Canada’s employment insurance (EI) system is failing its first major stress test since the COVID-19 pandemic.
Unemployment rates continue to rise, exacerbated by challenging trade wars with the U.S. and China. Yet, as more Canadians find themselves without a job, the share of the unemployed that access EI regular benefits — income support for those who lose their jobs through no fault of their own — has fallen. In July, the most recent month for which data is available, 1.65 million people were unemployed, but only 606,000 received EI regular benefits.
This is a problem for everyone. Nearly two-thirds of the unemployed slip through the first layer of Canada’s social safety net, weakening one of the program’s most important functions: to stabilize the economy and its participants. During an economic shock, laid-off workers spend some of their benefits at local businesses, helping to prevent a worse downturn. When the majority of the unemployed can’t access these supports, we are all more vulnerable to a recession.
As in past economic downturns (like in 2008, 2016 and 2020), the federal government introduced a series of temporary changes to EI. While intervention is merited, the consistent need for these ad hoc measures over the last 15 years points to long-identified issues and raises questions about the program’s ability to respond automatically to major shocks.
These new measures seem designed to achieve these goals: slow the rise in unemployment by helping tariff-impacted businesses avoid layoffs, bolster the program’s stabilizing role by improving access to benefits, and provide a longer time frame for support to long-tenured workers.
This commentary assesses the initial impact of some of these temporary measures. It explores the underlying reasons for the program’s declining coverage, offering a data-driven perspective ahead of the upcoming federal budget on November 4.
In principle, the EI program is designed to respond automatically to economic shocks. As more people become unemployed, the number of people receiving benefits rises as well, often in tandem. Between 2015 and 2020, for example, regular benefit recipients made up roughly 40 per cent of the unemployed on a given week. This relationship is often called the beneficiaries-to-unemployed (BU) ratio, and is a key, while imperfect, metric of program coverage[1]. Figure 1 charts this ratio and its component parts over the last decade.
As this interactive dashboard shows, the gap between the number of unemployed Canadians (the lighter area) and those receiving benefits (the darker area) has widened since early 2024. Consequently, the BU ratio (red line) has fallen to 35 per cent, one of its lowest points in recent history outside the pandemic. Not pictured, the BU ratio was closer to 75 per cent prior to the early 1990s recession and the changes to eligibility requirements that followed.
Program coverage is consistently lowest for workers aged 15 to 24, as EI rules on prior work often exclude students and new entrants to the job market. This group has seen a decline in coverage proportional to the national average, in stark contrast to that of older workers. For Canadians aged 55 and over, the BU ratio has remained remarkably stable over the same period.
NOTE: The figures are best viewed on a desktop computer.
The weakening of program coverage is happening within a broadly deteriorating economic climate. When the first round of EI changes was announced in March, the unemployment rate was already 6.7 per cent, higher than it had been in the preceding years.
By the time the most recent announcement came in early September, Labour Force Survey data for August showed employment falling for the second consecutive month, pushing the unemployment rate up to 7.1 per cent — its highest level since 2016 outside the pandemic.
At the same time, the number of available jobs is shrinking. As of the second quarter of 2025, there were nearly three unemployed workers for every job vacancy, a significant increase from last year. This combination of rising unemployment and fewer open positions creates a more competitive and difficult job market, making a robust and accessible EI program more critical than ever. It is in response to these alarming trends that the federal government has introduced a number of temporary measures.
So far in 2025, the government has introduced four main temporary changes for EI benefit claims within specified periods. Here are a description and preliminary analysis of each measure:
Initial thoughts: The Work-Sharing Program, while greatly enhanced, has famously battled with low uptake. Historically, it has made up less than two per cent of claims, which suggests these changes will likely struggle to have a major impact on the broader economy.
Initial thoughts: These are great ways of ensuring workers can access benefits promptly. However, they primarily affect the timing of when benefits begin and the initial amount received, without changing program eligibility in the first place.
Initial thoughts: The only change that directly aims to increase coverage. It’s an odd way to do it, because it’s effectively reducing the number of hours needed to qualify. In most cases, entrance requirements are lowered by only 35 hours, or the equivalent of completing one less week of full-time work. As Jennifer Robson suggests, only a small share of the unemployed were on the margins of qualifying by a few hours in the latest data (2023).
Initial thoughts: Awarding additional benefit weeks to long-tenured workers provides needed supports for a specific group that might have additional difficulties finding a job similar to the one they lost. Because long-tenured workers may exhaust their benefits before securing a new job, this change certainly has the potential to alleviate some of the coverage gaps observed. However, it is too soon to tell.
In another post, Robson points out that given the recency of the pandemic and the program’s definition of long-tenured workers, it’s possible there will be fewer qualifying recipients than expected.
Taken together, these measures will only have a marginal impact on EI’s core issues of access to, and adequacy of, benefits.
