, Verisk noted.

“Climate change will push heat stress impacts to boiling point with significant implications for both national economies and the health of vulnerable workers,” Dr. James Allan, head of environment at Verisk Maplecroft, said. “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.”

South East Asia could lose 16 percent of its present labor capacity because of heat stress between now and 2045, nearly double the loss the next two most affected regions—the Caribbean and West Africa—will likely face.

Singapore and Malaysia will take the hardest hit from the heat, with productivity levels expected to drop by as much as 25 percent. Cambodia and the Philippines could lose up to 16 percent productivity and Thailand and Vietnam are expected to see decreases in the 12 percent range.

“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 percent to US$9 trillion, accounting for 13 percent of the projected rise in global GDP,” the report noted. “However, the potential impact of heat stress on labor capital in the region has been largely overlooked in financial modeling and the challenges heat stress presents national workforces in ‘extreme risk’ countries may need to be addressed if these forecasts are to be met.”

South East Asia has 45 of the 50 highest heat risk cities likely to lose labor capacity including Kuala Lumpur, Singapore and Jakarta. Twenty cities in Malaysia will suffer from labor capacity loss, while 13 in Indonesia will—much more than the five in the Philippines, four in Vietnam and Thailand’s three.

Companies with long-range vision are already incorporating policies to address heat stress across their supply chains to lower the impact of worker absences and sickness, according to Verisk, a practice that will be key to success in the future business environment.

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