Rise of the robots in Northern Ontario? Not so much, study says

Published on: January 8, 2020 | Last Updated: January 8, 2020 3:22 AM ESTCOMMENTPRINT

Automation is the new buzzword in many mining circles these days and a new report by the Northern Policy Institute is shedding light on how the advent of robotic technologies could impact the economy in Northern Ontario.

Some say automation could result in increased productivity, income and standards of living; however, others are concerned new technologies could accelerate the pace of change and bring unprecedented occupational disruption and unemployment.

The impact of automation could be profound, the NPI says. It changes the nature of work and the demand for skills, and it benefits some workers while putting others at risk. The report also mentions that the substitution of jobs by robots raises concerns about the government’s ability to collect taxes.

“The majority of job losses (to automation) have been in occupations involving routine tasks such as retail salespersons and cashiers, that required a lower level of education and skills,” Bakhtiar Moazzami, a professor of economics and econometrics at Lakehead University, says. Moazzami authored the automation report. “Employment in occupations involving non-routine cognitive tasks have indeed increased in all regions.”

This includes jobs that involve critical thinking, creativity, problem-solving and interpersonal interaction, such as managerial, professional and technical professions in the applied sciences.

 “These jobs are less susceptible to automation,” Moazzami says.

But he indicates automation may not have a significant impact in Northern Ontario after all.

“We find that 74 per cent of employment in northeastern Ontario and 76.2 per cent in northwestern Ontario are in sectors with relatively low potential for automation,” he writes. “More important, approximately 32.2 per cent and 37.2 per cent of jobs in northeastern and northwestern Ontario, respectively, are in education, health care and public administration, which have very low potential for automation.”

Moazzami points out that automation will be rolled out over time. It is not a sudden phenomenon; therefore, it is unlikely that smart machines will replace all occupations considered high-risk in the near future.

“Automation is a gradual process and responds to shifting demand from low-skilled to high-skilled tasks and occupations in the economy,” he indicates. “Regions like Northern Ontario can invest in development of skills to moderate the effect of technological change on the level of employment. In other words, there is room for public policy to take advantage of automation rather than falling victim to it.”

The research is divided on the impacts of automation.

“Many researchers, using the experiences of past periods of industrial change, argue that automation and innovation are desirable as they contribute to increased productivity and higher incomes through economic growth,” Moazzami writes. “They state that with technology, production requires fewer workers who can then be employed elsewhere in the economy, resulting in the total level of production and employment to increase. However, this conventional view might not hold in the age of globalization when work can be offshored. Moreover, taking a macro view of the impact of automation on jobs masks the potential geographical redistribution of jobs and work.”

An American study that investigated robots in the workplace from 1990 to 2007 found “there are large and robust negative effects of robots on employment and wages.”

According to the study, one more robot per 1,000 workers “reduces the employment-to-population ratio by approximately 0.18 to 0.34 percentage points and wages by 0.25 per cent to 0.5 per cent. This translates to from 360,000 to 670,000 lost jobs due to robots.”

The effects were most prominently seen in manufacturing and for those with less than a college education.

In Canada, lower-paying, routine jobs are most at risk from automation. These include retail salespeople, administrative assistants, cashiers, transport truck drivers, as well as food counter attendants and kitchen staff.

“A recent study by Brookfield Institute finds that, ‘nearly 42 per cent of the Canadian labour force is at a high risk (70 per cent or higher probability) of being affected by automation in the next decade or two.’ The study finds that occupations with the highest risk of being affected tend to be more routine, administrative and service-oriented,” Moazzami writes. “The study suggests that approximately 42 per cent of work activities that Canadians are paid for can be automated using existing technologies. It further suggests that technology has the potential to result in major occupational restructuring relatively soon.”

Occupations that should be safe from automation include retail and wholesale managers, registered nurses, teachers and early childhood educators.

In mining in northeastern Ontario, Moazzami says job losses will be seen in “fuel handling and camp services with fewer people on-site,” a result of more electric vehicles at mine sites. He estimates that 52 per cent of jobs in the mining sector in Canada has the potential to be automated.

“Automation will improve safety, reduce cash cost per unit of production and potentially reduce the cutoff grade, maximizing resource utilization. The jobs that are preserved are in the technical and professional fields with low probability of automation,” he writes. “On the positive side, development of the Ring of Fire, which is expected to happen in the next five to 10 years, will generate a significant number of jobs and will continue to be a source of stimulation to Northern Ontario’s economy. Indigenous residents of the area will be able to participate in the development and initial phase of the operation, which will consist of open-pit operations; however, to receive long-term benefits, we need to enable our workforce to perform tasks that require a higher level of expertise and education.”

Moazzami says many tradespeople in Northern Ontario are reaching the age of retirement, which means workers at the Ring of Fire will need to be imported from elsewhere. While Indigenous communities are poised to benefit, Moazzami says without more education, they will not reap the benefits for long.

“The Ring of Fire will increase demand for skills well above the regional supply as most tradespeople are close to retirement in northern regions. Thus, many migrant workers will be employed at the site,” he says. “The northern Indigenous population will be the primary beneficiary of jobs in the initial stages of development. However, given the relatively low levels of educational achievement among the northern Indigenous workforce, the prospect of benefiting from later stages of development is slim.”

While the advent of electric vehicles has and will reshape mining, as Moazzami points out, automation has had positive impacts for women working in mining in the region.

“Most of the labour-saving technology in the mining industries relates to the underground and delivery phases of production,” he writes. “Mines have progressed to electric-driven underground vehicles remotely controlled. Thus, the operators can be in a major urban setting without living at the mine site. We also find that the shift from routine tasks to non-routine cognitive tasks has been accompanied by the rising employment of women in Northern Ontario’s mining sector.”

For those just entering the workforce, they may want to consider health care. With an aging population, the sector is poised to become a driving force, in terms of employment and revenue.

“More than 84.8 per cent of health care and social services jobs are either in non-routine cognitive or non-routine manual occupations that are less susceptible to automation,” Moazzami writes. “In other words, employment in these industries can only grow as the population ages in the coming decades. Since these industries are financed from outside Northern Ontario, they act as export sectors and, in that capacity, they compensate for the loss of jobs in the primary and manufacturing industries.”

To read the full report, go to northernpolicy.ca/impact-of-automation.