However, roughly four months of administrative data are now available, allowing for a closer look at the preliminary impact of two of these measures: changes to the Work-Sharing Program and adjustments to the unemployment rates. While this initial evidence is not yet conclusive, this analysis can help inform the broader discussion about EI’s role in supporting Canadians through these tough times.
During a meaningful but temporary business slowdown, employers and employees can come together to reach an agreement with Service Canada that avoids layoffs. Instead of job loss, workers can agree to reduced hours, receiving EI benefits equal to 55 per cent of their foregone income.
The program is particularly well-suited to deal with economic shocks that are expected to be temporary. The Work-Sharing Program was made permanent in 1985 and has gone through little change since.
However, as noted above, the program has always struggled with low uptake. This March, there were only 8,000 active Work-Sharing claims, compared to 504,000 active regular benefit claims. A recent evaluation of the program determined that difficulty assessing eligibility and complicated requirements and application processes hindered participation. It also found that general awareness of the Work-Sharing Program was low.
In its recent temporary changes, the government significantly widened eligibility for both employers and employees, doubled the maximum number of weeks, eliminated the cooling-off period between successive agreements, and loosened requirements around the business’s recovery plan.
These measures appear to have had an impact. As figure 2 shows, the enhanced Work-Sharing Program saw a sharp and immediate increase in uptake after the March 2025 changes were implemented, with participation rising to its highest level in recent years. It is possible the increase was driven by the worsening economic situation, as many sectors also felt the impact of tariffs around this time. However, the sharp increase in uptake, in contrast to previous years with rising unemployment, suggests the temporary measures had some positive effect.
Nonetheless, it is crucial to contextualize this scale. Even at its peak, the program covered roughly 12,000 workers — or 2.3 per cent of jobless benefits and less than 0.06 per cent of total employment in Canada. This confirms that while the changes were effective at boosting program use – providing a crucial lifeline to the specific businesses and workers involved – Work-Sharing remains a marginal tool with a tiny footprint in the overall labour market. ESDC estimates the program averted almost 11,000 layoffs since April. By August, the number of unemployed had increased by 46,000 people reaching a total of almost 1.6 million.
To qualify for regular EI benefits, claimants must have worked a set number of hours that varies by the unemployment rate in their EI economic region. The government’s temporary change, active from April to October 2025, artificially adjusted these rates to effectively lower the hours needed to qualify. The main outcomes were reducing the maximum eligibility requirement of 700 hours to 630 hours across the country, and reducing the hours required in most other regions by 35. Regions with an unemployment rate above 13 per cent (the maximum) saw no change to their required hours.
In the four months since this change took effect, only one region has not had its unemployment rate adjusted for a single month: Northern Manitoba has maintained rates above 13 per cent all summer. As figure 3 shows, a large share of the other 61 regions had unemployment rates in the lowest category during this period, thus receiving the largest reduction in hourly requirements of 70 hours. Â
| Change in entrance requirements | (before adjustment) | Apr | May | Jun | Jul |
|---|---|---|---|---|---|
|
From 700 to 630 hours |
Belowor equal to 6.1% |
28 |
25 |
26 |
25 |
|
From 665 to 630 hours |
6.2% to 7% |
13 |
14 |
9 |
16 |
|
From 630 to 595 hours |
7.1% to 8% |
7 |
10 |
14 |
7 |
|
From 595 to 560 hours |
8.1% to 9% |
5 |
3 |
5 |
5 |
|
From 560 to 525 hours |
9.1% to 10% |
3 |
4 |
2 |
3 |
|
From 525 to 490 hours |
10.1% to 11% |
3 |
1 |
1 |
1 |
|
From 490 to 455 hours |
11.1% to 12% |
NA |
2 |
1 |
2 |
|
From 455 to 420 hours |
12.1% to 13% |
NA |
1 |
2 |
2 |
|
No impact (420 hours) |
Above or equal to 13.1% |
3 |
2 |
2 |
1 |
At the national level, the data from this period offers a tentative, positive signal. As shown in figure 1, the BU ratio began ticking up in 2025, indicating a slight increase in coverage. Compared to last year, the number of recipients started growing faster than the number of unemployed around March to April when the policy became active.
However, it’s difficult to be sure the policy was the direct cause. A more rigorous test is to look at the regional data, since the policy’s intensity — the number of hours reduced — varied across Canada’s 62 EI regions.
Figure 4 tests this relationship in two ways. Both analyses point to the same conclusion: there is no clear evidence that the regions with the largest change to the number of hours required, or the lowest resulting eligibility requirements, saw a proportionally greater impact.
In the top chart, we plot the yearly percentage change in the number of recipients of all 62 regions for each month since the policy became active. Because of the way the rule works, the eligibility requirements of a single region can change month to month. The y-axis shows these requirements by outlining the nine distinct groups into which regions could fall based on their unemployment rate — as well as the new hourly requirements. While the average change is slightly larger in months where regions were granted the highest hourly reduction (top of the figure) than most other groups, there isn’t a clear relationship between the policy’s intensity or groups and a relative increase in beneficiaries.
