It has been almost a year since the COVID-19 pandemic began in early 2020, forcing thousands of workers out of jobs in Canada — many of them permanently. Although emergency income-support programs were introduced fairly quickly, they were meant to be temporary. With mass vaccination on the horizon, now may be the time to start thinking about long-term policies that will help displaced workers adjust to postpandemic economic realities. A wide range of such policies already exists in Canada, including temporary income replacement, training and assistance with job search. What is less well known, however, is what workers do to improve their situations, especially when employment opportunities are scarce — as they are now and are likely to remain until the pandemic’s effects subside.
This study by Statistics Canada researchers René Morissette and Theresa Hanqing Qiu documents the use of four adjustment strategies by Canadian workers permanently laid off in 2009 — in the middle of the last recession: moving to another region, enrolling in post-secondary education, signing up for a registered apprenticeship and becoming self-employed. The authors examine whether the adoption of strategies varied according to workers’ characteristics and their employment status a year after job loss, and to what extent it differed in the short and long terms.
Looking at adjustment patterns in the first and fifth years after job loss, the authors find that, overall, only a minority of displaced workers — at most one in five — adopted at least one of these strategies. The use of adjustment strategies varied considerably depending on gender, age, education and other characteristics. For instance, in the first year after job loss, the most common strategy among laid-off women was to enrol in post-secondary education, whereas among men it was to move to another region. Five years after job loss, moving was the predominant strategy for both genders. Older displaced workers were less likely to move to another region or invest in skills, in both the short and long terms. Those with more education were more likely to become self-employed or pursue post-secondary education, especially if they already had university degrees. Compared with displaced workers born in Canada, immigrants — especially women — were less likely to move to another region, in both the short and long terms, whereas recent immigrant men were more likely to start a business, but only in the long term. Compared with laid-off workers who were re-employed in the year after job loss, those without jobs were more likely to adopt at least one adjustment strategy during the entire five-year period. Still, less than half of them (42 percent) did so at some point during that time.
As to whether job loss per se induced a large behavioural response on the part of displaced workers — that is, led them to make greater use of adjustment strategies — that does not appear to be the case. Although those who lost their jobs in 2009 were more likely than those who were not laid off to adopt at least one of these strategies, the difference was rather small. And the impact of job loss was more pronounced among workers who had more education than it was among those who had less.
Documenting and quantifying the adoption of various adjustment strategies is a first step in improving our understanding of workers’ behaviour after job loss. Each strategy has pros and cons to be considered. And identifying the predominant strategies can shed light on the wide array of incentives and barriers people face when responding to job loss, especially when employment options are scarce. In the postpandemic world, the findings of this study will be especially relevant for informing the development of policies to support displaced workers.
In recent years, ground breaking advances in artificial intelligence and their implications for automation technology have fuelled speculation that the very nature of work is being altered in unprecedented ways. News headlines regularly refer to the ”changing nature of work,” but what does it mean? Is there evidence that work has already been transformed by the new technologies? And if so, are these changes more dramatic than those experienced before?
In this paper, Kristyn Frank and Marc Frenette offer insights on these questions, based on the new research they conducted with their colleague Zhe Yang at Statistics Canada. Two aspects of work are under the microscope: the mix of work activities (or tasks) that constitute a job, and the mix of jobs in the economy. If new automation technologies are indeed changing the nature of work, the authors argue, then nonautomatable tasks should be increasingly important, and employment should be shifting toward occupations primarily involving such tasks.
According to the authors, nonroutine cognitive tasks (analytical or interpersonal) did become more important between 2011 and 2018. However, the changes were relatively modest, ranging from a 1.5 percent increase in the average importance of establishing and maintaining interpersonal relationships, to a 3.7 percent increase in analyzing data or information. Routine cognitive tasks — such as data entry — also gained importance, but these gains were even smaller. The picture is less clear for routine manual tasks, as the importance of tasks for which the pace is determined by the speed of equipment declined by close to 3 percent, whereas other tasks in that category became slightly more important.
