To make our innovation economy more inclusive we must better map workers’ skills and employers’ needs and enable people to gain future-relevant skills.
Much of the debate about automation has been polarized between two camps: one fears the advent of robots that will take our jobs, and the other sees technological change as a constant through history that will continue to create jobs and improve their productivity. While predictions of job loss or gain are largely guesswork, we know that jobs will change, possibly at a faster pace than in the past, and that this change will impact some people more than others. The effort to determine the extent to which technological change spells progress or destruction can distract from the more practical question of how to mitigate its potential negative consequences.
Technological change is a major driver and outcome of Canada’s innovation economy. It holds huge potential to solve pressing challenges and fuel economic growth in areas from health care to transportation; but its adverse impacts on individual Canadians and communities could be significant. As companies invest in labour-saving technologies, inequalities — among people of different income or skill levels, between urban and rural populations, among age groups and between genders — could widen.
Joining the agenda of innovation-driven growth to the agenda of inclusive growth will be one of the biggest tests of policy and politics for Canadian governments in the next decade. For a long time, the assumption that what is good for the economy is good for people has reigned. Notably, the mantra of “jobs and growth” has often been invoked by governments, but these two are no longer sticking together.
For many companies, the number of jobs needed to maintain or increase their output is shrinking, largely thanks to new technologies. Applying an approach used by the Brookings Institution in the US to the Canadian context demonstrates that between 1980 and 2013, the number of workers required to produce $1 million in output in Canada’s manufacturing sector fell from 20 to 10. This trend is playing out across sectors. A study from the Massachusetts Institute of Technology estimates that, across the US economy, for every robot introduced between 1990 and 2007, six jobs were lost.
According to a 2016 report from the Brookfield Institute for Innovation + Entrepreneurship, roughly 42 percent of the Canadian labour market is at high risk of being affected by automation. Lower-earning jobs and jobs requiring lower education levels are disproportionately susceptible. These impacts can also be expected to have an uneven geographic distribution. At the same time, technology is enabling the concentration of economic gains among fewer and fewer cities, exacerbating regional inequalities.
So what does this mean? Jobs and the different skills and tasks that define them are changing. Certain skills are likely to decline in importance, and demand for other skills will grow. This leaves just as much room for optimism as it does for apprehension. But if keeping unemployment low and helping workers navigate through a period of disruption are both policy and political priorities, then we cannot focus exclusively on growth and assume that jobs will follow.
This challenge is set against the backdrop of economic anxiety and social fragmentation that is shaping politics and policy south of our border. Technological disruption is not the only force behind these trends. A 2016 analysis by Jed Kolko, however, showed a correlation between the counties that voted for President Trump, and the counties where more than half of jobs are routine and therefore more susceptible to automation. While popular fear of job loss has so far concentrated around trade, offshoring and immigration, it could easily shift to automation. This fear could throw cold water on the public’s and government support for technology innovation and adoption. In other words, if innovation-driven growth is not inclusive, it may be held back because too many people don’t see themselves reflected in it.
To chart a path through a shifting labour market, governments, employers, educators and workers will need to invest in the development of skills that are growing in importance.
To assuage economic anxiety and chart a path through a shifting labour market, Canada’s governments, employers, educators and workers will need to invest in the development of skills that are growing in importance. This will be vital both to fuel continued innovation and growth, and to enable more people to participate in Canada’s innovation economy.
A recent report from Nesta, an innovation foundation in the UK, sheds light on how multiple trends, not just technology, are likely to change the skills that employers will demand in the future. This report uses an unusual combination of historic trends analysis, foresight exercises and machine learning algorithms to make informed predictions not only about which jobs and skills are likely to diminish in relevance but also about those that are likely to grow or emerge. The Brookfield Institute is exploring the possibility of rolling out a Canadian version of this study, in collaboration with Nesta.
The federal government’s focus on skills (exemplified by its rebranding of the innovation agenda as the Innovation and Skills Plan) is timely and echoes the efforts of many provincial governments. Education and skills training initiatives will need to be calibrated to specific skill needs and people, however, and won’t work for everyone. A person’s potential to be retrained will depend on a variety of factors, including their baseline skill level, the types of skills in demand in their vicinity, the availability of appropriate training programs, and real-time labour market information or services that match employers and workers.
Providing opportunities for all Canadians to gain skills that will be relevant for the future is a crucial part of any strategy aimed at making Canada’s innovation economy more inclusive. This requires a clearer picture of workers’ skills and employers’ needs. Developing a more granular, skills-based map of Canada’s labour market and of how its topography is likely to change would be a great place to start.
This article is part of the special feature Inclusive Growth in an Age of Disruption
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