Return to site

Canada's Ai & Automated Future

· Automation,Ai,Canada,Economics,Economic Trends

Canada's Ai & Automated Future

Contrary to the massive job loss many may fear, adaptation of automation will bring about a half million new jobs to Canada. This increase in employment stems from demands for more personnel throughout Canadian education levels and in the humane professions as well as growth in technological employment to maintain and further develop the systems that are increasing Canadian productivity.

Over four million young Canadian students graduating from college in the next decade will be looking for a full-time job. With both the national (5.5%) and youth unemployment (11.9%) rates near their lowest levels since the financial crisis in 2008, Canada still has relatively high rates of unemployment. However, the Canadian government supports new technologies, driving the expansion of automation throughout the country.

Compared to countries like South Korea or Japan, Canada’s robot density is low, at 12 per 1,000 workers. Since most of the robots serve in the industries that require routine low-skilled work, like the auto industry, the current trend of robots performing more complex tasks and Canada’s low robot density leaves plenty of room for future growth in automation. This may profoundly influence the labor market for these young job seekers in the next decade.

Tech giants like Apple and Google are actively developing advanced Ai robots that can possibly pass the Turing Test, which tests a machine's ability to exhibit intelligent behavior compared to that of a human. However, Ai's in the near future cannot replace the non-routine cognitive work that requires human emotional intelligence.

There are two things that readily determine the switch from human labor to automation; technology and costs.

Plain and simple, some jobs are seemingly irreplaceable.While industrial robots can perform better tasks in manufacturing auto parts and advanced Ai's can easily act as high frequency traders or administrative assistants, there will always be jobs that require human contact. For example, elementary school teachers have little to no risks of being replaced by robots because their work needs human supervision and affection to guide the youngsters in their early stages. The 124,000 teachers in primary schools throughout Canada should consider their jobs relatively safe from robot replacements.

Costs of capital expenditure and maintenance will slow down the expansion in some industries. More than 20% of the gross merchandise value of goods in the world are manufactured in China, whose robot density is around 1 per 1,000 workers. The reason for this is obvious, as it is cheaper to use convenient human labor than robots for routine work. Even with Canada’s cost of labor being considerably higher than that of developing countries, it is in many cases more economically desirable to use humans than advanced AIs for performing complex tasks. Therefore, we are confident to predict a slower pace of automation that replaces more complex tasks in the future.

To further examine the economic impact of Ai, we have divided the economy into three sectors according to the vulnerability of workers being replaced.

The epitome of the routine job sector is the auto manufacturing industry, where half of the robots in Canada are currently used. These types of jobs make up 57.7% of the labor force of Canada, which is down 10% from 1987 and continuing to decrease. Some characteristics of this sector include little to no educational requirement, routine work, and a relatively low income. This sector has experienced the highest replacement rate by automation and will remain as such for the foreseeable future.

Unlike the routine jobs sector, the non-routine sector requires its workers to have some interpersonal skills and the ability to adapt to daily events. People in this sector work as chefs, waiters, assistants, customer service agents, etc. Currently, the 8.8% of the labor force that is employed in this sector has experienced little impact from automation. Employment in this sector has been relatively stagnant for the past 30 years. But jobs in this sector will be vulnerable to more advanced Ai's developed by tech giants like Google. For example, the Google Duplex introduced recently could easily act as personal assistants that communicate seamlessly with other human beings.

People in this sector are generally more educated and possess more cognitive and emotional skills that automation cannot replace and so can take the complex and non-routine jobs. This sector includes teachers, social workers, doctors, nurses, scientists, lawyers, etc. In the last 30 years, this sector has shown great growth and upward projections. Currently, more than 30% of Canadians employed belong to this sector. So how does automation create jobs?

Just as how cell phones made telegram operators obsolete and ATMs replaced bank cashiers, automation will inevitably replace many jobs in the routine sector and some in the simple non-routine sector. However, history has proven that advanced technologies will also create more jobs, leaving a net gain in the labor market. Similarly, even the most advanced automation systems require people with higher degrees to create, install, and maintain them. Additionally, the improved productivity and technologies will make jobs more sophisticated. This will lead to another wave of task specialization that creates many new jobs for people with higher education background and cognitive skills. As a conclusion, we see a decrease in the simple routine/non-routine sectors in the future, but a large increase in jobs in the complex non-routine sector. Therefore, the real question is: Can the labor force speed up its transition from simple routine jobs to cognitive jobs fast enough to outpace the growth of automation?

Canada is one of the most well-educated countries in the world and has an extensive and high quality educational system. More than half of the population holds college degrees. Some of these highly skilled workers, however, are currently employed in low-skilled jobs, which is a waste of good talent. The transition from low to high-skilled jobs in a recovery is due to the industry structure of Canada rather than an adaptation to automation. With robots doing the simple work, even more Canadians can fulfill their potential by working in more cognitive tasks.

Automation can help this transition, which in turn boosts the overall productivity and income of Canadian workers, while creating new specialized jobs in the complex non-routine sector.

In conclusion, the transition that the labor market is currently undergoing will accelerate thanks to the rapid growth of automation in Canada. Based on this trend, we give a lower estimate of job growth in the routine sector, a medium estimate on the non-routine sector, and a higher estimate on the cognitive sector. This brings us a net of half million jobs created due to automation alone (model built upon comparing Deloitte’s report and using data from CD Howe’s report). The education level, industry structure, and productivity of Canada make the country a great fit for automation. Contrary to what many fear, the future will consist of humans working alongside the computers, not competing against them for jobs.

Written by Tianyi Li & Edited by Alexander Fleiss

All Posts

Almost done…

We just sent you an email. Please click the link in the email to confirm your subscription!