The rapid rise of artificial intelligence could be quietly reshaping Canada’s job market, particularly for young people seeking their first step onto the career ladder, according to Tiff Macklem, governor of the Bank of Canada.
Speaking Thursday in Toronto at a talk titled “Structural Change Canada at a Crossroads,” Macklem said Canada is entering a period of deep economic transformation driven by three powerful forces: a shifting trade relationship with the United States, slowing population growth, and the accelerating adoption of AI.
“These are not short-term ups and downs,” Macklem told the audience. “They are structural changes that will shape the economy for years to come.”
Macklem described artificial intelligence as a transformative technology with the potential to boost productivity, lift economic growth, and improve living standards. At the same time, he acknowledged growing unease among economists and workers about the pace of change.
While AI is creating demand for workers with advanced digital and technical skills, Macklem said there are signs that it may also be reducing opportunities at the entry level in certain fields particularly jobs where routine tasks can now be handled by algorithms or automation.
“There may be early evidence that AI is shrinking the number of entry-level roles in some occupations,” he said, adding that this trend could be contributing to higher youth unemployment. However, he cautioned that it remains difficult to clearly separate the effects of AI from other pressures such as trade disruptions and demographic shifts.
Macklem also pointed to Canada’s increasingly strained trade relationship with the United States. Nearly a year after renewed tariff threats from south of the border, Canadian supply chains have begun to adjust.
Imports from the U.S. have declined, while purchases from other countries have risen. Still, Macklem noted that many Canadian businesses have yet to significantly expand their customer base beyond long-standing American clients.
“The pivot is happening,” he said, “but finding new markets has been slower than hoped.”
Compounding these challenges is slower population growth. Lower birth rates and reduced immigration levels have dampened Canada’s economic outlook, Macklem said, limiting both the number of new consumers and the size of the workforce.
As a result, the Bank of Canada expects the labour force to see little to no growth over the next few years a factor that weighs on the country’s long-term economic potential.
Looking forward, Macklem said the central bank expects Canada’s GDP to grow by about 1.25 per cent over the next two years, supported by modest gains in household spending and business investment. Hiring, however, is likely to remain cautious in the near term.
“The world around us is changing,” Macklem concluded. “Open trade is under pressure, population growth has slowed, and AI is transforming how work gets done. Canadian businesses will need to adapt to this new reality.”
As those adjustments unfold, the challenge for policymakers and employers alike will be ensuring that young Canadians are not left behind in an economy increasingly shaped by machines.
