Last month, unemployment in Canada hit an all-time low of 5.2%. In addition to low unemployment, many industries have seen – and still see – a shortage of workers, with the number of job vacancies in Canada reaching 900,000 in January.
Both of these things are good for workers, right?
Potential employers, desperate for new recruits, are “throwing money at candidates.” Many lower-wage jobs have even seen a pay hike, such as the 20% wage increase for truckers recently announced by Walmart.
The pandemic is partly responsible for this labor shortage, as the supply of immigrant labor ran out during the lockdown. However, the aging of the population in Canada was also a determining factor.
Is automation the answer?
The solution to the labor shortage proposed by the chief economist of the Business Development Bank of Canada is greater automation.
Defenders and critics have long argued about the impact of automation on employment. Advocates believe automation can be used to do mundane or physically demanding jobs, freeing workers to learn new skills and take on better jobs.
Recent research from the University of Pennsylvania supports the argument that automation creates jobs. The study found that investing in robots increased efficiency and quality of work by reducing costs, increasing productivity and creating more job opportunities. Likewise, a 2020 report from Statistics Canada also found that companies using robots were hiring more human workers.
The impact of automation on work can only be assessed in the long term and depending on whether jobs are created by those who leave or retire and whether the activities of those who leave work are fully automated.
But critics have argued that automation and technological advances create an hourglass economy where opportunities exist only for highly and low-skilled workers, leaving less work for semi-skilled workers who need to increase their skills or take on less skilled jobs ( and salaried).
A common example used to illustrate the damage of technology to employment is the case of Blockbuster. Once a physical video rental titan with 60,000 employees, Blockbuster was unable to compete with Netflix’s new streaming services (which only had around 2,500 employees) and filed for bankruptcy in 2010. Netflix automated the business. of video rental while Blockbuster maintained its labor-intensive physical activity model until it was too late.
Automation might not be that bad after all
Why automation didn’t have a more damaging impact on workers can be explained by two factors. First, employees are also consumers. Reducing employment means reducing the market for products, which is bad for producers and capitalism itself.
As a management professor, I often use an incident alleged to have occurred between Henry Ford II and Walter Reuther, leader of the United Automobile Workers union, to illustrate this point.
While showing Reuther the new automated assembly lines at his auto factory, Ford subtly threatened the future of the union: “How are you going to get those robots to pay your union dues?” Undaunted, Reuther replied, “How are you going to get them to buy your cars?”
Second, companies can easily solve problems with new technologies by hiring human workers to take over. Take for example the automation failure in the fast food industry and the story of Flippy, the burger-turning robot, which only lasted a day, only to be replaced by human workers when it couldn’t keep up with demand. Such cases reveal how workers offer an easy substitute for automation that can’t cut the mustard (or turn the burger).
Read More: COVID-19 has fueled automation, but human involvement is still essential
The current situation is different as employers are struggling to find workers. Reliance on automation is becoming a necessity rather than a source of competitive advantage. Additionally, labor shortages mean that targeting workers as a substitute for failed technology is a less viable strategy, so companies are more likely to persist in introducing new technologies.
The future of automation
It has been argued that around half of the activities undertaken by workers could be automated by 2055. This does not mean that all of these activities will be automated. Nor does it mean that 50 percent of jobs will necessarily disappear over the next 30 years without more emerging as a result.
However, current circumstances, especially the shortage of workers, are a powerful motivation for automation. Over the next few years, we could see a significant increase in the use of automation in the workplace.
The challenges of filling worker vacancies may be good news for workers now, but the long-term consequences still remain to be seen.