Do not let increasing heatwaves sap worker productivity in India

Photo: Bloomberg
Photo: Bloomberg

Summary

Extreme heat as climate change worsens could adversely impact our economic output unless we adopt mitigative measures

The heatwave that rippled across India earlier this month had not just left us sweltering, but also sparked fears that the winter crop could wilt because of rising temperatures. Then came some unseasonal rain that gave city dwellers in many places welcome relief from the heat. It also intensified concerns about farm production. The actual impact of the heatwave followed by rain will be known only once the winter crop is harvested in the coming weeks.

The latest monthly report by the finance ministry mentions heatwaves as one of the extreme weather conditions that could feed food inflation this year. In a week when the Intergovernmental Panel on Climate Change issued a stern warning that the current pace of the energy transition would not be enough to keep average temperatures below the globally accepted target of 1.5°

Celsius above pre-Industrial Revolution levels, climate risks have become a growing concern.

Shocks to agricultural production because of climatic conditions is not a new issue in India. The risk from a capricious monsoon is known through history. Economic historian Tirthankar Roy has recently written an important book, Monsoon Economies: India’s History In A Changing Climate, on how economic activity has been profoundly dependent on water security—itself dependent on the rains. Roy quotes from the report of the Indian Famine Commission of 1899: “The famine was a famine of water." The past many decades have thankfully altered the old relationship thanks to food stocks, irrigation, water storage and the overall diversification of economic activity.

Compared to the monsoon, heat has been given relatively less importance when thinking about climate risks. For example, consider the forecasting model used by the Reserve Bank of India, the Quarterly Forecasting Model. Among its many equations is one for food inflation dynamics in which it is assumed in the short-run to be sensitive to three shocks: monsoon shocks, shocks to minimum support prices and shocks to vegetable prices. The Indian central bank is not alone here. That is also how most econometric models on the Indian economy look at sudden exogenous disruptions to food prices. Perhaps it is time to add heat as a variable, at least going by concerns over the past couple of years about the impact of heatwaves on farm production as well as food inflation.

Rising temperatures can also hurt labour productivity, not so much for the elite that can crank up the air-conditioning to beat the heat, but for the millions who work out in the open. The annual Periodic Labour Force Survey asks respondents a question about their place of work, but only those who work outside agriculture. Last year, Abhishek Jha and Roshan Kishore of the Hindustan Times trawled through the unit-level data from the annual labour survey to estimate that nearly half the Indian labour force works in the sweltering heat. Think about those who toil in farms, at construction sites and on street corners—and one can perhaps add the growing delivery ecosystem of the gig economy as well.

Even those who work indoors can be less productive when there is a heatwave. Economists E. Somanathan, Rohini Somanathan, Anant Sudarshan and Meenu Tiwari have used data from three industries—cloth weaving, garment sewing and steel infrastructural products—to show that labour productivity declines during periods of excess heat.

This happens in two ways. First, workers work less. Second, absenteeism rises. Hot spells increase absenteeism among salaried workers, but not those who work on daily wages. I suppose this is because the latter do not earn anything on the days they stay away from work. Climate control at the workplace can make a difference, but companies may find the economic case weak if value added per worker is too low to justify investment in air-conditioning. The four economists estimate that worker productivity declines by 2-4% with every degree Celsius increase in the temperature above normal levels. The economists then make a case for more research into low-cost technologies to protect workers from excess heat, given that employers do not find the cost of air-conditioning worth it in industries where value added per worker is low. They also write about the possibility of using more automation in hotter regions to mitigate the impact of heat on productivity. This has distributional consequences in a country such as ours, where the challenge is to offer factory jobs to workers with low skill levels.

A few years ago, researchers at the World Resources Institute showed that slums in Mumbai were six degrees hotter than the adjoining housing colonies because of slum crowding as well as the building material used. Denial of a good night’s sleep also hurts the ability to work the next day. Some voluntary groups are trying to promote new roofing solutions to cool down homes in urban slums, just as such interventions are needed in many workplaces as well. The economic as well as social benefits of protecting the poor from the worst effects of rising temperatures call for a collaborative effort by the government, private sector and voluntary organizations to invest in new building materials for homes as well as factories.

Niranjan Rajadhyaksha is CEO and senior fellow at Artha India Research Advisors, and a member of the academic advisory board of the Meghnad Desai Academy of Economics

 

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