February 6, 2026 Artificial intelligence may already be cutting into entry-level job opportunities for young people in Canada, Bank of Canada governor Tiff Macklem said Thursday, as he outlined a set of structural forces reshaping the country’s economic future. Speaking in Toronto, he said Canada is facing long-term changes driven by three forces: rising trade barriers with the United States, slowing population growth and the rapid adoption of AI.
Macklem warned these shifts are not temporary disruptions but fundamental changes that will shape growth, employment and productivity for years to come. AI, he said, is a transformative technology with the potential to lift productivity and improve living standards. But he cautioned that the transition is unlikely to be painless.
While some sectors are seeing increased demand for workers with AI-related skills, Macklem said there is emerging evidence that AI is reducing the number of entry-level roles in occupations where routine or repeatable tasks can be automated.
“That may be boosting youth unemployment,” he said, adding that it is difficult to isolate the effects of AI from other pressures such as weaker trade conditions and demographic change. Still, he said there are signs it is becoming harder to secure entry-level positions in fields where AI can perform a large share of the work.
The warning comes as Canadian businesses remain cautious about hiring. Macklem said firms are adapting to an increasingly protectionist United States, where tariff threats over the past year have already begun to alter supply chains. Imports from the U.S. have declined, while Canadian companies have sourced more goods from other countries.
However, he noted that the shift has largely involved existing trade relationships, with limited success so far in finding new customers outside the U.S. market.
At the same time, slower population growth is weighing on Canada’s economic potential. Macklem pointed to lower fertility rates and reduced immigration levels as key factors behind a weaker outlook for labour force growth. Taken together, these forces are expected to constrain growth. Macklem said the central bank forecasts Canada’s gross domestic product will expand by about 1.25 per cent annually over the next two years, supported by modest gains in household spending and business investment. Even so, he said employers are likely to remain cautious about adding staff this year.
As those changes unfold, he said Canadian businesses and policymakers will need to adjust to an economy where technology, demographics and geopolitics are reshaping the nature of work itself.
