Future of work

The Fraser Institute’s new report asks a timely question: Can artificial intelligence (AI) help Canada confront its most pressing labour market challenges?

The report identifies four connected problems that are straining the labour market: 

• Canada faces a shrinking labour force participation rate, particularly as older workers retire and fewer youth enter skilled occupations. 

• Employers continue to report persistent labour and skills shortages, a constraint on economic growth that immigration alone cannot solve. 

• Canada’s long-standing productivity malaise shows little sign of improvement, threatening competitiveness. 

• Widening wage inequality puts Canada at risk of increasing social divides and weakening economic cohesion. 

The report contends that AI can help solve these challenges. By automating routine tasks, AI may allow older workers and persons with disabilities to remain in the workforce longer, boosting participation. It could also help ease skill shortages by enabling smaller firms to scale their operations and by raising productivity across sectors. Moreover, AI tools can improve job matching between employers and workers, pairing the skills that employers need with the workers who have them. The report optimistically suggests that AI could narrow wage gaps by enhancing the productivity of lower-skilled workers, giving them a stable place in the labour market. 

Nevertheless, the report is careful not to paint AI as a solution for all problems in the labour market. Achieving these benefits will depend on effective adoption, workforce training, and careful risk management, including the displacement of individuals in clerical and administrative roles. The authors caution that, without complementary policies to support workers through workplace transitions, AI could increase inequality rather than alleviating it. 

For Canada, the message is clear: AI is not merely a technological disruption to be managed, but something that can be leveraged to tackle significant labour force challenges. Whether it becomes a tool for increasing inclusion and productivity growth—or a source of further disruption—will depend on how policy-makers, employers, and workers choose to integrate it into the fabric of the labour market.