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CLIMATE CHANGE How to weather-proof manufacturing for climate change

Apr 16, 2021

A recent paper, ‘The impact of temperature on productivity and labour supply: Evidence from Indian manufacturing’, cites that hotter years yield lower productivity. The opinion piece analyses how manufacturing can adorn a shield which will protect them from weather changes that mess with the overall productivity.

Don’t you hate it when it’s supposed to be winters, and it starts raining in the middle of the day or there’s a heatwave in the afternoon? Climate change is real, and the iceberg melting is not its only impact; it brings disruption with it in various strata of world functioning, like in country’s GDP. For example, temperature rise sucks the energy out of people, demands much more physical effort in day-to-day work and lowers productivity. This means labour-intensive industries, irrespective of the sector, suffer in productivity , ultimately affecting a country’s GDP in the long run. The paper ‘The impact of temperature on productivity and labor supply: Evidence from Indian manufacturing’ cites that hotter years yield lower economic output in developing countries, & climate control can significantly mitigate productivity losses. The data from 58,000 factories across India concluded that manufacturing units produce about 2.8% less revenue for every one-degree rise.

Climate change does not just affect sectors that have outdoor labour work, like agriculture, construction, etc, but also labour-intensive industries, like manufacturing, which work indoors. Now companies might think offering an air-conditioned/cool working environment would be the solution for it. But not really. The study also showed a 1-2% increase in occasional absence during hot weather, which is not penalised by wage contract despite an environment-favourable work atmosphere. And in some industries, daily wage workers prefer travelling back to their villages and live on government offered grants for the time being. If manufacturing industries wish to grow with the USP of cheap labour, they must learn how to make their environments more workable. The manufacturing sector contributed to about 15% of India’s GDP in 2012 (about $270 billion), so a 3% decline in output implies an economic loss of over $8 billion annually relative to a no-warming counter-factual, according to the paper.

While digitalisation of factory floors would be a good solution, it is not the only potent solution. Technology is only as good as the man manning it. Technology, too, requires monitoring, i.e., labour on the shop floor. So, what could be a better solution? To begin with, more environment-friendly manufacturing methods, like adopting renewable energy, could be a step in the direction. Industries need to make sustainable manufacturing a mandate; regular checks analysing their environmental impact, recycling the manufacturing waste, choosing eco-friendly partners, stock management, etc could be a small step towards ensuring climate sustenance.

Everyone, especially country leaders, needs to recognise climate change as a fundamental factor hindering their growth. As promised in the Paris Climate Change Agreement, India could achieve carbon neutrality by 2050 and a 33-35% reduction in carbon emission by 2030. But for this, we need to make its regulations more stringent and ensure more mandates that enable sustainable, eco-friendly practices. It is a long-term investment, a slow investment – but the only way forward.

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