The bottom chart is similar, where we instead plot the difference in the yearly change of beneficiaries by the average number of hours reduced from eligibility requirements in a given month. This chart tells us whether the trend meaningfully changed once the policy became active. Like the above chart, there is no clear trend. All regions, including those with the largest reductions in hours (high on the y-axis), are spread across the spectrum of outcomes. They are not concentrated on the right side, which would have indicated a strong positive impact.
Looking only at changes in the number of recipients is not a great way to assess a policy’s impact, because this variable is highly susceptible to external trends. For example, the number of beneficiaries will naturally rise in a worsening economy, regardless of any policy change. A more reliable approach is to use an adjusted metric like the BU ratio, which controls for the size of the local unemployed population. However, this type of analysis is difficult to do with the 62 EI economic regions, which are custom-built geographies that don’t align neatly with the standard areas for which labour force data is collected.
Another option is to look at the approval rate of EI claims. Robson finds that the share of claims approved relative to claims received has dropped compared to last year in the months since the policy became active.
Therefore, while the national trend offers a glimmer of hope, evidence suggests it’s not necessarily due to the adjustments in entrance requirements. It’s likely this measure is having some impact, but it’s clear the scale of it is not proportional to the current challenge of insufficient EI benefits coverage for unemployed Canadians.
When evaluated against their stated purpose — to provide targeted support for individuals and businesses impacted by the current economic downturn — this set of temporary changes is a reasonable first step. As the preliminary data suggests, they may be having a small, stabilizing effect. However, this narrow focus overlooks the more significant drivers of EI’s persistent coverage gaps.
While a definitive diagnosis is difficult with publicly available data, I think it’s likely that a main driver of inadequate coverage is benefit exhaustion: as job searches get longer, more claimants are running out of benefits before finding work. This conclusion is supported by Statistics Canada supplementary unemployment rates, which track those that have been unemployed for longer than three months, as well as those without a job for more than a year (figure 5). Both rates nearly doubled between March of 2023 and 2025 and began falling in a similar timeline as the BU ratio. Depending on hours worked prior to their claim, and the unemployment rates of the region, recipients can receive benefits for 14 to 45 weeks in total.
Another likely contributing factor is the challenge faced by younger Canadians, who have a more precarious attachment to the labour force that often leaves them ineligible for EI regular benefits under current rules. Younger Canadians make up a small share of all claims, but it’s evident from figure 1 that both unemployment and EI coverage are going in the wrong directions. Â
These issues map directly onto the core challenges with EI that we identified in our 2022 research: complexity, which makes benefits difficult to administer and access; insufficiency, because benefits are often inadequate and less than half the unemployed receive them; and responsiveness, as shown by the government’s recurring need to make temporary adjustments during major economic shocks.
These fundamental challenges are not new. In fact, they were the focus of the government’s own consultations on EI modernization years ago. With the federal budget weeks away and Canadians facing an uncertain economic climate, it’s the right time to question incremental, temporary stopgap measures. Serious, comprehensive EI reform would require building a system that is truly fit for the challenges of the 21st-century economy.
Canada is facing multiple, overlapping challenges to its future economic security and overall way of life. Those include threats to our sovereignty and our largest trading relationship, geopolitical turmoil, housing shortages and critical infrastructure gaps.
Industrial policy, where governments deliberately encourage certain economic activities and outcomes that would not otherwise occur through market forces, has the potential to address some of Canada’s most pressing challenges. But it must only be pursued as part of a sound strategy with clear objectives and be accompanied by rigorous evaluation and good governance practices.
Canada has a long history with industrial policy, with some successes and some failures. There are many lessons to be learned that can help governments judge when and where to use industrial policy tools, and how to do it well.
Over more than two years and four workshops, we received insight and advice from a range of experts, stakeholders and rights-holders.
We recommend that when pursuing industrial policy governments should:
As Canada’s federal, provincial, and territorial governments grapple with responses to a continually changing trade and geopolitical context, there are certain areas where industrial policy can play a key role. Prime Minister Mark Carney, for example, outlined seven priorities in his May 2025 mandate letter to government. Many of those priorities, such as housing and defence, can be supported by industrial policy.
We propose six priority policy objectives or missions to pursue as part of an overarching industrial policy strategy for Canada:
There is a place for industrial policy in any credible response to the challenges ahead, but it is critical that it be focused on our top priorities. It is also important that industrial policies learn from the lessons of the past, and those of other countries, to ensure that they achieve their intended objectives without wasteful spending.
Canada has the potential to emerge from the challenges it faces as a stronger, more united country, if governments pursue the right policies in the right way.
The success or failure of previous industrial policies is largely tied to design and implementation. Industrial policies require an additional layer of prudence and diligence that goes beyond what might be expected of programs involving transfers to individuals or other levels of government, because they create the possibility for real or perceived conflicts between the public interest and the private interest of companies.
We propose a framework for successful industrial policy that rests on three core elements: (1) sound strategy; (2) good governance; and (3) rigorous evaluation (figure A).
