Staying Competent in the New Economy

Economist and author Linda Nazareth, Senior Fellow for Economics and Population Change at the MacDonald Laurier Institute and Mike Colledge, Mike Colledge, President, Ipsos Public Affairs, share some helpful insights on succeeding in the new economy in this interview for the MRIA Emerging Leaders Blog in October 2017:

TECHNOLOGY—How badly has the rise of AI made human professional labour redundant in Canada and how will this continue to look?

Linda Nazareth: I am not crazy about the idea of judging technology by saying it has been bad in any way. Technology has always been a good thing, in that it has raised productivity which in turn has raised the standard of living for workers, at least eventually. The industrial revolution may have meant some sharp adjustments, but eventually it caused average wages to rise and living standards for workers to rise as well.

Having said that, there are some things that are different this time.  In this Fourth Industrial Revolution things are changing more quickly than ever before. It is hard to say that this has been particularly negative for employment overall so far, given that the unemployment rates in Canada and the U.S. are the lowest that they have been in years. That said, we have already transitioned to something of a ‘gig’ economy in which companies buy just as much labour as they need, often relying on contracts rather than full-time employment. We are also not seeing wages rising at a rate we might have expected at this point in the business cycle, which also suggests that labour is not in the driver’s seat the way that the overall statistics would suggest.

Going forward, there are all kinds of dire predictions as to how many jobs could be eliminated because of technology. I would go along with saying that it could be many, but I also think that many will come about to replace them. We have no more typewriter repair people (or very few) these days, but we have web designers. That is something that would have been hard to predict in the 1960s. As well, although I do believe that there will be something of a reduced demand for labour because of technology, I think it is fortunate that this particular revolution is happening at a time when demographics are causing the supply of workers to grow relatively slowly, so that is something of a buffer.

Mike Colledge: I do not think that AI has made human labour redundant – yet. I think that in the long term there will be new jobs and/or new ways to generate income, some of which we have not imagined yet. I think the biggest concern will be the transition years where some people are left out and do not have the skills or the time (such as older Canadians) to re-tool and adapt.

LABOUR MARKET— A 2017 Ipsos Canada Next survey revealed the following stats: 61% of Canadians feel that people will have more numerous shorter term jobs over their career. 63% agree that as Canadians have to switch careers more often in the future, having money saved to go back to school or for training will be something almost everyone should do. Where, according to you, are the new opportunities today and what can young professionals, especially young researchers, do to reskill themselves in this Fourth Industrial Revolution? 

LN: I do not think it is about ‘reskilling’ as much as continuously skilling. The labour market of the future is not really a great place for complacency.  Research skills are awesome but as workers in the field already know, being successful also means being creative and thinking of things from different angles. That ‘creativity’ is something that is hard for a robot to replicate so being a creative thinker is something everyone should strive to be.

The idea of having money saved to go back to school is a good one, but I think having money saved for ‘transitions’ will be incredibly important as well. If you are working on contracts, there may be time between them so you need savings for that. You may have to deal with income volatility – making a lot one year, making less the next – a lot, too, so you will need to save for that and have a financial plan that deals with that.

MC: I think the industry sectors as we know them are going to blur and we will see companies that are equally tech based, food service, news media, entertainment media, transportation, etc., so I wouldn’t focus on any given sector.  Staying relevant is going to be about constantly learning and changing how we do our jobs and accepting that change is going to happen faster and not in an orderly, planned way.

INEQUALITY—The title of Linda Nazareth’s fourth book is Work is Not a Place. Is the lack of structure in the evolving jobs marketplace creating a post-jobs economy crowded with the worst jobs and the best jobs? How will a greater divide between the highly skilled and the lowly skilled affect different professions?

LN: Rather than thinking of worst and best jobs, I tend to focus on the ‘highest demand labour’ and the ‘lowest demand’.  We have seen so-called ‘talent wars’ for years, and I think they are only going to get more intense. As companies struggle in a competitive environment, they want exactly the right labour, the labour with absolutely the best skills that can be slotted right in. For example, the New York Times recently reported that Silicon Valley companies are now desperate to get those with expertise in artificial intelligence and are paying salaries of $300,000 to $500,000 a year to the workers they want. Even for Silicon Valley those are high numbers since we are, in some cases, talking about relatively new graduates.  The situations may be less extreme in other industries, but talent wars for the few definitely exist.

On the flip side though, those with minimal skills have less and less bargaining power. Fast food workers have gotten a ‘raise’ through higher minimum wages over the past couple of years, but it has only spurred the development of technology that can replace them. Ordering through a McDonalds kiosk is pretty efficient, and it is not hard to see a lot of the industry adopting similar systems. I am not at all negative on using technology for efficiency, and in the best cases those fast food workers would be making their way to better jobs anyway. But in the cases where they are not, the adjustment – for them and for society – will be a difficult one. And we need to focus on it, because good things do not happen when societies become more unequal.

CONNECTION—The rise of technology, ethnic diversity, and an aging population will all contribute to feelings of less connectedness among people, according to the same Ipsos poll. What impact will the rise of a post-connection economy have on traditionally valued employee attributes like social skills and human interaction, or even on traditional working-relationships?

MC: I think it will make those ‘soft’ social skills even more important.  The key will be ensuring people can show their personalities in the digital world.  People who have grown up online, especially young men who do most of the gaming, will have an advantage.

PROSPERITY IN A SHARING ECONOMY—The same Ipsos Canada Next 2017 poll concluded that 19% Canadians AGREE that because of efficiencies in the sharing economy people won’t need to make as much money to maintain today’s standard of living. How is the sharing economy changing the employment landscape and altering paths to prosperity, and how must young professionals and researchers try to adapt to this shift to leverage it successfully? 

LN: It is interesting to think that the sharing economy will reduce living costs, but I am not sure that the evidence is there to support it. Yes, it is cheaper to take an Uber than to take a cab and maybe than to buy a car, but there are other categories of spending that matter more to our lives. For example, shelter costs would only improve under the sharing economy if people of various ages are willing to take on roommates or engage in co-living, and I do not think we are there yet.

In fact, we may be facing higher prices in many categories. Food tops the list, thanks to its higher global demand. Prices of clothing and many goods that we import from abroad may well rise as labour in other markets gets more expensive. So it is hard to make the case that we can ‘afford’ to work less because of the sharing economy.

It may well be that we make a conscious decision to live on less, by scaling back the things we want as a society but that will be a tough shift for many. People could ‘choose’ to work part-time rather than full-time and live differently, but up to now that is not a choice many have wanted to make.

MC: I don’t think we really know how this will play out yet. Most assume that some of their income will be sharing economy related.  Most also assumed that the sharing economy is not the precursor to the leisure economy; in fact they may work longer hours, more years, etc. The difference being we are much less likely to be anchored to a specific geographic space.  This is happening now but will become more prevalent.

Continue the conversation on Twitter with Linda (@relentlesseco), Mike ( @MikeDColledge) and the MRIA (@MRIAARIM )

Learn more about Relentless Economics here www.relentlesseconomics.com  and about Ipsos’ Canada Next Survey here https://www.ipsos.com/en-ca/knowledge/society/public-perspectives-canadanext-2017.