Looking at longer-term shifts in overall employment, between 1987 and 2018, the authors find a gradual increase in the share of workers employed in occupations associated with nonroutine tasks, and a decline in routine-task-related occupations. The most pronounced shift in employment was away from production, craft, repair and operative occupations toward managerial, professional and technical occupations. However, they note that this shift to nonroutine occupations was not more pronounced between 2011 and 2018 than it was in the preceding decades. For instance, the share of employment in managerial, professional and technical occupations increased by 1.8 percentage points between 2011 and 2018, compared with a 6 percentage point increase between 1987 and 2010.
Most sociodemographic groups experienced the shift toward nonroutine jobs, although there were some exceptions. For instance, the employment share of workers in managerial, professional and technical occupations increased for all workers, but much more so for women than for men. Interestingly, there was a decline in the employment shares of workers in these occupations among those with a post-secondary education. The explanation for this lies in the major increase over the past three decades in the proportion of workers with post-secondary education, which led some of them to move into jobs for which they are overqualified.
The authors explain that these employment shifts may be caused by factors — other than technology-induced demand for skills — that change the industrial structure of the economy. For example, higher demand for health services due to population aging may increase the share of employment in health-related occupations. Their analyses show that these other factors explain most of the increase in employment share in service occupations, about two-thirds of the decrease in production, craft, repair and operative occupations, and roughly 40 percent of the increase in managerial, professional and technical occupations. Their estimates of changes in the average importance of various tasks, nevertheless, remain significant.
It is important that policy-makers be informed of the evolution of the nature of work as new technologies are further integrated into the workplace, given the potential implications for policy development. This study has shown that, although recent advances in automation technologies have affected what workers do on the job and which occupations they work in, overall, the changes are not substantive. In other words, it may be premature to conclude that new technologies have altered the nature of work.
Journalists who interview experts are motivated to select quotations that attract and entertain news consumers. This paper examines whether there is a relationship between how often experts appear in the media and the educational content of their quotes. The authors analysed quotes from experts in four Canadian and four Swedish newspapers during the national election campaigns held between 2000 and 2015. They conclude that newspapers prefer experts whose quotes are entertaining, at the expense of experts who can educate the public. The differences between Canada and Sweden are minimal. This suggests there are powerful forces that transcend national borders at work, including growing competition among media organizations.
The Government of Canada has recently increased investments in skills development to help Canadians prepare for the post-pandemic recovery and the future of work. However, these measures may have little impact without actionable data on the training options that can connect workers to in-demand jobs. To address this issue, Canada needs a comprehensive information system to link training, skills and jobs. This paper is a call to action for employers, training providers and government agencies of all levels to work together to lay the foundation of a robust pan-Canadian mapping of training and employment opportunities.
Poverty reduction measures implemented by Canadian governments over the last two decades have improved the lives of many seniors, single parents and families with children. However, one group has been left behind: employable singles without dependants. In 2016, just under half of the nearly 2 million Canadians living in deep poverty were singles. One reason for this is the provinces’ long-standing policy of providing them with only bare-bones benefits to discourage their reliance on social assistance and make paid work more attractive. However, close analysis of the factors that affect social assistance caseloads indicates that the generosity of benefits plays only a modest role. Increased income supports for singles are urgently needed to counter the effects of deep poverty that prevent them from moving forward.
The Employment Insurance (EI) program has long been criticized for its inadequacies. Chief among these are its variable eligibility requirements that create inequities among regions and its failure to cover a growing proportion of unemployed workers. The duration of benefits has received much less attention but it should be added to this list. EI rules were designed to provide longer-lasting benefits to unemployed workers in regions with fewer job opportunities and to minimize the risk their claims would run out before they found a new job. Yet, on seven separate occasions since 2004, the federal government has had to extend benefits beyond the duration set by EI rules. Indeed, extraordinary benefit extension measures have been in place for most of the past 16 years. This suggests that a fundamental review of EI rules is in order and all the more urgent in the context of the pandemic and its aftermath.
