‘We may be beginning to see the first concrete evidence that AI is having a wider impact on labour markets’
As economic clouds gather over Canada, both statistical indicators and workplace sentiment suggest the country may be on the brink of a recession.
Recent job market data and a new survey of Canadian employers and employees reveal a growing sense of unease, even as some business leaders express confidence in their ability to weather the storm.
“Never before in the annals of recorded Canadian economic history has the economy managed to escape an official recession with such a dramatic move off the cycle low,” said David Rosenberg, chief executive at Rosenberg Research and Associates.
He points out in a Financial Post article that since March, the economy has shed a net 40,000 jobs, marking “the steepest downturn since August 2020.”
Economic warning signs mount
Canada’s labour market is showing unmistakable signs of strain. In August, the country lost 66,000 jobs, pushing the unemployment rate to 7.1%—the highest since May 2016, pandemic period excluded. Youth unemployment has surged to 14.5%, a level that Desjardins Economics says is “now at a level more commonly seen during a recession,” said the article.
Canada’s economic fate is closely tied to the United States, which is also showing signs of a downturn. The U.S. added just 22,000 jobs in August, far below expectations, and revisions to previous months’ data have revealed even weaker job growth.
“The Household Survey is definitely flashing a recession signal, and the payroll survey is not far behind,” Rosenberg told the Financial Post.
Former Bank of Canada governor Stephen Poloz echoed these concerns, telling CTV News that both Canada and the U.S. are “sliding… not in recession, probably, but sliding in that direction.”
He noted that the backbone of the economy is weakening, with the labour market and housing sectors showing particular vulnerability: “We may be beginning to see the first concrete evidence that AI is having a wider impact on labour markets. It’s going to happen at that entry level. That’s where we’re going to see it first.”
Poloz told CTV News that Canadian businesses must prepare for a new economic reality: “As businesses here, we need to get ready for this new structure or new world that is facing us.”
Survey reveals confidence gap between employers, workers
Against this backdrop, survey results from Express Employment Professionals show that both employers and job seekers are bracing for tough times. Just over half of Canadian companies (51%) and job seekers (53%) expect a recession within the next year.
Yet, there is a notable disconnect in how each group perceives job security: While 80% of employers are confident in their ability to provide long-term job security and 82% in short-term stability, only 66% of employees share confidence in their employer’s long-term prospects, and 72% feel secure in the short term, find the June surveys of 500 hiring decision-makers and 503 adults.
The surveys also highlight that 51% of workers are more concerned about job loss than they were a year ago, compared to 42% of employers who perceive increased anxiety among their staff. Furthermore, 74% of job seekers are worried about finding employment if a recession takes hold.
Both hiring managers (68%) and job seekers (75%) believe government policies—such as tariffs, taxes, and regulations—have a greater long-term impact on job security than internal company decisions.
Canadian employers say they are taking several steps to support job security:
These practices align with what job seekers say would make them feel more confident about long-term job security:
- Training for additional roles/responsibilities (40%)
- Clearer communication from senior leadership (36%)
- Access to cross-training or upskilling programs (33%)
Communication and job security
How companies communicate about job security is another area of disconnect, found Express Employment Professionals. While 44% of employers admit to “selective sharing” of information and 43% claim to use an “all-hands-on-deck” approach, only 20% of employees say their company practices the latter.
Most workers (56%) report receiving only selective updates, and 23% say leadership rarely shares information. Notably, 85% of job seekers say clear communication from their employer would make them feel more secure about their future.
“In a labour market shaped by uncertainty, job security is no longer just about stability, it’s about adaptability,” said Bob Funk Jr., CEO of Express Employment International.
“Organizations that invest in transparent communication and continuous skill development aren’t just retaining talent, they’re building a workforce equipped to navigate change and drive long-term growth.”
