Canadian workers are not at risk of being replaced by robots – but that might not be a good thing

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Canadian workers are not at risk of being displaced by robots in the coming years because businesses in this country have lagged significantly in adopting new technology, argues a new report from the Vancouver-based Centre for Future Work.

The report, titled Where Are The Robots?, dispels an increasingly common myth about the future of the workplace in developed economies – that robots and algorithms will soon be able to perform many of the job functions traditionally done by human workers, thus leaving them idle.

Instead, the report’s author – economist Jim Stanford, director of the Centre for Future Work – contends that investment in automation by Canadians businesses has slowed down so dramatically in the past two decades, compared with other industrial countries, that the supposed impact of robots and automation on jobs have simply not materialized.

“The idea that robots are here to take our jobs assumes that technological investment is accelerating. In Canada, there is little evidence to suggest that,” Dr. Stanford said.

The typical Canadian worker, according to the report, uses 11 per cent less machinery and equipment to do their job today than they did in 2014.

But the lack of robots is not necessarily a good thing. Dr. Stanford said Canadians should be concerned that businesses are not adequately investing in new technology because it means that too many workers are relegated to low-tech, insecure and poorly paid jobs.

The report, which used some data from Statistics Canada, shows that Canadian business investment in innovation as a share of GDP was steadily increasing between 1960 and 2000, reaching a peak of 2.33 per cent in 2001. But in the past 20-odd years, that percentage has eroded markedly, declining to just 1.8 by 2021.

Another key indicator of the extent to which a country’s economy is advancing technologically is the share of research and development spending by businesses as a percentage of GDP. On that front, Canada was an outsized laggard.

In 2019, according to the report that relied on data from the Organization for Economic Co-operation and Development, Canada ranked 26th among 37 OECD countries in terms of spending on R&D. Chinese firms, the report noted, invested more than twice as much of their output in new technology compared with Canadian companies, despite the relative abundance of cheap labour in China.

“We should fear the lack of innovation in this country because it has a direct impact on the kinds of jobs that are being created,” Dr. Stanford said in an interview.

While technology-intensive sectors and occupations have grown as a percentage of the labour force between 2014 and 2019, they still account for a small share of the total new work in recent years, the report noted.

Most of the job creation in Canada between 2014 and 2019 came from the health care and social-assistance sectors. Other major sources of new work in this period were hospitality, manufacturing, retail trade, transportation and construction.

“There is an understandable fear among workers that their jobs are going to be taken away by robots. What that reflects, however, is their lack of security and power in the labour market. Employers should say, ‘Look, your job might change because of technology, but we will train you, redeploy you, not lay you off,’” Dr. Stanford said.

In his research, Dan Breznitz, chair of Innovation Studies at the Munk School of Global Affairs and Public Policy, has observed that Canadian businesses are not innovative either because they are operating in uncompetitive, protected markets or they have access to cheap, but highly educated labour.

“What Canadians should fear is not automation, but the lack of automation,” said Prof. Breznitz, who is also co-director of the Innovation Policy Lab at the University of Toronto. “If we don’t engage with new technologies, the result is lower wages and much more boring jobs,” he said.

The median wage in Canada, according to Prof. Breznitz, has been stagnant for the past 46 years – yet, Canada has the most highly educated labour force in the world. Canadian businesses tend to not like the risk and uncertainty that comes with new technology, he added, hence they compensate by continuing to rely on the availability and productivity of skilled labour in a low-tech environment.

Historical data from the International Federation of Robotics and the OECD show that more jobs tend to be created when businesses invest in automation, and those jobs tend to be high-skilled and generate higher wages.

South Korea, for example, had an average unemployment rate of 3.6 per cent between 2010 and 2020, and one of the highest rates of robots (932) per 10,000 manufacturing workers among OECD countries in 2020.

“But if labour is cheap and abundant, why would you buy a robot to replace it when you can hire it for minimum wage?” said Dr. Stanford.

He emphasized, however, that the tightening labour market over the past year might slowly change that equation, and businesses will hopefully be compelled to get more innovative in using technology in the face of a labour shortage.

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