Allianz Trade released its report Too Hot to Grow: The Economic Costs of Extreme Heat (May 2026). Drawing on historical heat-stress data, productivity, wage, energy consumption and macroeconomic indicators across 35 to 49 countries, the report examines the economic impacts of rising heat exposure.
Human Level’s Take:
- What happens to work when temperatures keep rising? According to Allianz, the effects are already visible. Once temperatures exceed 30°C, worker productivity begins to decline sharply, with output per hour falling by around 3% for every additional degree. And, while heat stress has been historically viewed as a challenge for hotter climates, the research shows that regions like Europe are increasingly exposed yet underprepared.
- The implications are serious. Rising temperatures are increasingly linked to fatigue, cognitive strain, sleep disruption, lost working time and wage pressures. The overall trend is clear: extreme heat is becoming a growing challenge not just for worker well-being but also for economic and business resilience.
- Yet the impacts will not be felt equally. Workers in heat-exposed and non-standard jobs and lower-income regions are expected to face some of the greatest risks, raising important questions about how the costs of climate change are distributed across the workforce.
- This is where the challenge becomes a business one. The report notes that resilience will increasingly depend on how well companies adapt work to a hotter climate. As heat-related disruptions become more frequent, workforce planning, operational continuity and worker protection are likely to become increasingly important components of long-term business performance.
- How can businesses adapt to this new reality? The report points to stronger protections for workers. Workplace heat protocols, cooling measures, adjusted working hours, and income protection during periods of disruption all have a role to play. As the world turns up the heat, building workforce resilience may become one of the most important adaptation challenges businesses face.
Some key takeaways:
- Heat stress is affecting both workers and businesses: Allianz finds that extreme heat is becoming an increasingly material economic risk, with consequences that extend well beyond temporary discomfort or reduced output. Rising temperatures are already affecting worker productivity, wages and health, while placing growing pressure on economic growth and business performance. While historically viewed as a challenge concentrated in hotter regions, the findings show that many European economies are particularly exposed as heat stress intensifies faster than adaptation measures are being implemented. The impacts are not distributed evenly. Workers in heat-exposed and non-standard sectors such as agriculture, construction, manufacturing, logistics and transport face some of the greatest risks, while lower-income countries are expected to experience the largest losses in working time and productivity. For businesses, the findings suggest that extreme heat can no longer be treated solely as an environmental issue. It is increasingly a workforce and operational challenge that affects how people work, how supply chains function, and how economies perform. As heat exposure rises, the report points to adaptation and worker protection as important factors in maintaining productivity, resilience, and long-term competitiveness.
- The economic impacts of extreme heat begin with people: The report finds that extreme heat is already affecting workers through declining productivity, wage pressures and lost working time, with impacts becoming significantly more pronounced once temperatures exceed 30°C. Across the 35 countries analysed, output per hour falls by around $1.30 for every additional degree above this threshold, equivalent to roughly 3% of average hourly output. Wage impacts follow with a lag, as labour markets adjust more slowly than productivity. In countries experiencing the highest levels of heat stress, wage growth is estimated to decline by 0.7–1.3%, while productivity losses are particularly pronounced in countries such as France, Slovenia, Australia and Italy. Allianz also highlights broader worker impacts beyond physical labour. Rising temperatures are associated with increased fatigue, cognitive strain and sleep disruption, with global sleep loss reaching a record 8.7% above the historical baseline in 2024. Looking globally, working hours lost to heat stress are projected to increase from 1.4% in 1995 to 2.2% by 2030, with the largest impacts expected in already warmer regions, including South Asia (5.3%) and West Africa (4.8%). While some cooler countries may experience limited short-term productivity gains, the overall trend suggests that rising heat exposure is becoming an increasingly important labour market challenge with implications for worker well-being, earnings and economic output.
- Heat resilience depends on how businesses protect workers: Adapting work to a hotter world is becoming a business imperative. The report highlights the importance of strengthening protections for workers exposed to extreme heat through workplace heat protocols, adjusted working hours, cooling measures and income protection when work cannot be performed safely. It also points to the need for businesses to build greater resilience into operations and supply chains while ensuring that protections extend beyond standard employment relationships to reach seasonal, temporary, and other non-standard workers who are often among the most exposed. More broadly, the findings suggest that companies will need to integrate heat-related risks into workforce planning and adaptation strategies rather than relying on ad hoc responses. As extreme heat becomes more frequent and more severe, resilience will depend not only on protecting assets and infrastructure, but also on safeguarding the health, productivity and livelihoods of workers.
