Sunil Johal is the policy director at the University of Toronto’s Mowat Center.
As heads of the world’s leading economies gathered in Buenos Aires for the Group of 20 summit last week, one of their key areas of focus was the future of work, with a particular emphasis on training and skills in the digital era. It is no wonder that the issue is top of mind. Reports of jobs being automated because of advances in robotics and artificial intelligence are commonplace. Estimates range from less than 5 percent of current jobs being automated all the way up to 47 percent of existing U.S. jobs being obsolete within possibly the next 10 to 20 years.
Though nobody knows what will happen and when, signals of digital disruption are everywhere. General Motors just announced it will close five North American plants within a year, eliminating up to 14,000 jobs, as part of a renewed focus on electric and autonomous vehicle technology. The automaker’s decision has been met with outrage by politicians and union leaders in Canada and the United States, outrage fueled by the realization that government bailouts of the company in 2008-2009 did not yield more goodwill.
Uncertainty about the future makes it easy to rely on the status quo — we don’t expect people to sprint headlong onto a foggy field, but to move cautiously as their next step becomes clearer. But this slow incrementalism risks ignoring the many individuals today who are ill-served by outdated social support systems.
Both Canada and the United States are laggards when it comes to public investment in adult job seekers. U.S. spending on labor market programs as a percentage of gross domestic product, which includes training, unemployment benefits and hiring subsidies, is second-lowest among 34 advanced economies in the Organization for Economic Cooperation and Development (0.27 percent in 2016, which is one-tenth as much proportionally as countries such as Finland), while Canada ranks 17th (at 0.90 percent). But providing people the right skills isn’t just a question of more funding. Many publicly funded job retraining initiatives are ineffective and were designed in a different, less tumultuous time.
Approaches from abroad demonstrate some potential ideas for more effective skills-training supports. Denmark’s flexicurity model allows firms to fire and hire workers easily — about 25 percent of private-sector employees change jobs annually. But this rapid movement in and out of jobs, which is likely to be a key characteristic of tomorrow’s labor market, is supported by high levels of investment in skills-training and unemployment benefits (which can last for up to two years and replace 90 percent of income). Singapore recently introduced the SkillsFuture program, which provides lifelong learning supports to citizens on a digital platform, integrated training supports and individualized funds for skills development.
A path forward for policymakers in other advanced economies would be to develop these types of integrated supports. Just as important, a rigorous approach to evaluating and scaling up interventions that are proved successful must lie at the core of any new training system, ideally with centralized evidence gathering and sharing of best practices coordinated by an institution such as the soon-to-be-launched Canadian Future Skills Center. With more than a trillion dollars a year spent in the U.S. education and training system by employers, postsecondary institutions and government, the need to ensure new and existing investments are delivering strong returns and providing workers with the right skills is crucial.
The very real challenges facing the GM workers could soon be felt by people in many other sectors at risk of disruption. Uncertainty about the precise trajectory of the future of work shouldn’t preclude policymakers from taking decisive action now to support workers and job seekers. Inaction or delay will leave too many people struggling to keep up as the pace of technological change continues to accelerate.