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The Globe and Mail

Massive disruption is coming to the job market, and Ontario isn’t ready

John Armstrong is a partner at KPMG in Canada and KPMG's National Leader for Financial Services. He also serves on the Ontario Panel on Economic Growth and Prosperity.

Over the past 10 years, we have seen significant changes in the composition of our work force in Ontario. Mid-level white-collar jobs have been disappearing, along with significant numbers of manufacturing jobs. This is reflective of both changes in our economic output (e.g., less manufacturing) but has also been driven by changes within companies, as they have adopted new technologies and "leaned out" their business processes.

The result of all this is that we have seen a trend toward a polarization of jobs. Workers in what Richard Florida defined as the "creative class" have seen their careers blossom, and those whose livelihood depend on more physical labour have experienced relative stability. Those in the white-collar "middle," however, have seen an increasingly challenging job market.

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Though these trends have occurred at a relatively gradual pace over the past decade, given the rise of new technologies in areas such as digitization, robotic process automation and artificial intelligence (AI), the next decade is likely to see massive dislocations as many jobs disappear and most industries are impacted.

Yet there has been very little dialogue in either the public or private sectors about the need to understand and get ahead of this coming dislocation.

One study recently published in The Atlantic suggested that in the United States, on average, 55 per cent of jobs could be at risk from automation, with regional impacts varying by mix of industry. In Canada, 42 per cent of our jobs are considered at high risk of being affected by automation, according to the Brookfield Institute for Innovation + Entrepreneurship.

The Ontario economy is driven by a number of sectors that are likely to see significant disruption. For example, the automotive sector employs more than 125,000 people in the province. With the rise of autonomous vehicles and a move to on-demand fleets, automotive utilization will increase dramatically with a concomitant reduction in the need for new cars into the ecosystem.

Similarly, in the financial-services sector, our financial institutions are focusing on automation and the use of artificial intelligence to both enhance the customer experience and to reduce costs in the back office. Some knowledgeable observers such as Vikram Pandit, former CEO of Citibank, believe that up to 30 per cent of bank jobs could disappear in the next five years. And the insurance sector will also be affected. KPMG estimates that in the United States, auto-insurance premiums could fall by as much as 60 per cent, as autonomous vehicles reduce the number of vehicles on the road and accident incidence falls dramatically.

While these factors have huge implications for how we equip Ontario youth to enter a very different work force, they have equally profound implications for current workers who risk being left behind in the new digital economy.

Much of the dialogue about education in this new economy has centred on the need for Ontario colleges and universities to rethink their curriculums, focused on STEM-related subjects. While there is no question that is an imperative, it is not enough. We need to give equal attention to our current work force and on how to retrain workers who will be displaced by automation and other technologies.

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It is not an overstatement to say that we are facing a "tsunami" of dislocation that we need to view as an existential threat to our economy and well-being.

To address the issues that Ontario is soon going to face around worker displacement, we need a new mindset on the part of our largest firms. It is in their interest, as well as the interest of the economy as a whole, for our leading companies to step up and take some level of responsibility for ensuring Ontario transitions into an increasingly digital economy with as little dislocation as is possible.

Our leading firms in the sectors most likely to be dislocated need to adopt a new model for managing their work forces, one that provides opportunities for their employees to continually upgrade their skills with a focus on the new skills these firms require.

There are examples of firms who are leaders in work-integrated learning. For example, according to a recent profile in the Harvard Business Review, AT&T employees who had been retrained filled half of all technology management jobs at the company and received 47 per cent of promotions in the technology organization.

But training is not the whole story. Firms need to retool and rethink their entire human-capital strategy and approaches to their labour force. This includes upgrading performance-management approaches to provide appropriate incentives, better tracking of employee skills and job profiles that better reflect new requirements. This will require new investments in HR technology for example, something that has often been neglected in favour of more client-facing investments.

In addition , we need to encourage an even greater co-operation between our colleges and universities and the private sector – not only to update their curriculums but also to work together to ensure accessibility with flexible programs and new forms of pedagogy.

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Industry associations also need to support the effort, by helping to identify new skills, developing accreditations where appropriate and ensuring our key sectors are leveraging best practices globally.

Finally, governments at the provincial and federal levels must be active participants in supporting this effort. We need fundamental changes to tax policy to ensure incentives for both individuals and firms to invest; we also need to rethink education funding in the province to ensure it aligns with our emerging needs.

Ontario enjoys an enviable position around our capabilities in areas such as AI, where we are world leading. We have the chance in this province to lead the way in capitalizing on new technologies while at the same time showing the world how to manage the migration.

Rob Carrick discusses the results of a survey if Millennials which sheds some light on the struggles this age group is facing in the job market.
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