What is climate inflation?

Do you remember the heatwave of 2003? A stifling summer, which was described at the time as exceptional. Twenty-three years on, temperatures of over 35 degrees for several days – or even weeks – on end are becoming the new norm. The summer we are slowly emerging from has only served to confirm this.

The consequences for workers are severe. At the start of the summer, several journalists approached Angestellte Schweiz about the health risks of working in extreme heat, including in offices. But what about the impact on our wallets?

Rising raw material prices

As we have just published our 2027 pay demands, this is a question of particular interest to us. Recently, the press has reported on the phenomenon of ‘climate inflation’: global warming is influencing the consumer price index. This is a striking fact, given that certain popular referendums in favour of the climate have failed because of proposals to impose climate taxes, to the detriment of purchasing power.

This phenomenon is most evident in the food sector. Every heatwave that hampers crop yields has an impact on food prices: when a raw material becomes scarcer, its cost rises. Taking into account the lag of a few months between a poor harvest and a rise in prices, Swiss households will pay more for food in 2027.

Experts have confirmed this: this year’s harvests have fallen by 10 per cent compared with the previous year. And following the 2022 heatwave that ravaged Africa – causing, amongst other things, a drastic rise in the price of cocoa – the European Central Bank recorded inflation of 0.67 per cent. This figure is higher than the inflation caused by the war in the Middle East.

Insurance and infrastructure

Climate-related inflation is also affecting the insurance sector. Extreme weather events are causing a sharp rise in the number of claims. Fires, hailstorms, storms: as insurers are forced to cover heavy financial losses due to events such as hailstorms, storms or fires, they are responding by increasing premiums.

These costs come on top of the already very high costs of the energy transition – a transition which also involves adapting our buildings and infrastructure to new temperatures. Organisations such as Swiss Engineering have already begun in-depth discussions on adapting architecture to an increasingly Mediterranean climate.

The stock market remains unfazed

A surprising fact in this context is that, whilst geopolitical upheavals have a direct impact on stock markets, the climate crisis does not seem to have any effect. Despite the heatwaves in early August, market growth reached record levels. This shows that investors are not taking climate risks into account. This is in contrast to the war in Iran, for example – which, according to analysts, would push other threats into the background.

All employees are affected

Global warming is affecting our lifestyles, and its negative consequences are being felt by employees across a wide range of sectors. Safeguarding purchasing power is a fundamental part of our remit; every year, our demands take account of the rise in the cost of living in order to set the desired indexation for the following year’s wages. You can find our 2027 recommendations via this link. And because everyone can play their part, at their own level, in creating a world of work that respects the planet, our training course for sustainability officers is being run again in October for the third year running.