Canada’s job market is facing major challenges as technological change leaves many workers behind. The 2017 federal budget scratches the surface on solving the issue, writes Linda Nazareth, but Ottawa will need to do more in the years to come.
By Linda Nazareth, March 23, 2017
It’s probably all going to be too little and too late, but Budget 2017 gives at least a nod to the fact that Canada’s job market is getting hit by a global tsunami. Between technology and tight corporate margins, old-style jobs are in jeopardy and, at the very least, Canada’s industries need a reboot. This budget does not exactly provide a quick-fix solution to any of that, but it suggests at least an acknowledgment of the disruptions to come.
Even now, in 2017, things are not all rosy in the labour market. Theoretically things are “good” since the unemployment rate was 6.6 per cent as of February, its lowest level in a couple of years, but the single number masks a bunch of disparities.
There is wide gap between the unemployment rate for those with a university education and those who dropped out before getting a high-school diploma. Youth unemployment is an issue, as is underemployment for those of all ages. Oh, and the labour force participation rate for those aged over 55 keeps trending higher, which means there are some older workers who are loathe to give up their current positions, which are lucrative and fun. It also means there are some increasingly desperate 50- and 60-somethings out there who are having a lot less fun, but who do not have the kind of savings or pensions they need to retire.
Between technology and tight corporate margins, old-style jobs are in jeopardy and, at the very least, Canada’s industries need a reboot.
But wait, it’s all going to get worse. In the words of the World Economic Forum, we are in the midst of the Fourth Industrial Revolution. Building on the digital revolution that started in the mid-20th century, this revolution is characterized by what the WEF calls “a fusion of technologies that is blurring the lines between the physical, digital and biological spheres” and is disrupting every industry in every country – Canada included.
In the very best case, this will all mean that everyone who wants one will get a really exciting, really high-skill, really high-paying job, maybe working only the hours they want to from whatever coffee shop they choose. In the worst case, unemployment will be rampant because technology will displace so many people, and workers will have to cobble together a living from short-term and contract work and, if they are lucky, some government help thrown in too.
We are pressing up against the much broader issues of a world that is changing without waiting for Canadian policies to catch up
Given that the Canadian government would like to avoid the second scenario to the greatest extent possible, this budget pays lip service to a bunch of things that could help. There will be a hike to the Labour Market Transfer Agreements of $2.7-billion over six years, and the federal government will set up some kind of new organization that is supposed to identify skills gaps with employers, figure out how to fill them and then share that information with Canadians. Grants are going to be higher for adults who want to return to school, and the Employment Insurance program will be tweaked so that Canadians can more easily hold on to their benefits while getting job retraining. Co-op education for post-secondary students will be encouraged, and $50-million is being earmarked so that kids in elementary and high schools can be taught digital skills and coding.
More promising is that there are at least some attempts being made to make Canada a leader in innovation, an area in which it is now woefully a laggard. Innovation programs are supposed to be consolidated and simplified across departments and there is to be $950-million spent over five years to support business-led innovation superclusters in innovative industries. What that will all translate to in practical terms is unknown, as is the impact of a new initiative meant to inject late-stage venture capital to Canadian entrepreneurs. Ideally, the whole thing will come together as more money, less red tape and more productivity in Canadian industries, but the jury is still out on whether any of that happens.
These are tricky times for Canada. We are waiting with bated breath to see whether nasty trade policies from the new U.S. administration will hurt our economy. Beyond the short-term challenges, however, we are pressing up against the much broader issues of a world that is changing without waiting for Canadian policies to catch up. Budget 2017 scratches the surface of some of the issues facing the Canadian labour market. Let’s just hope that there will be more to come in terms of policies and in terms of actions in the years ahead.
Economist and author Linda Nazareth is the Senior Fellow for Economics and Population Change at the Macdonald Laurier Institute. Her fourth book, Work is Not a Place: Reimagining our Lives and Our Organizations in the Post-Jobs Economy, will be published in 2018. Follow her on twitter at @relentlesseco or visit her at www.relentlesseconomics.com