Sound strategies require a design stage with clear priorities and objectives, analysis of the gaps and failures that are preventing private-sector investment in those priorities, and an evaluation of the effectiveness of existing policies. They also involve careful analysis of approaches (e.g., mission-oriented or technology-based) and instruments (e.g., a loan or tax credit) to determine which will be most effective and efficient in achieving the desired results. There also needs to be a plan for implementation and monitoring, with the possibility of adjusting policy parameters over time.
Good governance necessitates a combination of expertise both on staff and as part of a broader network, alignment with the activities of other levels of government or international partners, and the selection of institutions best placed to succeed. Industrial policies would also benefit from a centralized unit to guide and inform policy development and implementation across government, ensuring consistency and the application of best practices.
Rigorous evaluation underpins all aspects of successful industrial policy, providing a continuous feedback loop where learnings inform future decisions on design, instrument selection, and implementation. Standardized performance indicators can help to inform decision-making, allowing for the comparison of different types of industrial policies across organizations. Evaluations can also be used to communicate program performance to the public.
While these three elements of industrial policy are critical to success, they should not be used to circumvent bold or ambitious efforts. In fact, careful analysis might show that a large, near-term, targeted public investment could yield greater economic and societal returns than a weak, incremental approach spread across multiple objectives. But bold approaches need to be backed by careful analysis that is communicated clearly to an often-skeptical public. And they need to be designed and executed in co-ordination with other levels of government, and in collaboration with Indigenous Peoples.
A new visitor to Channel-Port aux Basques, nestled between sea and mountains on Newfoundland’s southwestern tip, would probably never notice that post-tropical storm Fiona blew through here on Sept. 24, 2022. In the years since, some areas of this town of about 3,500 people have simply been erased — either the homes were swept out to sea when Fiona whipped up those violent waves, or they were torn down later as a precaution. More homes stand empty, earmarked for demolition.
For the people who live in this far-flung, craggy place with dramatic ocean views, the absence is felt profoundly. Some residents simply moved away, while others are still trying to recover. There is talk about how people now fear the ocean that is so much a part of life here.
Fiona threw another curveball at a region that was already struggling to support new economic opportunities. Now the focus is on reconstruction — everything from housing to restoring the town’s beloved Grand Bay West trail and beach. The rebuilding and repair work has fuelled economic activity here in recent years.
One stable element of the local economy is its largest employer, Marine Atlantic, a federal agency that runs the daily ferry service between North Sydney on Nova Scotia’s Cape Breton Island and Channel-Port aux Basques year-round. In the summer, a seasonal route to Argentia on Newfoundland’s Avalon peninsula operates three times a week.
Ferry service, first established in 1898, made Channel-Port aux Basques the principal port of entry into Newfoundland. The service is constitutionally protected under legislation enacted when Newfoundland and Labrador joined the federation in 1949 and is considered part of the Trans-Canada Highway.
The ferries are imposing white colossi of modern engineering on an otherwise wild landscape. They transport passengers, vehicles and masses of cargo back and forth across the Cabot Strait, with tractor trailers parked nose to tail in the belly.
Like most major industries across Canada, shipping is facing changes as the world goes through an energy transformation. Marine Atlantic has assessed its emissions inventory and has created a roadmap to reach net-zero by 2050, with a focus on reducing fuel consumption of its ferries and terminals.
Other changes are on the horizon, too, as the province looks to harness wind power to develop a renewable energy industry and diversify its economy.
In May, the IRPP published Harnessing Generative AI: Navigating the Transformative Impact on Canada’s Labour Market, a study by Matthias Oschinski and Ruhani Walia looking at the automatability of Canadian occupations. They employ an innovative methodology, using large language models (LLMs) as stand-ins for human experts to rate the extent to which generative AI tools could master different skills and work activities.
I suspect this technique could be very valuable for a wide range of researchers and analysts, inside and outside of government. As it turns out, the core task — systematically prompting an LLM with a list of items to get a structured response (like a rating between 1-5) — is surprisingly simple to implement with modern tools.
Of course, the question is not just whether we can use an LLM, but whether we should. As a new methodology using emerging and sometimes unreliable tools, results should be approached with caution. At the same time, the only way to learn is to experiment.
To that end, I replicated the first part of Oschinski and Walia’s study (producing AI-generated ratings for skills and work activities) and published it for others to use and adapt. You can access it using the link below.
My hope is that this project encourages other researchers to experiment with this new approach to labour market analysis.
You can use the provided code to:
I am grateful to Matthias Oschinski and Ruhani Walia for developing the original methodology, for their permission to replicate their study, and for their valuable comments on a draft of this guide.
The views expressed here, and any errors in the accompanying notebook, are my own. The notebook was developed with assistance from Gemini (2.5 Pro Preview) while learning the DSPy framework. I take full responsibility for its content and accuracy.
The global economy and Canada’s place in it are going through a period of tumultuous change, with an energy transition underway, and a major reconfiguration of trade patterns in the offing.