In this study, David Gray and Philip Leonard assess the implementation and impact of EI benefit extensions based on the categories of unemployed workers targeted by these measures and the economic conditions that motivate the additional support. They examine whether benefit extensions have successfully reduced the risk of claimants exhausting their benefits while still unemployed. They also review the evidence on the unintended behavioural effects of extensions, such as claimants delaying their job search and staying on benefits longer than they would have without a buffer period.
Seasonal workers: The most common benefit extensions target seasonal workers in particular regions. They are meant to shorten the period between the end of their benefits and the start of the following working season. Gray and Leonard’s analysis focuses in particular on a 2010-12 pilot project that extended benefits by 5 weeks in 21 regions where the unemployment rate exceeded 8 percent. They compare the outcomes for claimants in these regions to those in regions not taking part and find there was a clear reduction in the proportion of claimants running out of benefits. Government evaluations of these measures revealed a major flaw, however. A large majority of those who claimed the extended benefits were not seasonal workers facing income gaps. This resulted in significant unintended costs and other problems, which the authors highlight. For instance, they argue that the difficulty in targeting seasonal claimants without affecting other unemployed workers in these regions made these benefit extensions distortionary and inefficient, not to mention the fact that they exacerbated regional inequities among unemployed workers. Also, the recurrent use of benefit extensions to support select groups of seasonal workers does not conform with the proper role of insurance, which is to mitigate the effects of unanticipated and nonpreventable events. They recommend that these measures not be renewed as they only serve to perpetuate seasonal workers’ dependency on EI. Policy-makers should focus instead on increasing the occupational and regional mobility of these workers, for example, through retraining and adult education.
The 2008-09 recession: The 2009 federal budget marked the first time EI benefit extensions were implemented nationwide in response to a recession. The plan included an extra 5 weeks of benefits for regular claimants and an extra 20 weeks of benefits for long-tenured workers with little history of making EI claims. Based on the government’s program evaluations, these measures had the intended effect of significantly reducing benefit-exhaustion rates relative to what they would have been otherwise. Gray and Leonard say the benefit extensions were an appropriate response to an unanticipated economic shock. But they argue that policy-makers should draw two important lessons from this experience: (1) the EI program has proven not sufficiently responsive to sudden and massive job losses; and (2) implementing ad hoc benefit extensions entails inevitable, costly delays. A better solution would be to revamp the EI system to ensure benefit durations increase more rapidly when unemployment rises.
The 2015 commodities downturn: There is limited evidence with which to assess the 2015-17 benefit extensions that were granted to claimants in 15 commodity-based regions facing a sharp drop in resource prices. Evidence suggests that the unemployed workers who claimed these extended benefits, including many who previously worked outside the oil and gas sector, were clearly in need of income support. The vast majority of them were still unemployed by the time they exhausted their claims. As in 2009, this measure responded to an unanticipated economic shock and was therefore appropriate. However, as Gray and Leonard point out, commodity prices have now been depressed for five years and the regional labour market effects persist, even beyond those related to the pandemic. Without the prospect of a near-term recovery, the argument for extending EI benefits for this purpose in the future is weakened. Many of these workers would likely be better served by programs to help them transition to other occupations or sectors.
Displaced long-tenured workers, such as those who have been permanently laid off from auto manufacturing plants in Ontario, have not been granted EI benefit extensions, despite calls for such action. The two exceptions are the 20-week extensions announced in the context of the 2008-09 recession and the 2015 commodities downturn. Yet research indicates that long-tenured workers are less likely than others to be re-employed one year after losing their jobs and those that are often earn significantly less than they did before. Rather than extending EI benefits for these workers, however, Gray and Leonard suggest that governments develop new programs better suited to their needs such as wage insurance and re-employment accounts.
At the end of September 2020, the federal government temporarily increased from 14 to 26 weeks the minimum benefit duration for all EI claimants as part of its longer-term response to pandemic-related layoffs. Gray and Leonard agree with this course of action. However, they argue that the government should also use these unprecedented economic circumstances as an opportunity to make fundamental changes to EI. Employment Insurance remains the main pillar of Canada’s social safety net. We need a system that is more responsive to ongoing changes in the labour market and better able to support those most at risk of being left behind in the post pandemic recovery.
