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‘Nobody wants that job’: Some businesses are turning to robots to solve labour shortage woes

‘Nobody wants that job’: Some businesses are turning to robots to solve labour shortage woes

Hiring problems have forced some to embrace automation, but business investment faces headwinds in a slowing economy

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Five years ago, if someone asked Ottawa restaurateur Amir Rahim if he’d consider swapping out his $10,000 Cimbali espresso machine for a $20,000 Swiss-made automatic coffee maker, he’d roll his eyes and go on a diatribe about how the secret to making the perfect latte is all in a human’s touch.

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“I’ve changed my mind completely now,” said Rahim, the owner of Grounded Kitchen and Coffeehouse in the city’s downtown. “It makes a really good product and, actually, makes a better product than a human and all you have to do is push a button.”

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The change of heart was prompted by a restaurant industry expo Rahim attended this spring in Toronto. There, he’d turn corners and bump into robots handing out pamphlets or walk down a line of booths and see digitized, locker-style walls of boxes holding customers’ pick-up orders. It blew his mind.

Then, faced with relocating after condo developers bought the building housing his restaurant, Rahim decided it was time to automate as many parts of his new restaurant-cafe as he reasonably could — especially as a labour shortage made it difficult to hire staff.

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“I’m using an automated process because it solves the challenge of finding people to do the job,” he said.

Labour woes

A tight labour market is making it difficult for business owners to find workers. The latest jobs data from Statistics Canada peg the unemployment rate at 5.2 per cent, a figure some economists say indicates “full employment,” a condition where effectively anyone who wants to work could find a job. Statistics Canada counted nearly one million vacancies in the second quarter, a record, and hourly wages are growing at an annual rate of around five per cent, adding to inflationary pressures.

“We are in excess demand, where the economy’s need for labour is outpacing its ability to supply it,” Bank of Canada governor Tiff Macklem told an audience at the Public Policy Forum in Toronto on Nov. 10.

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Some business owners, such as Rahim, think the solution to their labour woes rests with the robots.

The move to automation might make sense for the food service industry in particular, which has struggled to find enough workers in the aftermath of COVID-19. The sector, grouped in with hotels by Statistics Canada, had the highest vacancy rate in August at 9.3 per cent, with more than 136,000 unfilled jobs. Last month, the accommodation and food service industry experienced its first positive increase of jobs since May when employers hired 18,000 new workers. But that still leaves a vast number of open positions.

“It’s really difficult to find staff to do a job that, quite frankly, nobody wants to do anymore,” Rahim said of food service gigs.

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“There’s a lot of people that talk about automation being a bad word because it takes away people’s jobs. The reality is no, if people wanted this job, I wouldn’t have a problem hiring staff.”

Automation and productivity

Stephen Tapp, chief economist at the Canadian Chamber of Commerce, said that broadly speaking, the country’s companies should automate more.

“If you look across the G7 economies, you look across the OECD — so that might be a group of more like 36 economies — Canada’s productivity performance has been pretty abysmal over the last two decades,” Tapp said.

During the era of historically low interest rates in advanced economies, Canadian businesses didn’t match the capital investment spending, which boosts productivity, of companies in the United States. Since 2015, Canada’s business investment in machinery and equipment has declined compared to the U.S., in part because of the 2014 oil crash, according to a report by the C.D. Howe Institute, a think-tank. For the last seven years, consumption and residential investment made up more than 85 per cent of Canadian gross domestic product.

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In 2021, for every dollar the U.S. spent on business investment per available worker, Canada spent just less than half that per available worker, the report said.

Meanwhile, the economy has changed. Demand for labour hasn’t let up, even though the central bank has signalled it will need to raise rates further to cool an overheated economy.

“The unemployment rate in June hit a record low — and while that seems like a good thing, it is not sustainable. The tightness in the labour market is a symptom of the general imbalance between demand and supply that is fuelling inflation and hurting all Canadians,” Macklem said.

Business investment faces headwinds

Josh Nye, a senior economist at Royal Bank of Canada, said businesses struggling to hire may continue to invest in automation if sales aren’t slowing down. However, he flagged rising interest rates and softened demand as headwinds for accelerated automation.

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Companies’ intentions to invest have moderated for three quarters in a row, according to the central bank’s latest Business Outlook Survey. But firms facing capacity constraints and healthy demand said they are more likely to invest in technology and automation to increase production capacity.

“When we look at the broader Canadian growth picture, we’re still expecting business investment will increase in 2022 and it’ll probably be one of the better performing sectors during recessions,” Nye said. “But broadly speaking, we think we’re going to have softer business investment next year.”

A weak Canadian dollar could add to the headwinds. Tapp said the loonie’s underperformance relative to the U.S. dollar could make it more expensive for companies that import automation machines and technology from the United States. Meanwhile, the threat of continued interest rate hikes also makes it more costly for companies to invest in productivity-boosting equipment, he said.

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But Canada’s lacklustre productivity stats and a structurally aging population are putting pressure on businesses to come up with solutions to keep output flowing. The time could be ripe to invest in automation, Tapp said, as companies come out of the pandemic and reassess aspects of everyday operations — such as whether workers absolutely need to go into the office five days a week.

“Even if interest rates are going up a little bit right now, and the economy is slowing down, that doesn’t mean it’s a bad time (to invest). There’s … research that suggests that some of the best companies, some of the strongest companies, some of the most innovative companies, they come through and are built in times of dramatic transitions and recessions,” Tapp said.

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This could be one of those transitions, as labour shortages hit key sectors of the economy, including construction, manufacturing and accommodation, among others.

“There’s probably the strongest incentive for them to try to find ways that they can invest in capital and, if not replace labour, complement their labour or not require as many workers and still increase the output that they need to do,” Tapp said.

The robot solution

For Rahim, the chance to automate his restaurant solves a major problem he believes will benefit both customers and staff. He thinks his new restaurant, which is set to open by the beginning of December, will provide the perfect blend of human/robot service that won’t alienate customers who still want a face-to-face dining experience.

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Waiters will no longer be needed because diners will order and pay for food using smartphones to select menu items off a website. When the chefs are done preparing the meal, they’ll put it in one of the high-tech cubbies that will make up a wall between the kitchen and dining room — the same one Rahim saw at the restaurant expo.

The automated cubbies that will be installed in Rahim's restaurant.
The automated cubbies that will be installed in Rahim’s restaurant. Photo by Courtesy Amir Rahim

When their meal is ready, customers will get a notification containing a QR code on their phones that they can then flash in front of a control panel to open up their designated cubby.

The new Grounded Kitchen and Coffeehouse will still have hosts, and customers can still enjoy cups of coffee, though they will mostly be made by the Swiss machine with a barista pouring the milk for bespoke latte art.

“For $15.50 an hour plus tips, you want someone to wake up at 5:30 in the morning and show up at 6:30 and sling a bunch of coffees for a bunch of grumpy people on their way to work that they don’t want to go to? You can’t find those people,” Rahim said. “They don’t want to do it. And it’s so tedious. It’s hard on your wrists. It’s messy. It’s hot. Nobody wants that job.

“I wanted to automate in order to pay good people enough money and still be profitable.”

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