The implications for Canada’s entire workforce are significant, but they are even more important for communities with higher concentrations of employment in sectors susceptible to economic disruption, including Indigenous communities dependent on resource sectors.
Many of these communities are in rural or remote areas, and face greater challenges in attracting skilled workers and more barriers to accessing training. Among other issues, workers are often reluctant to pursue training at their own cost unless it is linked to an employment opportunity.
Training provided by employers is an integral part of the education and training ecosystem but is unlikely to build sufficient workforce resilience. Various levels of government offer programs that address some gaps, but their limited scale and scope constrain their effectiveness. All too often, economic development planning is not co-ordinated with local skills development, leading to missed opportunities for companies and workers.
A more proactive, co-ordinated and place-based approach to skills development that recognizes the unique challenges and opportunities facing each community could help build the resilience Canada needs as it faces global headwinds.
To help prepare workers in susceptible communities for the future, the Institute for Research on Public Policy recommends that:
Like its neighbourhood of houseboats that bob in the waters of Great Slave Lake, Yellowknife is used to ups and downs.
For decades after the Second World War, the city was kept afloat by the two mighty gold mines on its outskirts. The Giant and the Con not only created hundreds of jobs for generations of miners, but they also structured Yellowknife’s social life and gave the town much of its lingering character. Those mines stilled shortly after the turn of the millennium, along with their high-paying union jobs, filled by a local workforce.
Then someone discovered diamonds. Located about 300 kilometres northeast of Yellowknife, the Ekati mine opened in 1998, followed a few years later by Diavik and the Gahcho KuĂ© mine in 2016. It was another boom, but a different kind. Many of these jobs were filled by fly-in, fly-out workers or members of First Nations communities in the newly self-governing Tłı̨chÇ« region. Yellowknife saw some trickle-down impacts and some of the work, including from the new industry of diamond Âpolishing, but it wasn’t like the old days of the gold mines.
Another wave rolled through after 2004, with a mammoth proposal to build a gas pipeline up the Mackenzie Valley. The proposal, estimated to cost $16 billion, created buzz throughout the entire Northwest Territories but probably would have benefited Yellowknife and the Beaufort Delta community of Inuvik the most. Those dreams were washed away when the fracking revolution brought the price of natural gas below what was needed to make a pipeline profitable. In 2017, Imperial Oil finally cancelled it.
Now the diamond mines, on which the region has hung its hard hat for two decades, are on their way out. Diavik is slated to close in 2026, the resource depleted. Ekati and Gahcho Kué are likely to operate longer, but Yellowknife’s Diamond Age is ending.
As well, the city was hard hit by two other events. The COVID-19 pandemic badly damaged businesses, including Yellowknife’s healthy aurora tourism industry, which normally filled hotels with visitors keen to experience spectacular displays of northern lights. Tourist-focused businesses such as art galleries have yet to fully recover.
Then, in the summer of 2023, the entire city was evacuated in the face of a giant wildfire. The sudden need to move more than 20,000 people — including a hospital full of patients — in an environment without a lot of places to move them to or means to get them there brought home to many how isolated their northern lives were. Many simply didn’t return and it shows: the two downtown malls on Franklin Avenue have as many empty spaces as paying tenants.
Yellowknife is badly in need of a new wave, and critical minerals might well be its next act. Semiconductors, fuel cells, batteries, motors — all the components of the world’s electric future — use minerals found in abundance in the Northwest Territories. Of the 31 minerals listed in Canada’s critical minerals strategy, 23 are found here in “significant” occurrences or in deposits “with good potential for additional discoveries,” according to the territorial government.
Several mines are in various states of development, but there is still a lot needed to get them off the ground.
In short, this new opportunity could either generate a new wave that Yellowknife — and other northern communities — could surf for generations or it could raise barriers that swamp it. ’Knifers, as they sometimes call themselves, will do their best. They are a stubborn and resilient bunch who consistently find a way. As one community member put it, “The people who come here have not chosen life’s default path.”
Canada will host the 51st Group of Seven (G7) summit in Kananaskis, Alberta, from June 15 to 17, 2025. During last year’s meeting in Italy, G7 leaders issued a declaration stating that members would “remain committed to strengthening the rules-based multilateral trading system.” Since then, G7 countries have faced one of the most challenging geopolitical landscapes since the group’s inception in 1975, primarily due to the trade war the United States has launched on allies and adversaries alike. While a temporary pause of some of the steepest tariffs is in place, the uncertainty surrounding future tariffs means that an economic slowdown, job losses and stalled investments have become the new normal.
Canada has the opportunity to use the G7 as a platform to strengthen trade relationships and call for a renewed commitment to rules-based trade.
