Environmental shocks can often negatively impact worker productivity. However, these impacts are rarely studied in labor-intensive settings. Exposure to air pollution can result in significant economic costs by posing serious challenges to worker productivity. Even short term exposures to particulate matter (PM) produced by specific forms of air pollution can impact workers' cognitive functioning. This can be of particular concern in developing countries which are more likely to experience severe environmental shocks.
What role can supervisors play in mitigating the negative impact on productivity experienced by factory workers due to environmental shocks? Can supervisorial attention on everyday decisions like worker reallocation among others mitigate such impacts on productivity?
Fine PM produced due to ambient air pollution enter closed environments more easily. It can also be breathed more deeply by people spending long hours in these indoor spaces. While long term exposure can have serious health impacts, even brief encounters can lead to workers’ temporarily experiencing reduced physical and cognitive functioning. This can have a negative impact on the collective productivity of the firm.
One of the primary responsibilities of factory supervisors is to monitor and respond to productivity fluctuations occurring under their line in real-time. One of the methods to optimize productivity employed by supervisors is to adjust worker-task allocations. Given the direct relation between the productivity of a worker and that of their line, this reallocation becomes the most important mechanism for supervisors to respond to environmental shocks to productivity.
We partnered with Shahi Exports to monitor the negative impacts of exposure to fine PM in a garment factory and the role that supervisors can play in mitigating such impact through everyday managerial decisions. We paired detailed data on:
We also found that more attentive supervisors reassign workers more intensively in response to pollution shocks. Consequently, they experience substantially smaller losses in their lines.
Production lines that have greater opportunities to reallocate workers on a given day are able to mitigate the entire effect of pollution. In contrast, production lines with fewer such opportunities exhibit large productivity losses. Supervisors who are attentive and respond to workers’ needs more positively are most able to mitigate the impacts of pollution shocks, almost entirely, on their line’s productivity.
One standard deviation increase in pollution leads to:
We further used accounting data from the firm and calculated that unmitigated pollution shocks over the course of a year would cost the factory more than 190,000 USD in profit. We found that making supervisors just a quarter of a standard deviation more attentive could avoid roughly 43,000 USD of this loss. These findings highlight the importance of soft skills on factory floors and the benefits it can bring to firms. Read about GBL’s work, the soft skills and their impacts on factory floors here.