NEW DELHI: Hotter years have been routinely linked with reduced economic output in developing countries. A new research shows that one reason is that people are less productive at work and more likely to be absent on hot days and the aggregate effects are large enough to significantly reduce the output of the manufacturing sector in India.
By using several high-frequency microdata sets of worker output and a nationally representative dataset of more than 58,000 factories across India, researchers found that plants produce about 2 per cent less revenue for every one-degree rise in annual temperature. This is reflected in lower Indian GDP output in hot years and possibly also lowers year-on-year growth.
“The effect of high temperatures on lower crop yields has been previously established. This paper shows that rising temperatures can also hurt economic output in other sectors by reducing the productivity of human labor. The damage is greatest when already warm days become hotter.
If India wishes to succeed in becoming a manufacturing powerhouse using cheap labor, we need to think hard about how we can adapt to a hotter world.” said Dr Anant Sudarshan, South Asia Director of the Energy Policy Institute at the University of Chicago. Dr. Sudarshan co-authored this study with E Somanathan of Indian Statistical Institute, Delhi, Rohini Somanathan of Delhi School of Economics, and Meenu Tewari of University of North Carolina.
The authors argue that although the focus of the paper is on Indian manufacturing plants nevertheless, because heat stress is a universal physiological mechanism, there are implications for any sector where labour is important.
This multi-year study indicates that climate control in the workplace removes productivity declines but not absenteeism, presumably because workers remain exposed to high temperatures at home and outside. And the fact that climate-control is expensive makes its use limited.
So what does the future look like? “The industrial sector might respond to high temperatures by increasing automation and shifting away from labor-intensive sectors in hot parts of the world,” said Somanathan.