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The Impact of Automation on Canada’s Labour Market

Future Shock? The Impact of Automation on Canada’s Labour Market – Automation poses no doomsday scenario for jobs in Canada, suggests a new report from the C.D. Howe Institute. In “Future Shock? The Impact of Automation on Canada’s Labour Market,” authors Matthias Oschinski and Rosalie Wyonch find that a drastic shift in employment due to automation is unlikely in the near future, although particular industries and types of occupations will be disrupted more than others.

Despite recent alarmist claims that large portions of the Canadian workforce will soon be unemployed, the authors caution policymakers from hitting the panic button. “We find no evidence of an imminent threat of massive unemployment due to automation,” says Wyonch, adding that, “the automation of job tasks is part of the natural process of technological innovation and a necessary engine of economic growth. The challenge for policymakers is creating a policy environment that cushions displaced workers and develops in-demand workforce skills.”

The report finds that labour market 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,” states 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,” he adds. This process, already underway, can be moderated by policy that encourages collaboration between public and private institutions to ensure workers have the necessary skills for a technologically uncertain future. Those whose qualifications are no longer in demand should be helped to gain the qualifications they need for new employment.

With this in mind, the authors provide the following findings:

Canadian employment is concentrated in industries that have a low risk of automation, with industries where less than a quarter of the jobs are susceptible to automation accounting for 27.5 percent 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 percent 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 have a relatively low risk of being automated.

It is very unlikely that employment in occupations highly susceptible to automation (35 percent of Canada’s employment) will be completely replaced by smart machines over the next few years.

As the rate of technological progress increases and digitization permeates different occupations and industries, technical job-specific skills might become obsolete relatively quickly. This indicates a need to increase opportunities for continuous education and lifelong learning.

The authors find that Canada is well positioned to tackle the challenges presented by increased automation, including building upon the Canada Jobs Grant, which helps transition workers over the course of their working careers. The combination of strong public educational institutions, a highly skilled workforce and existing policy to assist displaced workers during the transition between jobs is a solid foundation upon which Canada can build.

“By encouraging the adoption of new technologies and putting in place the appropriate support for workers, Canada can minimize both skills shortages and technological unemployment,” conclude the authors.

Click here for the full report:

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