The G7’s presidency rotates annually from member to member, with the presiding nation setting the agenda and hosting the meeting. This year, a time of great uncertainty, Canada is taking the helm. The calendar of ministerial meetings is bare, with only two entries: the G7 Foreign Ministers’ Meeting and the G7 Finance Ministers and Central Bank Governors’ Meeting. During last year’s summit, Italy hosted 23 such meetings. This year, keeping the agenda minimal may be in Canada’s best interest, as trade tensions could usurp any other items.
One item that will weigh heavily on G7 leaders will be the (temporarily cooled) trade war between China and the United States. While the duel between the two superpowers has come to a détente, the potential for re-escalation looms fewer than 90 days away. Likewise, the potential for G7 countries to suffer collateral damage in a trade war between the world’s two largest economies is a source of stress for G7 leaders thanks to their trade dependencies on both countries (see figure 1).
Excluding Canada and Japan, China and the United States capture a fairly even share of imports to G7 countries, but the United States is a larger export market for most G7 countries. For nations around the globe, maintaining a cordial relationship with two squabbling superpowers could become challenging. For two G7 countries, however, the picture is less murky. For Canada, the United States far exceeds China’s influence on the Canadian market. For Japan, the opposite is true. However, other factors Âbeyond trade, such as defence and critical minerals, play a role in the relationships countries have with the U.S. and China. The United States is still a clear military superpower and fellow member of NATO with most G7 countries. China is the world’s largest manufacturer and processes almost all of the world’s critical minerals, providing Chinese policymakers with control over critical supply chains.
Figure 1: G7 trade linkages with China and the U.S.: Imports and exports as a per cent of total goods trade (US$)
We need look only to Canada for an example of how difficult balancing these relationships can be. Because Canada followed the United States’ policy of imposing a 100 per cent surtax on Chinese electric vehicles in 2024, China retaliated this March by imposing a 100 per cent tariff on canola and a 25 per cent tariff on seafood and pork, among other exports. Meanwhile, Saskatchewan Premier Scott Moe is pressing Prime Minister Mark Carney to negotiate a reduction in Chinese agri-food tariffs, and Ontario Premier Doug Ford is most concerned with resolving the United States’ auto sector tariffs.
Trade diversification has been on Canada’s to-do list for decades but is now more urgent, and this year’s G7 meeting offers an opportunity to shore up new trading relationships. Canada currently has 15 free trade agreements (FTAs) in force with 51 countries (see figure 2 and figure 3). Twelve more free trade agreements are in the negotiation stage, though many of these have not seen any development over the last five years. Meanwhile, Canada is in exploratory talks with China and Turkey but there have not been developments within that same time frame. Finally, negotiations with Indonesia have been concluded. With the Carney government slating trade diversification as a top priority, there is hope that trade discussions will develop into something more concrete.
Figure 3. Free trade agreements by status and country
During this June’s G7 meeting, Canada will have the opportunity to make headway in its talks with the United Kingdom. Currently, a continuity agreement remains in place, meaning the previous FTA applies while a new agreement is negotiated, but trade negotiations have stalled over disputes on agricultural trade. While the United Kingdom was able to reach a trade agreement with the United States, tariffs of 10 per cent remain in place on some goods and will continue indefinitely. It is in both the United Kingdom’s and Canada’s interests to solidify an agreement soon. Canada could also continue pressing France and Italy to ratify the Canada-European Union trade agreement, which remains provisionally in place. There is also significant scope to continue deepening economic and military ties.
Canada’s G7 presidency is also an opportunity to champion the rules-based multilateral trading system, including institutions such as the World Trade Organization. It could also promote trade diversification as a way to strengthen and expand alliances. As Prime Minister Carney recently stated, “If the United States no longer wants to lead, Canada will.” At the G7 in June, Carney will have his first opportunity to do exactly that.
This study explores the potential impact of generative AI on the Canadian workforce over the next five years. Through two novel approaches — using ChatGPT to evaluate the generative AI automation risk of occupations and employing the recently established Occupational and Skills Information System (OaSIS) database — we analyze how generative AI might transform work activities and skill requirements across different sectors and regions of the Canadian economy.
We do this by evaluating the estimated technical ability of generative AI to handle the various skills and work activities associated with all occupations in Canada. Importantly, this does not account for the full set of considerations that might go into a firm’s decision to automate a particular job. Automation of some occupations might, for example, be constrained by the need for large capital investments, new technologies, or changes to laws and regulations. However, by focusing only on the technical feasibility of generative AI, our estimates can be used to anticipate a wider spectrum of risks and opportunities.
Our analysis reveals three significant patterns that have important implications for productivity enhancement and workforce development. First, the impact of AI varies substantially across different types of skills and work activities, with clerical and data-processing tasks showing the highest automation risk due to generative AI. Skills involving human interaction, social perception, and instruction demonstrate markedly lower vulnerability.
Second, rather than eliminating entire occupations, generative AI is more likely to transform the composition of work activities within jobs. This is indicated by our results which show that occupations representing 50 per cent of total Canadian employment exhibit a moderate automation risk from generative AI, suggesting partial rather than complete automation.