It is a well-known fact that, for some time, Canada has been performing below expectations when it comes to turning its excellent science and technology into innovation. This is worrisome because we also know there is a positive relationship between scientific research, technological innovation and economic growth.
The Innovation Superclusters Initiative, put forward by the federal government in 2017, is the centrepiece of its plan to reverse Canada’s deteriorating innovation performance, accelerate the adoption by Canadian firms of several key transformative technologies and foster a strong entrepreneurial or start-up culture. Under this initiative, Ottawa is investing $950 million over five years to support five superclusters involving small, medium-sized and large companies, academic institutions and not-for-profit organizations from across the country. But how will we know if the program has achieved its objectives?
In this study, Catherine Beaudry and Laurence Solar-Pelletier argue that the superclusters are in fact innovation ecosystems; and that is the lens through which their performance should be monitored and assessed. More broadly, they view the superclusters initiative as somewhat of a Canadian experiment, providing all stakeholders with a unique opportunity to identify the factors that facilitate the emergence and success of innovation ecosystems, and allowing policy-makers to better design and fine-tune innovation policies and programs.
According to the authors, the use of the term “innovation ecosystem” has become quite common among academics, practitioners and policy-makers, but the concept is still not well defined. They make the case that, to fully understand why and how innovation ecosystems can help boost Canada’s innovation capacity, one must first understand the theoretical foundations on which they are built. These range from industrial clusters and knowledge networks to collaboration and open innovation. The literature they survey strongly hints at the potential benefits of innovation superclusters. However, their true economic impact has yet to be measured.
After reviewing several of the key performance indicators to be used by the government to track the progress of the superclusters, Beaudry and Solar-Pelletier conclude that these consist mainly of generic indicators, which broadly cover the main goals of the initiative but overemphasize basic metrics such as the number of participating companies and organizations as well as new products, processes and jobs created. As they point out, although such indicators may be relatively easy to quantify, they are at best proxies for innovation and its impact. They overlook key elements that matter a lot in understanding innovation outcomes, such as the nature of the links and relationships among ecosystem constituents, the innovative capacity of the people involved, and the extent of knowledge transfer and technology adoption taking place.
Since the initiative was launched, Innovation, Science and Economic Development Canada has been consulting with experts and working with members of the five superclusters to develop a more detailed and precise set of performance indicators. Beaudry and Solar-Pelletier urge all stakeholders to continue to work together to design and test new indicators that are better adapted to the reality of innovation ecosystems. This would enable them to truly measure the impact and potential of these ecosystems and to adapt innovation practices and policies accordingly. The authors are currently working on developing such metrics as part of a five-year research project conducted by the Partnership for the Organisation of Innovation and New Technologies.
Gaining a better understanding of supercluster dynamics will benefit all the players involved, including policy-makers. The degree of coordination and insight required to ensure the success of the superclusters, or to propose how to change tack in real time if need be, is unprecedented. So too is the task entailed in accurately measuring that success.
Despite federal, provincial, and territorial governments devoting a lot of effort on plans to reduce poverty in recent years, too many Canadians continue to struggle to meet their basic daily needs on incomes that fall far below the poverty line. And, among all household groups, single persons without dependants are most likely to find themselves in these dire circumstances. Working-age singles constitute the largest proportion of beneficiaries on social assistance, and they are three times as likely to live in poverty as the average Canadian. The average income of singles living in deep poverty is less than $10,000 a year, which includes social assistance benefits. Yet, they have been overlooked in social policy reforms for several decades and in many ways remain the “forgotten poor.”
This report presents the findings of extensive research about employable singles on social assistance undertaken by Toronto Employment and Social Services, in partnership with the Ontario Centre for Workforce Innovation. Drawing on data from 69,000 singles who were receiving social assistance in Toronto in 2016, and 51 interviews with randomly selected participants, the report highlights these individuals’ characteristics, their complex needs, and the barriers they face in moving off social assistance and into employment. Complementing the quantitative analysis, the interviews provide important insights into the daily realities of participants’ lives and their journeys on and off assistance.
