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“AI is increasingly being deployed by Canadian companies, and our assessment is that it will boost productivity growth going forward.”
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Economists, however, say the technology is still so new that it may take a while to see a significant impact on productivity.
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Nathan Janzen, an assistant chief economist at the Royal Bank of Canada, said in an interview that AI could help mitigate persistent labour shortages that are driven by an aging population and a low unemployment-to-job-vacancy ratio.
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“In that kind of a back drop, you do look for ways to increase production other than adding workers,” he said. “AI investments and productivity growth is the best way that you can do that over time.”
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However, he noted Canada’s lagging productivity is also likely tied to weak business investment and a lack of competition, which have been problems for decades.
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“Our tax structure, the governance structure of the Canadian economy itself, the regulatory backdrop across different provinces and territories … these are all kinds of structural factors that have been a negative for Canadian productivity growth versus what we’ve seen in the United States,” he noted.
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“Those don’t get fixed by just adopting AI.”
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Janzen said measures such as cutting red tape, better utilizing immigrant skills, improving tax competitiveness, adopting new technologies and capitalizing on a highly-educated workforce could better improve productivity.
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He also noted that AI adoption rates have been “relatively low” in Canada. AI adoption rates in Canada trail behind the U.S., with data from the Census Bureau suggest roughly 18 per cent of businesses reported actively using AI as of year-end 2025.
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“It will take time for those investments to pay off in terms of actual productivity growth, but in the longer run, productivity gains come from businesses actually adopting that technology,” Janzen said.
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The labour market will also experience restructuring as companies and workers adapt to new technologies.
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In her speech, Alexopoulos said there is evidence that demand is already rising for workers with AI skills, but she also acknowledged fears that some jobs will be made redundant by the technology.
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“To be sure, some workers are already feeling the effects of AI…. This is a real concern,” Alexopoulos said.
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“But, broadly speaking, the evidence does not yet point to widespread worker displacement because of AI.”
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Christopher Worswick, a labour economics professor at Carleton University, said in an interview that there may be short-term disruptions to Canada’s labour market. For example, new graduates and students may have problems landing jobs.
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“In the medium term, I suspect firms will probably pay higher wages for workers who can work with AI effectively. People who can identify mistakes and inconsistencies and work interactively with multiple AI programs are, realistically, going to be super productive,” the professor said.
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Worswick added that, much like the rise of the internet and technological advances in the agricultural sector, adaptation to AI will lead to job creation in the long term.
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Closing the productivity gap with the U.S. may not be easy.
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A report by the Federal Reserve Bank of Dallas suggested that the adoption of AI could boost productivity growth by between 0.3 and 3.0 percentage points a year over the next decade. Canada’s projected growth is slow in comparison — a recent Bank of Canada analytical paper said that, if Canadian businesses continue to adopt AI, the country’s economy could see annual productivity gains ranging from 0.35 percentage points to 1.13 percentage points over the same window.
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English (US)