Improving the Physical Working Environment in Garment Factories


Garment factories in India rarely control for temperature or pollution. How important is it in driving productivity and improving the work environment?

  • Replacing fluorescent lighting with LEDs reduced energy consumption by roughly 85%, reducing the average indoor temperature by roughly 2.4°C.
  • Additional profit from increased worker productivity was 5X larger than energy cost savings.
  • Exposure to air pollution significantly reduced worker productivity, reflecting both worker welfare reductions, and lost profit for the firm.
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Partners:
University of Michigan | University of Southern California | Yale University | Department for International Development, UK Government | Private Enterprise Development in Low-Income Countries (PEDL) | International Growth Centre | University of Southern California | University of Michigan | Shahi Exports
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TIMELINE

TESTING

Apr-2010

ANALYSIS

Aug-2015

Introduction

Improving physical working conditions on the factory floor can go a long way in increasing worker productivity, and profitability for the firm.

  1. The Lab has measured the impact of light, heat, and pollution on the factory floor, on worker productivity, and firm profitability.
  2. The apprehended trade-off between adopting environment friendly technologies and firm profits can be offset as evidenced by the cost-effectiveness of these technologies and our ROI measures.
  3. Welfare, and productivity benefits can be as large or larger than the environmental benefits that solely motivate the investment decision.
  4. Our research speaks to the need for firms to recognize the extent to which these environmental factors negatively affect productivity, and regulate them for an optimal, and comfortable work environment for front-line employees.
  5. This study goes a long way in providing sustainable and environment friendly solutions to improve the productive potential of workers in developing countries in the manufacturing sector.

Design

Two studies by the Lab, measuring heat stress and pollution levels on Shahi factory floors over three years provide the basis for the ‘No Sweat’ Shop project. We rigorously tested the use of energy efficient, and environment friendly technologies on garment factory production floors to improve physical working conditions, and calculate the return on investment (ROI) for the firm.

Data Insights

In one study, GBL estimated that adoption of LED lights in place of fluorescent lighting not only reduced energy consumption by roughly 85% but also dissipated 1/7th of the heat, reducing average indoor temperature by roughly 2.4 degree Celsius. The lighting upgrade reduced prevailing temperature on factory floors to below the heat stress threshold of the human body, vastly improving comfort levels of workers. This was reflected in the additional profit from increased worker productivity which proved to be 5X larger than energy cost savings, dramatically shifting the break-even point of the investment for the firm from three years to seven months. In a second related study, we found that exposure to high levels of air pollution significantly reduced worker productivity, reflecting both welfare reductions for the workers, and lost profit for the firm. Hence, our research adds conclusive, rigorous evidence of the business gains to improving ambient air quality in the workplace to a large body of existing evidence on the health and welfare gains to workers.

Media Mentions

Green technology in India increases profits productivity: study

By Business Standard / 30-Oct-2014

A Michigan University study of 25 garment factories in Bangalore has shown that green technology saves energy, boosts profits and productivity in industrial units.

The hidden productivity benefits of energy-saving technology: Evidence from LEDs in Indian factories

By VoxEU / 27-Aug-2016

Innovations in energy efficiency have been cited as a primary means to curb the acceleration of climate change. Despite this promise, energy-efficient technologies are consistently adopted at low rates.

The hidden benefit of energy-saving technology

By World Economic Forum / 31-Aug-2016

Given the repercussions of rising global temperatures due to climate change, and the startling rate of growth of global energy demand, achieving high adoption rates of technologies that mitigate climate change is a key policy priority.

LED lighting "boosts garment factory productivity"

By JustStyle / 11-Nov-2014

The investigation of 25 garment factories in Bangalore, India between 2010 and 2013 found that, because LEDs create less heat than traditional lights, they help keep the factory floor cooler, boosting worker productivity and reducing absenteeism.

The Light and the Heat: Can Energy Saving Technology Also Boost Productivity?

By Vanguard Energy / 15-Dec-2015

Michigan Ross Professor Achyuta Adhvaryu shows that looking only at energy savings doesn’t give the full picture. One of the less-studied effects of global warming is the effect on industrial workers. There’s a direct correlation between high temperatures and lower productivity.

How pollution can affect productivity

By World Economic Forum / 27-Jul-2015

In a nice, recent paper Achyuta Adhvaryu, Namrata Kala, and Anant Nyshadham take a look at how air pollution hurts productivity and what effect, if any, managers can have in mitigating these effects.

Good Business Lab: New foundation promotes soft skills for workers in garment sector

By The Economic Times / 31-Mar-2018

"Our goal with starting a foundation is to study interventions that have the potential to impact worker welfare while also promoting the growth of firms," Adhvaryu said in a statement. "We incubate new ideas and serve as a platform to disseminate findings from our research."

Investing in Worker Welfare Increases Welfare and Firm Productivity: Good Business Lab

By BusinessWorld / 11-Jan-2018

In an exclusive interview with BW Businessworld, the three co-founders of Good Business Lab, Achyuta Adhvaryu: Assistant Professor of Business Economics and Public Policy, University of Michigan, Anant Nyshadham: Assistant Professor of Economics, Boston College and Anant Ahuja: Head of Organizational Development, Shahi Exports discuss the research of Good Business Lab and why it is wise for firms to invest in its workers’ welfare.

Why A Drop Of 4 Degrees Made A Big Difference For A Garment Maker's Bottom Line

By National Public Radio / 23-Jul-2018

The researchers found that at those 26 factories, the mercury spiked above the heat stress threshold (roughly 85 degrees inside the factory) one quarter of the time. And once the temperature passed that tipping point, for every extra degree it got hotter, productivity went down by 3 percent and profits went down by 2.2 percent.