The report indicates that, contrary to common belief, singles on social assistance are not a homogenous group of young men. For instance, 38 percent of them were women and 38 percent were 45 years of age, or older. Men under the age of 30 accounted for less than 20 percent of the cases. Education levels varied greatly, as did the immigration background of those on assistance. Notably, about a third had not completed high school, but as many as 30 percent had post-secondary credentials of some kind. Naturalized Canadian citizens and permanent residents represented 43 percent of the singles caseload, the same proportion as those born in the country.
One of the key issues highlighted by the report is the fact that public income supports for single individuals living in poverty — in the form of social assistance, tax credits and supplementary benefits — are considerably less generous than those for families. Unlike the many lone parents who have been helped to move out of poverty through targeted programs and child benefits, singles have minimal access to income supports beyond modest social assistance payments. Interview participants described the difficult trade-offs they made between meeting essential needs and other living expenses. They pointed to malnourishment and deteriorating physical and mental health, not to mention the stigma and social isolation, that resulted from spells on social assistance.
Singles on social assistance also reported multiple barriers to employment. The most common reasons cited were poor health, a lack of education/skills, limited transportation options, and insufficient Canadian work experience. All of this underscores the importance of better understanding their diverse circumstances and challenges to be able to provide public services tailored to their needs. The report’s findings provide valuable information not only to policy-makers in Toronto, but also across Canada, as the increasing number of singles on social assistance and the limited financial support available to them are nation-wide concerns.
To follow up on this research, the Institute for Research on Public Policy asked three experts to comment on the findings and the broader implications for social policy reform, in particular how policy-makers at all levels of government could better help reduce deep poverty in Canada.
Sherri Torjman, social policy consultant and policy associate with Maytree, has long advocated for a fundamental “reformulation” of the country’s patchwork social safety net for working-age adults. She points out that, in the last few decades, tremendous progress has been made lifting families out of poverty, mainly thanks to decades of improvements to the Canada Child Benefit. However, in her view, progress stalled when it came to tackling the complex needs of working-age adults, especially those of singles on social assistance who are often stuck behind the “welfare wall.” She puts forth three major policy-reform options: (1) a redesign of Employment Insurance; (2) an expansion of the Canada Workers Benefit to provide an income guarantee to low-income workers and boost their take-home earnings; and (3) a “big bang” rebuild of all income-support programs. She also stresses the need to provide more diverse individualized support services for the most vulnerable.
Alain Noël, professor of political science at the Université de Montréal, argues that the focus of social policy in the last 20 years in member countries of the Organization for Economic Co-operation and Development (OECD) has been to reform the welfare state to deal with the new social risks associated with increasingly polarized labour markets and less stable dual-earner family arrangements. As a result, policy-makers’ attention in redesigning income support programs has leaned towards children, work-family conciliation, and labour market integration. He argues that those living alone in poverty were in the blind spot of this “social investment” drive, and that this contributed to maintaining very low welfare incomes for single adults. For instance, Canadian provinces remain in the bottom tier of OECD governments in terms of the adequacy of social assistance income for employable singles relative to median income. While Professor Noël agrees the post-COVID-19 environment may provide policy-makers an opportunity to address long-standing income security gaps, he cautions that there are considerable political risks in betting on new, large-scale, basic income programs as advocated by some. Instead, he encourages multi-pronged solutions focused on lifting people out of deep poverty by significantly increasing social assistance incomes, and providing more supportive employment and social services to those facing multiple challenges.
In a similar vein, Ron Kneebone, professor of economics at the University of Calgary, opines that for decades, Canadian public policies to fight poverty have been driven by politically popular campaigns centered on seniors and families with children. He argues that with single people now making up the largest group of reported households in the census, and singles being disproportionately represented among the ranks of the poor in the country, it’s time for policy-makers to shift the focus of their efforts from simply reducing the poverty rate overall to specifically addressing the problem of deep poverty among singles and its consequences. Professor Kneebone calls not only for a significant increase in social assistance benefits for them, but also for annual cost-of-living adjustments to be made on the basis of changes in rental costs — housing being the most significant affordability challenge for those living in deep poverty.
