As British Columbia faces labour-related challenges, a new report from Vancouver’s Fraser Institute finds that artificial intelligence may carry the potential to address critical concerns.
The June 2025 report, titled “Can AI Mitigate Our Labour Force Problems?” identifies four main issues: a declining labor force participation rate, shortages in specific skills, low productivity growth impacting wages and living standards, and increasing wage inequality.
AI has the opportunity to tackle all four, according to report author Morley Gunderson.
For example, AI can improve labour market participation by matching job seekers with employers using platforms like Canada’s Job Bank. The tech can provide timely, localized data to match employer needs with worker skills, reducing shortages.
“While there’s a common perception that AI will eventually lead to mass unemployment, it actually opens the door to the labour market for people who may have been on the outside looking in,” says Gunderson, professor emeritus of economics at the University of Toronto.
In addition to unemployment concerns, Canada is also contending with stagnant productivity. Canada’s productivity growth has declined from 1.9% annually before 2000 to just 0.5% today, a rate that is now lagging well behind the US.
AI could help address this issue by both boosting the productivity of individual workers as well as better integrating dispersed markets and enhancing labour mobility, according to the report. The tech could also lower the barrier to gaining important skills by reducing the need for formal education to be sufficiently equipped for knowledge work.
“Rather than unduly fearing AI, Canadians should welcome the promise of AI to increase our ability to produce goods and services and improve our living standards,” believes Steven Globerman, senior fellow at the Fraser Institute.
The Fraser Institute is an independent Canadian public policy research and educational organization with a mission to improve the quality of life for Canadians by studying and communicating the effects of government policies, entrepreneurship, and choice on well-being.
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