Canadian Manufacturing

Automation tech could impact half of all jobs in some countries by 2040, says BoC official

Senior deputy governor Carolyn Wilkins acknowledged that policy-makers must get ready to manage the negatives, but that "blaming the machines is not the way forward"


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OTTAWA—A senior Bank of Canada official says while the country’s poised to reap economic benefits from technological progress, it must also brace for potentially painful side effects like job losses and greater income inequality.

In a speech in Toronto, senior deputy governor Carolyn Wilkins said Tuesday innovations like artificial intelligence and robotics are expected to help re-energize underwhelming productivity in advanced economies like Canada. Over the longer haul, she added that new technologies should eventually create more jobs than they replace.

However, the fast-approaching changes come with concerns for Wilkins, from the challenging adjustment for the labour force, to the distribution of the new wealth.

She noted how experts predict changes like automation to have downsides, which could include impacts on close to half of all jobs in some industrialized countries within 20 years.

Policy-makers, she added, must get ready to manage negatives like amplified income inequality brought on by conditions that could help workers whose skills are complemented by innovations and those whose tasks are replaced by machines.

Her speech to the Toronto Region Board of Trade comes as governments grapple with the challenge of providing support to these emerging fields, while also easing the fears of workers who could lose their jobs.

For Canada to get the most from these changes, Wilkins argued it must address these concerns.

“Canada should embrace new technologies and their benefits while at the same time proactively managing their more-harmful side effects,” Wilkins said.

“Blaming the machines is not the way forward.”

Wilkins laid out potential approaches to ease the shifts that will likely accompany what she called “a new industrial revolution.” She said policy-makers will have to have to put more emphasis on education and skills training to help many workers and businesses adjust to what could be a difficult transition.

Canada, she said, has weathered past changes that have transformed sectors like the agricultural industry. For example, she pointed to farming innovations that helped lower food prices, which generated higher consumer demand in other sectors and new jobs.

“Innovation is always a process of creative destruction, with some jobs being destroyed and, over time, even more jobs being created,” said Wilkins, who added that what will change is the type of workers in demand.

“We’ve seen this process in action throughout history.”

She noted that advancements such as the steam engine, the combine, the jet engine and the assembly-line robot have boosted Canada’s productivity and helped raise the average income per person 20-fold—adjusting for inflation—over the last 150 years.

In recent weeks, the Trudeau government has made commitments to high-potential fields such as artificial intelligence as a way to help boost the economy. For example, last month’s federal budget announced a $125-million investment in a pan-Canadian strategy to help the country leverage its existing strengths in AI.

The announcement, along with other recent investments to support new technologies, arrived amid growing concern that advances in areas like AI will lead to the elimination of a significant number of jobs over the coming years. The budget sought to address those fears with increased federal support for skills and training to help workers adjust to the rapid changes.

Wilkins said the Bank of Canada has also taken steps to help it deal with the fast-approaching changes. It has created a new digital economy team with a focus on how automation affects the economy as well as its impacts on inflation and monetary policy, she said.

Read the text of Wilson’s speech on the Bank of Canada website.


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