OTTAWA – A senior Bank of Canada official says while the country’s poised to reap economic benefits from technological progress – it must prepare for painful “side effects” like job losses and greater income inequality.
In prepared remarks of a speech Tuesday, senior deputy governor Carolyn Wilkins said innovations like artificial intelligence and robotics are expected to help re-energize underwhelming productivity in advanced economies like Canada.
But Wilkins also said many experts predict changes like automation will have downsides – such as significant impacts on close to half of all jobs in some industrialized countries within 20 years.
Policy-makers, she added, must also prepare to manage other negatives like amplified income inequality that could see workers whose skills are complemented by new technologies take home much more than people whose tasks are replaced by machines.
“Blaming the machines is not the way forward,” Wilkins said based on prepared remarks she was to deliver to the Toronto Region Board of Trade.
“To get the most out of the new technologies, we will need to work together to proactively mitigate the more-harmful side effects.”
Wilkins also laid out potential approaches to ease the adjustment. She said more emphasis will be needed on education and skills training to help many workers adjust to what could be a difficult transition.
She said Canada has weathered past changes that have transformed sectors like the agricultural industry. Wilkins said farming innovations helped to lower food prices and to generate higher consumer demand that created new jobs in other industries.
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She noted that advancements such as the steam engine, the combine, the jet engine and the assembly-line robots have boosted Canada’s productivity and helped raise the average income per person 20-fold – adjusting for inflation – over the last 150 years.
“Innovation is always a process of creative destruction, with some jobs destroyed and, over time, even more created,” Wilkins said.
The Bank of Canada has also created a new digital economy team with a focus on how automation affects the economy and its impacts on inflation and monetary policy, she said.