Third, significant variations exist across industries and regions, based on the type and number of occupations present. Sectors like transportation and warehousing show the highest share of at-risk occupations (56.4 per cent), while others like educational services demonstrate greater resilience (3.1 per cent). These differences are more pronounced in certain regions, like Nunavut and the Northwest Territories, where manufacturing, mining, and transportation exhibit higher shares of high-risk employment than in the rest of the country.
Automation risk also varies by region when looking at the kinds of occupations that are currently in high demand. In Ontario and Manitoba, for example, in-demand occupations have a higher average automation risk from generative AI when compared to those in Prince Edward Island and Newfoundland & Labrador.
These findings have important implications for policymakers and business leaders seeking to leverage generative AI for productivity growth. Geographic and industry variation suggests the need for targeted approaches to workforce development and AI adoption. Additionally, realizing productivity benefits from generative AI will require addressing significant implementation challenges, particularly in developing the necessary workforce skills.
While generative AI could help address Canada’s productivity challenges, capturing these gains requires a coordinated approach to infrastructure development and workforce preparation. Our results suggest that upskilling and retraining initiatives should prioritize developing complementary skills — those skills that show low automation risk but high value in an AI-augmented workplace. This includes social, managerial, and leadership skills that our analysis shows are least at risk from automation due to generative AI. The study thus contributes to an understanding of how generative AI can be deployed to boost Canadian productivity while supporting broader workforce adaptation.
Canada stands at a critical economic crossroads. From the urgent transition to net-zero emissions, to the pursuit of secure supply chains in critical minerals and energy technologies, to addressing a national productivity crisis, the opportunities for transformation are vast — but remain unevenly distributed.
Much of the country’s innovation policy infrastructure remains concentrated in major urban centres such as Toronto, Vancouver and Montreal.
However, many of the individuals with the practical experience, land-based knowledge, and incentive to drive innovation are based in rural Canada. Moreover, rural communities are on the front lines of the very challenges that Canada must urgently confront.
Consider the following: whatever the device you are using to read this, trace the flow of electricity powering it back to its source. Whether that electricity was generated from fossil fuels or clean sources, it most likely originated in a rural community.
Effective theories of change management underscore the importance of providing real and ongoing support to those most directly impacted by societal transitions. Without such support, large-scale changes are unlikely to succeed.
Rural communities are foundational to Canada’s economic capacity, yet their innovation potential remains significantly underutilized.
The Southeast Techhub (SETH), located in Southeast Saskatchewan, is demonstrating how that can change. By combining grassroots resilience with a clear alignment to Âforward-looking policy objectives, SETH is offering a replicable model for rural innovation that can inform a truly pan-Canadian strategy — provided that federal and provincial governments are willing to engage rural leaders on their terms.
In Southeast Saskatchewan, innovation has long been a necessity rather than a luxury. When equipment breaks down or challenges arise, there is no quick trip to a nearby store to find a replacement. The closest urban centre, Regina, is a two-hour drive away — and even it lacks many of the services and amenities typical of a major metropolitan area.
As a result, residents in this region have developed a deeply ingrained culture of self-Âreliance. You learn to repair what is broken; you learn to build what is missing. You find creative, workable solutions using the resources at hand.
In this context, innovation is not labelled as such. It is not a buzzword or a strategic pillar. It is understood simply as “getting it done.”
The Southeast Techhub did not emerge from a government directive. It was born of necessity by a community navigating economic transition.
When the federal government announced the phaseout of coal-fired power in Saskatchewan, the city of Estevan and the broader Southeast Saskatchewan region were confronted with an uncertain economic future. Rather than retreat in the face of this disruption, the region mobilized.
As former Mayor Roy Ludwig stated, “With environmental restraints on our coal industry, we were being forced to pivot to other areas that will create sustainable, well-paying jobs. One of these areas is tech. We must move, embrace, and accept this change in a positive posture, or we will lose opportunities and get left behind.”
Southeast Saskatchewan is home to significant figures in the global innovation ecosystem. These include Dr. Eric Grimson, former Chancellor and current Academic Chancellor at the Massachusetts Institute of Technology (MIT), and Jeff Sandquist, former Vice President at Microsoft and Twitter and now Head of Product for Developer Productivity and Generative AI at Walmart.
Despite this high-calibre talent, launching SETH required more than vision — it required funding. At the time, there were no dedicated programs to support rural innovation hubs in Canada. The turning point came when the Government of Saskatchewan introduced the provincial Coal Transition Fund, designed to assist communities directly affected by the retirement of coal power. Estevan successfully leveraged this fund as seed capital for SETH’s formation.
This was not a case of rebranding an existing economic development office. The creation of SETH represented a genuine coalition, bringing together educators, municipal leaders, city councillors, local business owners and concerned residents. Their shared objective: to build a diversified regional economy rooted in technology and innovation.
What distinguishes SETH is its bottom-up foundation. It did not arise from institutional mandates, but rather from the community itself, reflecting the values, needs and entrepreneurial spirit of the region.
