People walk in Vancouver’s business district over the lunch hour on April 22, 2022.JENNIFER GAUTHIER/The Globe and Mail
Claude Lavoie is a contributing columnist for The Globe and Mail. He was director-general of economic studies and policy analysis at the Department of Finance from 2008 to 2023.
Worried that artificial intelligence will take your job? You should keep your eye on the caribou!
Last month, the federal government announced its intention to prohibit logging activities in large areas of Quebec to protect caribou populations; a move called irresponsible by the Quebec government because of the negative impact on jobs in small communities.
What does this have to do with AI? Like global trends in environmental protection and climate change mitigation, the adoption of emerging technologies such as AI will disrupt many lives, destroy jobs and hurt the livelihoods of many people along the way.
The costs of job losses can be enormous for workers and are linked to health problems, depression and failing marriages. We’ve seen this before. The economic decline in manufacturing regions in the aftermath of trade liberalization and automation in the 1990s saw Detroit and Southwestern Ontario go from being among the most prosperous to being amongst the least.
Does this mean we should push back against technology adoption or the transition to a low-carbon economy? No. Over all, they will have large, positive impacts on future generations of Canadians. People will find new and different jobs and end up having a better quality of life. Studies show that environmental policies or new technologies have little impact on aggregate employment in the longer term.
But there’s no question these structural changes will have long-lasting negative repercussions on some people and their families. Think about workers in their mid-40s with 20 years of work experience who lose their jobs owing to AI, or the inability of their industry to adapt to high carbon pricing. It is difficult to find a job at that age, especially when your experience and skills are related to a sector in decline. And, although most will find a new job after a while, studies show they will often earn between 10 per cent and 20 per cent less than they would have earned in their old jobs after five years.
Governments promised that the adoption of free trade and automation would benefit everybody, believing that a rising tide would lift all boats. But they did not take action to adequately support those negatively affected – largely, lesser educated workers. These people felt betrayed, lost trust in the “elites,” and bolstered populist support.
So what should we do?
Although politically tempting, governments should not subsidize or protect declining industries to keep them alive and maintain jobs. This approach is fiscally irresponsible and just postpones the inevitable, stopping the economy from adjusting and hurting productivity. We need to protect workers, not jobs.
What about enhancing employment insurance? The current EI system is inadequate for workers displaced by structural economic changes. These workers have typically been employed for many years before being laid off and often earn more than the maximum insurable earnings. Going on EI means their income is likely to be more than halved, but their housing and food costs remain the same and they have no certainty on future employment. It’s not fair, especially when you consider that unemployed workers in seasonal industries may receive the same benefits, despite having contributed significantly less to the system and more likely have a job waiting for them in the foreseeable future.
One potential solution that has been introduced in many countries is to adjust benefit generosity on the basis of employment history in order to provide more support to long-tenured workers. The 2022 budget pledged that the government would release a plan for the future of EI that included new ways to support experienced workers transitioning to a new career. Canadians are still waiting.
What about training? Training is Canada’s go-to solution for anything labour-market-related, which explains why there is an overwhelming array of programs with questionable effectiveness. Most participants in these programs are already highly skilled, while those who would benefit the most are lesser skilled. Canada does particularly poorly in encouraging lower-skilled workers in participating in training mostly because the programs don’t address the non-financial barriers. Perhaps those workers are less educated because they didn’t like or couldn’t succeed in school. These people need personalized guidance and help, and programs designed to meet their needs and goals.
These are only two potential solutions. Yes, all this will cost money. However, we might look to those who will gain the most from these changes to share part of their gains. Compensating for the effects of environmental policies and technology adoption is key to increase their political acceptability.