Against the backdrop of steadily increasing life expectancy, the decline in employment-based defined-benefit pension plans underscores the importance of public pensions, and of individuals making the right decisions to maximize their retirement income and address the financial risk associated with longevity. The age at which a person decides to take up their Old Age Security (OAS), Quebec Pension Plan (QPP) or Canada Pension Plan (CPP) benefits is therefore a significant factor in financial planning for retirement.
In this study, Pierre-Carl Michaud and his co-authors examine the behaviour and intentions of Quebecers and other Canadians in deciding when to retire and begin taking QPP and CPP benefits. Up until the mid-1990s, there was very little difference between Quebec and other provinces in the proportion of 60-year-olds taking out their public pension at the earliest opportunity (age 60). However, over the decade from 1995 to 2005, there was a sharp increase in the proportion of 60-year-old Quebecers doing so — it grew to more than half by 2016, compared with around 30 percent for the CPP in other provinces (Figure 1).
There are a host of reasons why many Canadians choose to receive their public pension benefits as soon as possible and why the incidence of early take-up varies among provinces. While many have already retired at this age and are living on their employer-based pensions, others take up their pensions because they need it to support themselves, or because people they trust have advised them to do so. A large survey of pre-retired people aged 55 to 59 in 2019 highlights the many factors that go into this decision. First of all, only 58 percent of Canadians in this age group say that they have a financial plan for their retirement. Respondents on average expect to start drawing QPP/CPP benefits at age 63 in Quebec and at age 63.8 in the other provinces — a very small difference. The real contrast is in the proportion of those who plan to start at age 60, which is 40.5 percent in Quebec and 32.7 percent in the rest of Canada.
This suggests that by the time people turn 60, something is affecting the behaviour of QPP beneficiaries relative to their counterparts in the rest of the country. One explanation may be the QPP sign-up form sent by Retraite Québec to all Quebecers aged 59 and a half, for which there is no CPP equivalent. However, the difference in early public pension take-up between Quebec and the rest of Canada emerged well before this form was introduced in 2010.
Also, the extent to which retirement planning advice is sought from family, friends and advisors, as well as the reasons given for choosing a certain age to start collecting public pension benefits, are broadly similar in Quebec and other provinces. Overall, the reported differences in retirement planning and motivating factors among pre-retirees between Quebec and the rest of Canada fail to explain why public pension take-up at age 60 is significantly higher under the QPP than under the CPP.
Given limited financial planning for retirement in the population and the longevity challenges looming, should policy-makers revisit the age of eligibility for public pensions? To help answer this question, the authors calculate the optimal age to start drawing QPP benefits from a financial perspective, taking into account the tax implications and interaction with other seniors’ benefits, as well as life expectancies of men and women. Their results show that for many people — especially those who are single or have low career earnings — it is financially advantageous to start taking their pension at 60, although most would be better off if they deferred it.
In April 2019, the Canadian Institute of Actuaries (CIA) presented a proposal to raise the eligibility age for QPP and CPP benefits from 60 to 62, while ensuring that the benefits at age 62 would be the same as they are in the current system for those who start their collecting their pension at 62. The proposal also called for raising the age of eligibility for Old Age Security (OAS) from 65 to 67. According to the CIA, this could be an attractive option to increase pension benefits and provide more financial security for most retirees. In addition, it might encourage people to postpone retirement, thus alleviating expected labour shortages due to population ageing.
The authors’ assessment of the CIA’s proposal for the QPP reveals that raising the age of eligibility would have a positive effect on the incomes of most households, although for many the effect would be negative (leaving aside the possibility that some could then receive social assistance). They estimate that more than half of 60-year-olds in Quebec would benefit from the proposed reform. Overall, this change would yield an average gain of more than $1,000 (in after-tax, present value terms calculated at age 60). Looking separately at those who gain and those who lose, the average gain or loss would be around $3,000, respectively. Single people would be most likely to be among those who lose.
