Can Canada’s Youth Employment Be Protected from AI Displacement?

AI is undermining the once stable foot in the door young Canadians could expect when they enter the workforce. While it's still too early to say AI is causing mass youth unemployment, the pace of its adoption, and the risk it presents to Canada’s youth, is increasing.Highlighting the extent of the risk AI poses, Statistics Canada reported that 19.2% of Canadian businesses are using AI to produce goods or services in Q2 2026. Another Stats Canada survey, found that 41.6% of Canadian workers reported having used at least one AI tool as part of their main job or business over the previous 12 months. All things equal, that puts workplace AI use on track to reach 50% by the end of 2026 and is likely to exceed the 60% adoption mark by the end of 2027.

As businesses automate routine tasks and new job openings prove insufficient to absorb new graduates, another factor is adding to the economic woes of our youth: U.S. foreign policy and the political disruption to Canada's trade.

The U.S. tariffs have become a major drag on the Canadian economy in the last 12 months, hurting production, exports, investment and hiring across manufacturing, natural resources, transportation, agriculture and other industries that depend on the U.S. market or are caught up in disrupted supply chains. Canada-U.S. negotiations failed to produce a deal, and the latest escalation, including the new 50% tariffs on $27.6 billion worth of Canadian goods announced in August, is triggering more layoffs for all age groups, not only youth.

Unlike the damage caused by the trade war, most of the Canadian businesses using AI that are unaffected by tariffs, have avoided major job cuts. The uncertainty over both trade relations and the not-yet profitable AI race makes businesses cautious about hiring young, entry-level workers, at a time when AI is not only here to stay but is already infiltrating all layers of business. Amid both developments, Canadian youth must now compete with both AI and workers who use AI to outperform new hires, naturally leaving fewer entry-level opportunities and raising the barrier to employment.

Fortunately, the situation isn't completely dismal for young entry level workers. The dilemma facing employers is that they need to reduce direct costs by reducing the workforce. AI can fill this gap, creating displacements, yet new hires are still necessary to handle issues AI cannot do well. However, with such roles shrinking in number, many youth are left with few opportunities to learn skills that can further their employment - skills not always learned in school.

The federal government is offering AI literacy training to one million entry-level post-secondary students, expanding work-integrated learning, and creating up to 90,000 AI-related work-placement opportunities for young Canadians by 2031. It also plans sector-specific AI training and says it will work with colleges and polytechnics to provide more hands-on learning. That sounds great, but the question remains: can early generic AI training replace the entry-level jobs AI is already eliminating, or are more robust economic interventions required and what those interventions look like?

The federal government acknowledges the need for practical, sector-specific, work-integrated training, but cannot force employers to absorb the cost of more onboarding, and it is still too early to know whether “AI for All” measures will close the entry-level employment gap. What is clear, however, is that AI is here to stay, and every graduate must prepare for roles that increasingly look like mid-level positions, where the one advantage  youth can offer, granted they receive adequate training, is how fast they learn constantly changing technologies across industry-specific platforms and ecosystems.

Written By:

Fedor Butochnikow, Policy Strategist, Engage