Today, Federal Finance Minister Bill Morneau will deliver a budget that is widely expected to focus on harnessing innovation to drive new levels of economic growth for Canada.
Interestingly, a little less than two weeks ago, Families, Children and Social Development Minister Jean-Yves Duclos took a step that was a departure from the usual lead up to the Budget. He provided an update on the opportunities and challenges facing Canada’s middle class.
The connection between these two events is a familiar story: Jobs and Growth. For decades, Canadians have been comforted knowing that if you have growth, jobs will follow. That simply by growing the economy, new jobs will be created, largely benefiting the middle class.
However, recent evidence shows that this link, if not broken, is becoming increasingly tenuous. Many are asking: if this new economy has such promise, where are the jobs?
It’s a question that has tremendous implications for our time. The Brookings Institution showed that in 1980, it took 25 jobs to generate $1 million in manufacturing output. In 2015, you could reach that level of output with just 6.5 jobs. Martin Ford, in his book The Rise of the Robots, cited some numbers that seem to define two very different economic eras. In 1979, General Motors needed 840,000 workers to earn $11 billion in today’s dollars. In 2012, Google, a current icon of corporate success, generated a profit of nearly $14 billion while employing fewer than 38,000 people.
In Canada, the Brookfield Institute for Innovation + Entrepreneurship (BII+E) released two studies last year which illustrate the tension in the economy between growth and jobs. The State of Canada’s Tech Sector, 2016 found that technology-driven sectors are an increasingly important contributor to Canada’s economic growth. Another report, The Talented Mr. Robot, found that over the next 20 years, 42 percent of Canada’s workforce is at risk of being replaced by technology, specifically automation.
This dichotomy demonstrates that innovation can be a source of both anxiety and hope. This is because the risks and benefits of innovation tend to be unevenly distributed. Certain technology-driven clusters thrive but other communities struggle. The sought-after STEM (science, technology, engineering, math) worker, for example, feels optimistic while workers with lower levels of education are worried about their security.
So, while Minister Morneau’s upcoming Budget will undoubtedly contain timely, progressive initiatives, there is a deeper policy challenge to be solved over the longer term. How can Canada achieve inclusive growth in a new economy increasingly driven by innovation?
In the past, the need for human labour in performing routine tasks provided some natural protection against economic inequality. That’s why the “Jobs and Growth” agenda worked for so long. In the new economy, human minds are greatly needed, but not as many human hands. We need a modern policy formula that connects more people with those new opportunities – one that shares the benefits of the resulting economic success more widely.