By Leonie Barrie | 22 February 2019

Global manufacturing hubs in South-East Asia – including key clothing and footwear producers Vietnam and Cambodia – could see double-digit drops in worker productivity over the next 30 years due to the impact of rising temperatures and extreme heat stress.

The forecast also cautions that investors in 'extreme risk' countries may face rising costs for manufacturing and health care provisions for workers, alongside disruption risks in their supply chains.

The Heat Stress (Future Climate) Index suggests that within a generation, economies including Singapore, Malaysia and Indonesia could be up to a quarter less productive than they are today, while Cambodia and the Philippines could see a 16% drop. Thailand and Vietnam are also expected to experience 12% decreases in labour productivity by 2045.

The key manufacturing hubs of Thailand, Cambodia and Vietnam are the South East Asian countries projected to be the most exposed to heat stress in the future, ranking 7th, 11th and 17th respectively in the Heat Stress (future climate) Index.

Cambodia, in particular, is singled out for demonstrating one of the largest increases in risk of all countries. Its score shifts from 5.13 out of 10 (where lower scores indicate higher risk) in the Heat Stress (current climate) Index to 'extreme risk' and a score of 0.03 out of 10 in the Heat Stress (future climate) Index.

Mass factory faintings are already a concern in the Cambodian garment and footwear industry, with up to 300 workers having been seen to collapse at a time due to a combination of factors including malnutrition and heat stress. The incidents have even received scrutiny from the International Labour Organization (ILO).

However, "without the implementation of adaptation methods, heat stress conditions in workplaces such as these are likely to become more prevalent under climate change," says Verisk Maplecroft, the author of the research.

The study used the latest future climate projections to calculate the drop in labour capacity for each country based on the increasing occurrence of conditions that prompt heat stress, and reduce the ability of a workforce to undertake physical activity.

Nine of the ten warmest years on record have now occurred in the 21st Century, and Verisk Maplecroft forecasts that by 2045 nearly half the world's population (47%) will live in countries categorised as 'extreme risk' in the Heat Stress (Future Climate) Index.

South-East Asia most vulnerable

Incremental rises in global temperature and humidity due to climate change are likely to increase the number of working days exceeding safe levels of heat stress, which can cause absenteeism through dizziness, fatigue and nausea and even death in extreme cases.

Crops and livestock are also highly susceptible to heat stress, driving food shortages, poverty, and migration – factors that can increase the risk of conflict and instability.

Risks are amplified in countries dependent on manufacturing, construction and agriculture. 

Verisk Maplecroft estimates that South-East Asia could lose 16% of current labour capacity due to rising heat stress over the next three decades – almost double the shortfall of the two next worst affected regions, the Caribbean and West Africa.

However, the potential impact of heat stress on workers in the region has been largely overlooked in financial modelling. Likewise, the challenges heat stress presents national workforces in 'extreme risk' countries may need to be addressed if economic growth forecasts are to be met. In the coming decades SE Asia's GDP is set to increase 50% to US$9trn, accounting for 13% of the projected rise in global GDP.

The risk analytics firm believes that organisations incorporating climate threats into risk analyses, investment decisions, and employee health guidelines will better prepare themselves for the future business environment.

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

The research calculated labour productivity by assessing how a combination of high temperatures and humidity can limit human's ability to undertake physical activity.

The indices are based on the Wet Bulb Globe Temperature (WBGT) metric, which is calculated on a combination of temperature and humidity. When the WBGT exceeds 25°C the human body's capacity to undertake physical activity, without suffering from heat stress, drops by roughly 25%. As the WBGT rises, this capacity drops further, until a point at around 32°C when heat stress will likely occur in all instances of strenuous activity.

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