Is technology killing jobs? Relax, no doomsday scenario here

Artificial intelligence, driverless cars and automated production lines are raising red flags in North America where some technology prognosticators are warning that automation will displace millions of workers.

Global consulting firm McKinsey and Co. concludes 60 million in the US will face some form of automation and warns of job losses coming in the white-collar world. We’re seeing it in retail (automated checkouts), but McKinsey offers a broad list that includes transportation, agriculture, arts, medicine, stock trading and even prostitution (something about robotic companions that are decent conversationalists and good listeners).

Closer to home, a report by the Mowat Centre, part of the University of Toronto’s School of Public Policy & Governance, warns 1.7 million to 7.5 million Canadian jobs could be at risk over the next 10 to 15 years.

And federal government officials have been warned machines are going to replace people in the workforce over the coming years. That will require a rethink of how government helps the unemployed.

But the C.D. Howe Institute has conducted an analysis of global trends and contends automation poses no doomsday scenario for jobs in Canada.

The Toronto-based research firm finds a drastic shift in employment is unlikely in the near future, although particular industries and types of occupations will be disrupted more than others.

Future Shock? The Impact of Automation on Canada’s Labour Market finds trends show a gradual shift to jobs that require higher skill levels.

“New technology does not simply make people redundant; rather, it reduces the labour required for a given level of production,” says report co-author Matthias Oschinski. “This means that more of the same goods can be produced or people can be redeployed in areas that otherwise might not have been developed.”

Canadian manufacturers, especially smaller ones, have been slow to adopt advanced technologies.

The PLANT Manufacturers’ Outlook 2017 report shows only 16% of respondents use automated materials handling technologies and 10% make use of robotics.

The pace of automation adoption in manufacturing has room to pick up, but as it does so, will it lead directly to job losses?

Robotic use

Based on density (the number of robots in service per 1,000 workers), the C.D. Howe research shows Korea is at the highest level followed by Japan and Germany. Canada, incidentally, is well above the world average. So you’d think the highest density countries would experience the greatest job losses. But the data says otherwise.

Looking at robotics use in manufacturing among a variety of industrialized countries (1993 to 2007), there was no significant effect on overall employment, but increased robotics density led to GDP growth and labour productivity gains.

What does that mean for Canada? The report notes several important factors:

• Canadian employment is concentrated in industries that have a low risk of automation. Industries with less than a quarter of the jobs susceptible to automation account for 27.5% of total employment (4.9 million jobs).
• Industries where more than three-quarters of the jobs are at high risk of automation account for only 1.7% of employment (310,000 jobs). This implies that Canada’s diversified economy and labour force are well positioned to adapt to rapid technological change.
• Occupations high in abstract, complex-decision-making skills with a strong focus on creativity, critical thinking and interpersonal social skills are relatively low risk.
• It’s very unlikely jobs highly susceptible to automation (35%) will be completely replaced by smart machines over the next few years.

But the report observes as the rate of technological progress increases, technical job-specific skills might become obsolete relatively quickly. This indicates a need to increase opportunities for continuous education and lifelong learning.
Oschinski recommended policies that encourage collaboration between public and private institutions to ensure workers have the necessary skills for new employment. That’s sound advice as technology continues its rapid advance.