Work no longer provides stability for millions of Canadians. Rising unemployment, declining job quality and the growing risk of AI-driven displacement are changing everyday economic life. The labour market is becoming more fragile rather than more resilient.
This shift is not accidental. Worker insecurity reflects policy choices about how work is organized, how jobs are eliminated or restructured and who bears the risks of economic and technological change. As artificial intelligence and other digital technologies are introduced into workplaces, the absence of robust labour protections increasingly transfers adjustment costs to individual workers.
Canada’s experience is not unique. It reflects a broader international trend toward labour-market deregulation. Since the early 1990s, employment protections have been weakened in the name of flexibility and competitiveness, yet promised productivity and employment gains have not materialized.
Evidence from Canada and peer economies shows that reducing wages, job security and employment protections does not make for a more dynamic labour market. Instead, it reallocates risk from firms and governments that benefit from new technologies to workers, who are left to absorb the consequences of restructuring and permanent loss of jobs.
Technological change and labour in postwar Canada
Earlier periods of technological change in Canada were governed by markedly different policy logic. In the decades following the Second World War, job loss due to mechanization was treated as a shared social risk. Labour protections were actively expanded to ensure that workers were not left to absorb the costs of economic transformation alone.
The Unemployment Insurance Act of 1940 established the loss of jobs as a collective responsibility, while the Industrial Relations and Disputes Investigation Act of 1948 (p. 320) secured the right to unionize and bargain collectively. This ensured that workplace change would be negotiated rather than imposed. Moving forward, federal labour standards enacted in 1965 (p. 2 of report) set minimum requirements for hours of work, termination notice and related protections.
The last meaningful federal update addressing technological change came in 1973.Amendments to the Canada Labour Code introduced advance notice and requirements for employers to consult with trade unions or, in non-union workplaces, employee representatives regarding job losses driven by technological change. However, these protections apply only to federally regulated sectors — about six per cent of the workforce.
Weak income security for displaced workers
Beginning in the late 1980s and entrenched in the 1995 federal budget, (pp. 16-17), Employment Insurance was significantly scaled back. Between 1976 and 2019, coverage fell from 87 per cent of unemployed Canadians to just 38 per cent. Women and part-time workers were especially hard hit. More of the risk that comes with economic downturns and technological change shifted from public institutions to individual workers.
Across Canada, laws governing severance after a job loss are fragmented and provide only basic protection for workers. Employers are generally required to give advance notice or pay in lieu of notice — but additional severance is not guaranteed. In many provinces, — including British Columbia, Alberta, Manitoba and Quebec — employers are not required to provide severance beyond these minimum standards. While some workers receive more through contracts or union agreements, many receive only the minimum the law requires.
Once severance payments end, laid-off workers may qualify for employment insurance (EI). It replaces 55 per cent of previous earnings to a maximum of $729 a week. Benefits apply only to annual earnings up to $68,900, so many middle-income workers experience a sharp drop in pay after being terminated.
These rules do not adequately support workers in a fast-changing economy shaped by rapid technological change.
Training access falls short
Preparing for a new role in the workforce is also a challenge. Canada introduced a program in 2018 to help unemployed and mid-career workers upgrade their skills while receiving EI. But the initiative was time-limited, although some of its measures were later absorbed into existing supports. Today, workers may still receive EI while retraining, but only with government approval and depending on program availability.
Full-time training under EI remains largely out of reach. In 2020–2021, less than one per cent of eligible recipients — only 613 workers — were approved. That rose only slightly to about 780 claimants (p. 119) in 2023-24. These numbers point to systemic barriers that keep retraining inaccessible for most workers.
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Most programs are delivered by provinces. Ontario funds programs such as Better Jobs Ontario and the Skills Development Fund (capital stream). British Columbia supports employer-led training through the B.C. Employer Training Grant, while Quebec provides financial assistance and job training through Services Québec.
This patchwork makes it difficult to upgrade or learn new job skills. Workers must navigate complex eligibility rules and limited program spaces. Yet it’s crucial to prepare them for current and future labour market challenges as AI and other technologies rapidly change the nature of how we work.
What needs to change
The Liberal government has introduced temporary measures to address tariff-related unemployment, but these do not reflect structural changes driven by technological transformation. In 2025, several major employers globally cited AI as a factor behind mass layoffs and hiring freezes.
Economic growth and stability depend on reforms to ensure workers have income security and access to retraining at a time of great change in the labour market. This calls for co-ordinated action on two fronts.
Extending labour protections
Only six to eight per cent of Canadian workers are employed in federally regulated sectors. That means existing protections related to technological change reach only a small portion of the workforce. These protections should be extended beyond narrow jurisdictions. Labour legislation should establish permanent, economy-wide requirements for advance notice, consultation with unions and worker representatives and retraining when technological change significantly alters or eliminates work.
Fixing EI to include retraining
Employment insurance should be redesigned so that support for retraining is a core feature. Current rules prioritize short-term job search. They also penalize participation in full-time training by suspending benefits or requiring repayment of financial support already received. These measures deter recipients from pursuing further upgrading. EI should be updated to permit and fund full-time skills training without placing recipients at risk of losing income support.
New technologies are evolving at an unprecedented pace in almost every aspect of our day-to-day lives. It is crucial that Canada provide workers with resources and protections to navigate a shifting labour landscape and better position themselves in a rapidly changing world.
