Working for the Future: How AI is changing the Job Market
Author
James Lautens
Editor
Demetria Hu
Publications Lead
Artjom Gavryshev
How do we deal with ghosts in the machine?
Artificial intelligence (AI) development is currently going through a period of philosophical study by both scholars and policy experts. In November of 2024, AI experts from around the world met in San Francisco to discuss how to safely develop AI. The end result was the goal to establish a series of AI Safety Institutes (AISIs) to promote the ethical development of AI.
Yet, while the establishment of such institutes is admirable, the rapid advancement of AI is raising serious concerns about how it will affect humanity, especially how it will displace workers. Tasks that were once performed by individuals, like clerical work and data entry, are now being taken over by AI.
In this article, I hope to explain the relationship between how AI displaces workers and how it affects productivity. By doing so, I aim to highlight the human cost of AI usage. There has been research done on how A.I. can improve productivity for certain groups, but such productivity should not cost the dignity of stable employment. Ultimately, the adoption of a universal basic income model (UBI) could prove useful in helping workers displaced by AI. Not only that, but also providing tax credits to companies that maintain a certain percentage of human workers in employment over AI could assist in helping displaced workers.
AI’s current effect on the job market is displacing low-skill and production jobs while providing greater opportunities for higher wage jobs. The OECD further confirms this by highlighting that while AI may prove beneficial in enhancing productivity, low-skill workers are at risk of being replaced due to difficulties in adapting to AI usage.
Considering how, as of 2024, 18.5% of employees in Canada earn below $20.00 an hour, this is cause for concern as such people are at greater risk of economic hardship. Despite AI leading to an increase in productivity in some fields, the net effect on employment is still considered to be ambiguous. As such, those displaced by AI may turn to entrepreneurship to mitigate the lack of employment opportunities. This type of entrepreneurship, coined as “necessity entrepreneurship” as those considering creating a business are doing so out of a sense of desperation, would mean a massive creation of more businesses because of AI. Yet, it is theorized that higher-skilled workers, often synonymous with higher wage-earning workers, would create these businesses, while lower-skilled workers are more likely to be unemployed.
The relationship between AI and labour is multifaceted. Yet, that multifaceted nature should not preclude us from planning for every eventuality. Some have argued that retraining workers is an important step in mitigating the effects AI would have on the job market. While such a suggestion is worthwhile, as it can help those who are disadvantaged economically, it is a long-term goal that would not immediately solve the economic plight of workers being displaced by AI. AI displacement is paradoxically both rapid and glacial. AI is changing the very nature of our society by questioning how humanity works in the short term while leaving lingering questions of what skills will be rendered obsolete. Still skill retraining, while useful in the long term as AI renders obsolete certain skillsets, could prove ineffective in the short term.
As of October 2025, Canadian unemployment rests at 6.9%. This number is even worse for young Canadians. With many entry-level jobs being taken by AI, this is only going to become a more pressing issue.
One policy option would be implementing a UBI across society to mitigate the labour displacement of low-skill workers. Implementing this may take time; however, if governments move swiftly, it could potentially mitigate the displacement effects that AI has on low-skilled workers.
Before the rise of AI, the Province of Ontario in Canada demoed a UBI pilot in an effort to see if it would have a measurable impact on participants. Although the pilot project was cancelled in 2019 by the then elected Conservative government, a separate assessment of the data from the project, though incomplete, showed positive results such as improvement in education outcomes and health.
India is a country that currently has a UBI project. As reported by Development Pathways, a consultancy focusing on developing social protection systems, India started a UBI pilot project in 2016. The project saw the improvement of living conditions, the improvement of nutrition, and higher spending on education.
Such qualifiers are useful for any economy, especially education, since it is crucial to economic growth and development. Yet the intersection of AI and worker displacement ultimately means that a significant amount of the Canadians population will be seriously impacted by AI adoption by employers. That significant amount being the almost 20% of Canadians making below $20 an hour.
The implementation of UBI in the short term would give those who are affected the chance to maintain a reasonable standard of living without being totally destitute. The Government of Canada, especially Innovation, Science and Economic Development Canada (ISED), should make efforts to research what potential areas will be affected by the adoption of AI systems. Such research could prove useful in directing the policies and funding needed to help workers displaced by AI.
The longer term use of government tax incentives to encourage companies to hire human beings could also prove useful in supplementing and later supplanting UBI. The Canadian Federal Government already provides such credits for those who hire apprentices specializing in red seal trades. The same applies to employers that hire students in co-op programs. By using such credits to deter AI adoption, it could help in encouraging businesses to keep human workers while giving governments time to create more robust policies and support systems to help displaced workers. AI is likely here to stay but policies should be implemented to slow adoption while policy makers find solutions that can maintain worker dignity.
Such credits have already proven useful in times of financial stress. A study conducted by French economists Pierre Cahuc, Stéphane Carcillo, and Thomas Le Barbanchon, in the context of the 2008-2009 Financial Crisis, found that such tax credits worked well in keeping people employed in smaller firms. As such, the government could implement tax credits to help businesses retain human workers while also allowing them to compete with companies that make use of AI on a grander scale.
I would therefore make the following recommendations:
1.) Establish a Universal Basic Income (UBI)
Data has demonstrated that the effects of UBI are positive on recipients. With the possible serious displacement effect AI may have on low-skilled workers, such social supports will be needed to allow the displaced to either retrain or find employment.
The Province of Ontario, in particular, should restart its UBI project and then propose it as a national model for adoption to help mitigate the effects of AI displacement.
Such a program can also prove helpful for all Canadians, no matter if they were displaced by AI. Yet, those affected by AI displacement should be the first priority.
2.) Tax Credits to Retain Human Workers
The Government of Canada should consider implementing tax credits to companies that hire human workers. Such credits can help with hiring workers with less human capital who would be affected by the displacement effect of AI.
Such credits should be focused on small businesses and entry level positions. These positions are at the most risk since they can be easily automated by AI.
UBI should not be considered a long term solution but as an immediate response to the displacement caused by AI. Skill training would ultimately be more sustainable in the long term as the government would not have to contend with shifting budget priorities that would threaten UBI.