Bank of Canada sees AI transforming jobs without widespread losses as productivity gains emerge

AI is not replacing workers on a large scale so far, says Bank of Canada

By Promit Mukherjee and David Ljunggren</Paragraph><Paragraph xml:space="preserve"> OTTAWA, May 13 (Reuters) - The Bank of Canada on Wednesday said there were no signs so far that artificial intelligence was leading to widespread job losses, adding the technology had the potential to transform tasks rather than eliminate them.</Paragraph><Paragraph xml:space="preserve"> Deputy Governor Michelle Alexopoulos said the central bank was closely monitoring the employment market and anticipated that as AI becomes more prevalent, some jobs would be replaced and new ones would emerge.</Paragraph><Paragraph xml:space="preserve"> "But, broadly speaking, the evidence does not yet point to widespread worker displacement because of AI," she told ⁠a business audience in Ottawa. </Paragraph><Paragraph xml:space="preserve"> As technology companies funnel billions of dollars to support AI growth, experts variously predict this will lead to massive productivity gains or huge job losses. </Paragraph><Paragraph xml:space="preserve"> "We are starting to see evidence of small productivity gains from AI," Alexopoulos said, adding the BoC was incorporating limited gains into its projections and estimates of potential output.</Paragraph><Paragraph xml:space="preserve"> The bank's most recent survey of senior experts in risk management in the financial sector showed many see AI as a tool to support decision-making, while still keeping humans very much ⁠in charge, she said.</Paragraph><Paragraph xml:space="preserve"> "This reinforces the view that AI will mostly transform jobs - not eliminate them," she added.</Paragraph><Paragraph xml:space="preserve"> Talking specifically about Canada, she said as an aging population retires out of the workforce, labor shortages would likely speed up the development of new ways to use AI. </Paragraph><Paragraph xml:space="preserve"> Alexopoulos ⁠said it was not yet clear whether AI use would spread across the entire economy or be focused on certain sectors or tasks.</Paragraph><Paragraph xml:space="preserve"> As AI is incorporated more in workplaces and businesses, it ⁠could boost efficiency in the production of goods and delivery of services. </Paragraph><Paragraph xml:space="preserve"> "Stronger productivity will make businesses more competitive, leading to higher wages for workers, cost savings for consumers ⁠and less pressure on inflation," she said.</Paragraph><Paragraph xml:space="preserve"> Governor Tiff Macklem said in 2024 that adoption of AI by businesses could add to price pressures in the short terms and productivity growth in the long term.</Paragraph><Paragraph xml:space="preserve"> ((Reuters Ottawa bureau)) Keywords: CANADA CENBANK/</Paragraph><Paragraph xml:space="preserve"> Our Standards: The Thomson Reuters Trust Principles., opens new tab

Bank of Canada expects limited job losses in AI transformation

OTTAWA -- The Bank of Canada isn't yet seeing widespread job losses from artificial intelligence but senior officials at the central bank are watching the labour market closely as adoption advances. Michelle Alexopoulos, external deputy governor at the central bank, is speaking to a business audience in Ottawa on Wednesday about the implications of AI on the economy. She said AI has the potential to drive productivity gains in Canada, which can help to boost workers' wages without stoking inflation. "As AI continues to improve and its adoption spreads, it could permanently change how the Canadian economy works. By lowering costs for businesses and improving efficiencies, AI could support higher wages, reduce prices for consumers and spur new investment," she said in prepared remarks. Alexopoulos said that it's still too soon to say whether AI will have a sweeping impact on the way we do business like the computer did, or whether it will end up a powerful but niche technology. She noted that, so far, adoption of AI is concentrated in industries like finance and insurance, while the technology's reach has been limited in sectors such as food and accommodation. That's limiting the overall productivity boost to date. The Bank of Canada hasn't seen widespread evidence of AI replacing workers in the labour market, but Alexopoulos said the central bank does expect some roles will be eventually eliminated by the technology while others will be created or transformed. She compared the looming disruption to the introduction of the computer. While typists and switchboard operators eventually vanished with the advent of the computer, it also led to the creation of IT departments and office workers increasingly saw their work revolve around the technology. Alexopoulos said that transformation played out of the course of many years, and, "ultimately, computerization did not lead to fewer jobs." Slowing population growth in Canada could also lead to more job vacancies for workers who see their roles replaced by AI, she said. Some technology firms have nonetheless cited AI as driving layoffs, Alexopoulos noted, and some studies suggest weak hiring in entry-level roles exposed to AI like coding or customer service. Youth and employees in these industries ought to brush up on AI skills, she argued, as demand for workers who are comfortable with the technology rises in the years ahead. The Bank of Canada's surveys of risk management experts in the financial sector meanwhile suggest that decision-making is being supported by AI, but not replaced by it. The tool is so far being used to automate routine tasks to give workers time to focus on higher value work. Alexopoulos gave the example of note-taking software in health care that's freeing up doctors to spend more time with patients and less time on administrative work. "This reinforces the view that AI will mostly transform jobs -- not eliminate them," she said. "AI is changing how tasks are done, but humans remain in control."

Productivity Boost From AI to Roll Out Slowly, Senior Bank of Canada Official Says -- Update

OTTAWA--Canada is beginning to record some early productivity gains from firms adopting artificial intelligence but it will take some time before significant improvements start to emerge, a senior Bank of Canada policymaker said. Deputy Governor Michelle Alexopoulos said Canada remains in the early days of AI adoption, adding the technology could lower costs for businesses, support higher wages and spur new investment. "AI adoption remains concentrated in a few sectors," Alexopoulos said, according to prepared remarks she is scheduled to deliver at a Ottawa economics conference. Among the sectors heavily deploying AI are financial services, information technology and health care. "This means that even if some firms are seeing benefits, it will likely take time before significant gains show up in overall productivity data." In a speech earlier this year, Bank of Canada Gov. Tiff Macklem encouraged Canadian businesses to embrace AI, and not be dissuaded by other external factors--most notably President Trump's trade policy--that are casting a dark pall of uncertainty about investments. "We can be victims of U.S. tariffs and AI disruption, or we can lean into structural change, expand our internal market, diversify our trade, embrace new technology and raise our productivity," Macklem said in remarks in February. Lackluster productivity is one of Canada's biggest underlying weaknesses, prompting warnings from Macklem and other senior officials about the pressing need for businesses to deploy capital to improve their operations. Officials have cited corporate Canada's penchant for risk aversion for a generally slow takeup in AI. Alexopoulos said there are some early signs of improvements in productivity due to AI, and that is being incorporated into the central bank's outlook. Productivity, she said, lifts living standards and "ultimately determines how fast the economy can grow when it's firing on all cylinders without generating inflationary pressures." The Bank of Canada sets interest-rate policy to achieve and maintain 2% inflation. Alexopoulos said AI will replace some jobs, although new jobs will emerge and the technology will allow workers to focus on more value-added tasks. "Some workers are already feeling the effects of AI. But, broadly speaking, the evidence does not yet point to widespread worker displacement because of AI," she said. She added AI may also help Canada deal with the coming labor shortage stemming from an aging population and recent limits on immigration growth. Alexopoulos cited AI use in health care, which is freeing up nurses and doctors from performing mundane tasks and allowing them to spend more time with patients.