Sean Mullin is the Executive Director and Creig Lamb is a Senior Policy Advisor at the Brookfield Institute for Innovation + Entrepreneurship, which has recently studied the impact of automation on Canada’s work force.
In June, Manulife Financial Corp. announced plans to cut roughly 700 Canadian jobs as the company automates and consolidates its operations. This move is part of a broader trend in the finance sector, as companies rapidly embrace new digital technologies to remain competitive and meet the ever-growing consumer demands for fast, convenient and personalized digital services – in particular as emerging fintechs chip away at the business models of the large players.
While automation is not sector specific, and its implications are felt throughout the economy, the finance and insurance sectors provide an illustrative example that can help Canadians unpack what these recent trends mean for companies and workers.
With each highly publicized layoff resulting from automation, concerns of a jobless future always seem to rise to the forefront. However, despite recent advances in artificial intelligence, automation isn’t a new phenomenon; each successive wave of automation has served to improve productivity, enhance living standards and ultimately create more jobs than it eliminates in the long run. But to be sure, as with the Manulife employees slated to lose their jobs, this process can be disruptive for certain workers in certain industries or regions.
For Canada and the world’s economy, automation presents a “dual challenge.” On the one hand, there is the need to embrace technology and automation to maintain competitiveness and productivity; on the other, is the equally pressing need to mitigate the potentially negative impacts for certain workers.
The Manulife story is indicative of an emerging trend unfolding in Canada’s finance and insurance sector, and the economy writ large. To remain competitive, and ultimately preserve jobs, Canadian companies need to embrace technology or risk being rendered obsolete.
To date, our financial services companies have lagged behind peer jurisdictions when it comes to the use of technology – in 2013, total investment per worker in the information and communication technologies sector across Canada was 79.2 per cent of the U.S. total. Yet, changing consumer demands, increasing competition from fintechs and other global competitors, and the opportunity to develop new business models that utilize new sources of consumer data are increasing pressures on these companies to accelerate their uptake of technology.