The extent to which raising the age of eligibility to the QPP would affect the age of pension take-up or the labour force participation of older people is less clear. Based on their review of empirical evidence, the authors are unable to predict the likely impact of the CIA’s proposal in that regard. Indeed, since 2014, the link between the age of eligibility for public pensions and retirement has become far less direct because people are no longer required to stop working in order to start receiving QPP benefits.
They also point out that the proposed reform would affect the costs of other government programs. The federal government’s expenditures on the Guaranteed Income Supplement could decrease, while the Quebec government’s spending on social assistance should increase. In fact, even if the latter did not intervene directly to compensate those who stand to lose, the reform would still automatically result in an increase in social assistance expenditures. If the government were to provide more support, the costs would, of course, be even greater.
To conclude, the authors suggest that there are undoubtedly other, less costly and less controversial ways to encourage Quebecers to defer collecting the QPP, especially as the average age of actual retirement has been rising steadily for the past 20 years. Possible measures, including changing how information on pension deferral is presented to the public (this is already underway) or better spreading the penalty for early pension take-up, could help future retirees plan better to meet the financial challenges of living longer.
 “Asking Canadians,“ Survey of 3,055 Canadians, Retirement and Savings Institute, HEC Montréal, November 2019.
The COVID-19 pandemic has exposed a new vulnerability among firms that rely on human labour. In order to comply with public health directives on physical distancing, many businesses have had to completely shut down their operations for months. Others remained functional thanks to teleworking, which many intend to prolong and even adopt permanently. As experts contemplate the long-term repercussions of the pandemic on the economy, many expect firms to ramp up their adoption of new technologies to better weather the post-pandemic recession and insulate themselves from future health crises.
Just a few years ago, policy-makers became concerned about the prospect of many job-related tasks being automated using advances in robotics and artificial intelligence and in particular about the projected job losses at the time. While we no longer expect entire jobs to disappear, new technologies may substantially transform jobs, forcing workers to adjust to new requirements and prompting governments to assist them in this process.
In this study, Statistics Canada researchers Marc Frenette and Kristyn Frank are breaking new ground by examining the demographic and employment characteristics of workers facing a high risk of job transformation due to automation. To assess the potential impact of a new wave of automation on vulnerable workers, policy-makers need to know not only what jobs are at risk but also who holds these jobs. For instance, while we know that previous waves of robotization replaced low-skilled workers and enhanced the work of those with high skills, this time around there are fears it is high-skilled workers who are at risk, given the rise of new algorithms that are increasingly proficient at accomplishing complex cognitive tasks.
Consistent with the findings of previous research, Frenette and Frank show that, overall, more than 10 percent of Canadian workers face a high risk of seeing their jobs transformed through automation – high risk being defined as a probability of 70 percent and higher. And close to 30 percent of workers face a 50-to-70 percent risk. What the authors underscore, however, is that the extent to which the automation risk varies is based on certain worker characteristics. For instance, more than a third of workers without a certificate, diploma or degree face a high risk of job transformation, compared with fewer than 4 percent for those with degrees. The probability of being at high risk also decreases significantly as employment income increases. Over a quarter of workers in the bottom decile of the income distribution are at high risk, whereas only 2 percent of workers in the top decile are. Also among the groups most exposed to job transformation are older workers (aged 55 and over), those with low literacy or numeracy proficiency, the part-time employed, those working in small firms, and in manufacturing, where about 27 percent workers are at high risk. The authors find no significant differences in the risk of job transformation on the basis of gender, immigration status, having a disability or being unionized.
The results from this study stand in sharp contrast with many observers’ expectations that the new technologies could adversely affect workers previously seen as immune to automation. It suggests that the workers at high risk of job transformation due to automation, by and large, share the same characteristics as workers who have been susceptible to poor labour market outcomes in the past. Frenette and Frank say that more research is needed to better understand which characteristics can be interpreted as risk factors. Nevertheless, by shedding light on the differential effects of automation on particular segments of the workforce, their study contributes to labour market policy development going forward.