BoC official says evidence doesn’t yet show large-scale job losses from AI
‘AI is changing how tasks are done, but humans remain in control,’ says Bank of Canada External Deputy Governor Michelle Alexopoulos. / BANK OF CANADA PHOTO
At a moment when sluggish productivity growth, labour shortages and inflation pressures are reshaping the Canadian economy, artificial intelligence may become the country’s next major economic transformation story, says Bank of Canada External Deputy Governor Michelle Alexopoulos.
“Based on its current and promised applications, AI represents a significant technological advance that has the potential to boost productivity and raise living standards,” Alexopoulos said in a speech to the Ottawa Economics Association—Canadian Association for Business Economics Spring Policy Conference on May 13.
“AI has the potential to transform the economy,” she said. “How big and how disruptive the transformation will be depends on how fast and how broadly AI is adopted, as well as other factors such as demographic changes.”
While acknowledging uncertainty around the pace of adoption, Alexopoulos positioned AI as a possible “general-purpose technology” on the scale of electricity, computing and the internet — innovations that fundamentally rewired economies over decades.
Alexopoulos noted that AI-related capital spending by major US technology firms rose from roughly US$200 billion in 2024 to approximately US$400 billion in 2025, with further increases expected.
“One of the biggest changes is that investment in AI data centres has really ramped up,” she said.
The expansion has become so rapid, she added, that “new power generation capacity has not been able to keep up,” prompting governments and utilities to accelerate infrastructure development.
For Canadian businesses, declining costs and broader access to advanced AI tools could become a turning point for adoption. The Bank’s surveys suggest that uptake is already accelerating, though unevenly across industries.
Alexopoulos cited Statistics Canada data showing that the share of Canadian businesses using AI rose from about 3% in 2022 to around 12% in 2025. Adoption remains strongest in sectors such as finance and insurance, while industries including accommodation and food services lag significantly behind.
Still, the Bank does not yet see evidence of broad economy-wide productivity gains. AI use remains concentrated among a limited number of firms and sectors, meaning the macroeconomic effects are likely to emerge gradually.
“We are starting to see evidence of small productivity gains from AI,” Alexopoulos said, adding that the Bank has already begun incorporating “limited gains” into projections and estimates of potential output.
Alexopoulos acknowledged that “some jobs will be replaced by AI,” but she stressed that the evidence does not yet point to large-scale labour displacement.
According to Statistics Canada research cited in the speech, nearly 90% of firms that adopted AI reported no effect on staffing levels. Roughly 4% reported job creation linked to AI, while about 6% said AI contributed to employment declines.
Instead of eliminating workers outright, AI appears to be changing workflows and reallocating time toward higher-value tasks.
“This is my second point: AI is changing how tasks are done, but humans remain in control,” Alexopoulos said.
The Bank’s surveys found that workers using AI primarily report productivity improvements in writing, data analysis and administrative tasks. Many respondents also said the technology frees up time for professional development, innovation and more complex responsibilities.
Alexopoulos pointed to healthcare as an example of AI augmenting labour rather than replacing it. Studies she cited found that Canadian doctors using AI for note-taking and routine paperwork saved several hours per week, while nurses using AI scheduling tools gained more time for patient care.
“But it is not putting doctors and nurses out of their jobs,” she said.
The Bank also views AI as potentially important in addressing demographic pressures. With retirements rising and population growth slowing, labour shortages may intensify across several sectors in coming years.
“This brings me to my third point: AI has the potential to create new job opportunities and help solve demographic challenges,” Alexopoulos said.
Despite the optimism around productivity, she also noted that AI’s rapid rise has fuelled concerns about “overinvestment and overvaluation in AI-focused equities,” while the technology may also increase cyber risks by making sophisticated attacks easier to execute.
She also stressed that the Bank itself is integrating AI into its operations, though not into monetary policy decision-making.
“Let me be clear: AI does not make monetary policy decisions,” she said. “But it can help sharpen our insights.”
The Bank is already using AI and machine learning to support inflation forecasting, analyze economic sentiment, process large datasets and monitor financial stability risks.
“The bottom line is this,” Alexopoulos said. “Considerable uncertainty remains about how quickly, how broadly and how fully AI will diffuse throughout the economy.”
