Joel BlitJoel Blit
> Professor, Faculty of Arts
> Alumnus, Faculty of Engineering (MASc ’99)
> Waterloo.AI
> Problem Lab
> Centre for International Governance Innovation

While many people hope to get back to normal after the pandemic, economics professor Joel Blit (MASc ’99) sees an unprecedented opportunity for Canada to transform its economy.

The pandemic has forced businesses to do things differently and often better. Firms have digitized processes and automated workflows to survive the economic crisis and address its health risks.

“We are in the midst of a historic opportunity. The artificial intelligence and robotics revolution that we have been expecting is now at our doorstep,” Blit says. “We must start shifting from COVID-19 economic policies that aim to maintain the status quo to policies that embrace change.”

The harsh reality of the pandemic is that millions of people have lost their job, and due to automation, many of these jobs will never come back. But trying to restore the old normal is a losing proposition that would only ensure Canada’s loss of global competitiveness, Blit says. Instead, we must promote this economic transformation, while supporting people through the transition and beyond.

The COVID-19 recession: Why it’s different

With a background in computer engineering, business and the economics of innovation, Blit is an integral part of the conversation about the future of work. He’s advised senior policy-makers such as the G7 Sherpas and has been invited to speak at high-profile events including the OECD Global Forum on Productivity.

When the COVID-19 pandemic shut down the economy, Blit’s work shifted to examining the impact that this health crisis would have on an economy on the threshold of an artificial intelligence and robotics revolution.

“In every recession since the beginning of the information and communications technology revolution, the Canadian economy has undergone significant technological automation and resource reallocation,” Blit says. Historical data shows that each recession saw a permanent drop in routine jobs — jobs that typically involve a lot of structure, repetitive tasks and predictable routines and that can therefore more easily be replaced by machines. Meanwhile, non-routine jobs were less likely to be affected by a recession, and if they were, typically bounced back quickly after the recession.

“This COVID-19-induced recession will be no different, and in fact, will trigger an even bigger economic transformation due to the added health-related incentives to automate. If you are a manager, the best way to protect your people and operations is to replace worker-worker interactions with worker-machine interactions, or better yet to replace workers altogether,” Blit says. “The transformation is likely to be greatest in the retail and hospitality sectors, because these industries have strong health incentives to automate and automation is feasible given current technologies.”

We’re already seeing how businesses of all sizes are changing, from family-owned bricks-and-mortar shops going online to retail giants such as Walmart piloting stores without cashiers, and wholesalers replacing warehouse workers with robots.

“Even sectors such as health and education, that have historically seen relatively little technology-driven transformation, are seeing rapid changes because these industries face the most significant health risks,” Blit says, adding that advances in telehealth and online education will endure after the pandemic and catalyze further waves of innovation.

While some people view this trend toward automation negatively, Blit sees it as an opportunity to bolster flagging productivity and increase the standard of living of Canadians. “We should embrace this revolution by removing barriers to technological change, by helping to finance investments that make our firms more competitive, and by mobilizing the knowledge that resides in our universities and institutes.”

Making sure everyone benefits

Innovation may be the silver lining to the COVID-19 recession, but Blit’s research also considers how to avoid the inequalities that can arise from technological change. We’ve already seen how the COVID-19 recession disproportionately affected low-income earners, and a massive wave of technology adoption could make things worse.

“Not only will their jobs be disproportionately impacted, they are also less likely to have the skills to easily transition to the new economy,” Blit says. “Retraining is part of the solution and universities have a crucial role to play. But the reality is that we also need to consider other programs such as a guaranteed basic income. Fortunately, COVID-19 also presents an historic opportunity to reimagine our social contract.”

“Recessions’ periods of rapid automation and reorganization are important to long-term productivity and growth,” Blit says. “Change is coming. Our choices are twofold: how quickly to make the transition, and what governance to put in place so that all Canadians benefit.”