Canada’s long-standing ability to cushion labour market shocks may be less resilient in an environment where businesses are forced to make hard choices to survive, according to a new report by TD Economics.
Rannella Billy-Ochieng’
AI adoption alone may not pose an immediate risk to the Canadian workforce, but when cost saving technologies like AI collide with a downturn, firms may permanently change how work is done. As economic stress forces firms to make hard choices, some job losses may not reverse, said the report by Rannella Billy-Ochieng’, Senior Economist.
“Canadians are well educated and can face this challenge head on and there is an opportunity for some workers to benefit from the moment. Policy supports needs to be precise to support reskilling dislocated workers and minimizing outflows from the job market. The stakes are high and acting early will help to limit long term labour market damage.”
Highlights
- Canada’s labour market adjusts slowly, which has historically cushioned it during downturns, but this stabilizing feature may become a vulnerability.
- AI adoption alone is unlikely to immediately threaten workers. Digital technology will change how work is performed, but employees will continue to play a key role in an AI-empowered world.
- Where we are in the business cycle matters. Recessions tend to catalyze strategic change inside firms. When weak demand intersects with rapid cost saving technological adoption, employers are more likely to redesign workflows and positions, increasing the risk that jobs lost in a downturn do not return in their prior form.
- When technology permanently displaces roles, policies should prioritize faster worker transitions through flexible, affordable retraining and human‑centric skill development, rather than job retention, which risks higher long‑term unemployment and worsened productivity scarring.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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