Today, SETH operates with a diversified funding model that includes public support, such as multi-year contributions from SaskPower, as well as growing financial commitments from industry partners, member organizations and philanthropic donors.
The Southeast Techhub is grounded in a clear and purposeful mission:
This mission is operationalized through three core pillars:
The innovation gap between rural and urban Canada, and the need to bridge this gap as a national policy priority, has been the primary motivation behind the devising of these three pillars, and the mission itself, from inception.
At SETH’s opening ceremony in May 2022, students from St. Mary’s Elementary School participated in a pitch competition, showcasing imaginative technology solutions. One standout project came from some Grade 8 students. The young women had designed a system consisting of soil moisture sensors placed in household plant pots. These sensors were connected to Amazon Alexa, enabling the virtual assistant to verbally notify users when their plants required watering.
Despite their ingenuity, these students had no path to advance their skills. At the time, in the entire stretch of Saskatchewan south of the Trans-Canada Highway — from Alberta to the Manitoba border — there was not a single accessible institution where youth or adults could study computer science.
This highlights a glaring contradiction. In the spring of 2023, the Bank of Canada identified a national productivity crisis, underscoring the need for a more skilled workforce and increased innovation. Yet current education and innovation policy frameworks continue to overlook rural students, many of whom are eager and capable contributors to Canada’s future economy. Involving rural youth in comprehensive innovation and technology education will play a critical role in solving Canada’s productivity crisis. To put it bluntly: Canada cannot solve its productivity crisis without equitably involving rural youth in comprehensive innovation and technology education.
This is why SETH’s mission explicitly includes a commitment to technology-based education. It represents not just a regional initiative, but a broader call to action: to provide rural youth with access to the tools and opportunities they need to participate in Canada’s innovation economy.
SETH’s involvement in economic development stems from the local identity of Estevan as “the Energy City.” With deep expertise in energy production, Estevan is well positioned to play a leadership role in Canada’s energy transition.
Despite this, Canada does not currently have a dedicated national Centre for Energy Development. This raises an urgent question: how can the country successfully manage its energy transition without robust engagement from communities like those found in Southeast Saskatchewan?
Saskatchewan has limited hydroelectric capacity and little feasible potential for further development. A 2010 study by Bigland-Pritchard and Prebble identified a potential addition of approximately 125 MW of hydroelectric capacity by 2020, but most remaining sites are in remote areas and are cost-prohibitive due to infrastructure and transmission challenges.
In contrast, Southeast Saskatchewan possesses considerable renewable energy assets. It is among the sunniest regions in Canada, with solar potential approaching 1,400 kilowatt hours per installed kilowatt, according to a study in Ecological Economics. It also sits atop some of the hottest geothermal formations in the country and enjoys strong, sustained winds, making it ideal for wind power development.
In addition, the region’s geological profile is well suited for Carbon Capture and Storage (CCS) and emerging technologies such as underground CO₂ “batteries,” for storing excess electricity. Harsh environmental conditions — ranging from winter temperatures of -40°C to summer highs of +40°C — make Southeast Saskatchewan an ideal real-world test bed for applied research and product development related to energy resilience and adaptation.
If innovations can be developed and proven under these extreme conditions, they can be scaled to other parts of Canada and exported to international markets facing similar energy and climate challenges.
Despite this potential, efforts by the community — through both SETH and the Estevan Chamber of Commerce — to engage the federal government have met with limited response. It often appears that Ontario, Quebec and British Columbia receive the majority of funding, despite enjoying access to low-cost hydro power and fewer transitional risks. Rather than imposing solutions on communities like Estevan, the federal government should co-create strategies with those most affected by national energy policies. In doing so, the government could turn the “disrupted” into the “disruptors,” unlocking local solutions to national problems.
The final pillar, startup incubation, addresses another critical gap: the lack of accessible resources for rural entrepreneurs. If a rural innovator wants to commercialize an idea, Âdevelop a business plan or seek mentorship, their only option is often to travel to a distant urban centre.
This matters deeply. Rural Canadians have already demonstrated their capacity to create companies and innovations of national significance — from the founders of SkipTheDishes to world-renowned researchers in nuclear fusion and cancer therapies. How many more transformative ideas are sitting dormant in rural communities — unrealized not for lack of potential, but for lack of infrastructure and support?
Based on over two decades of leadership in successful innovation initiatives, I define innovation as “the disruption of a process to make it better.” At the heart of this definition is the concept of disruption — a term that, while often considered a buzzword, is pivotal to understanding how meaningful change occurs. When brought into relation with another commonly used but equally important term, resilience, a deeper truth about innovation emerges.
Disruption inevitably introduces instability into established systems. It creates uncertainty and discomfort, not only within the processes being altered but also among the people who operate those systems. Human beings have a natural tendency to resist such change.
As a result, individuals who lead change frequently encounter opposition and criticism. Successfully driving innovation under these conditions requires more than technical knowledge — it demands personal resilience.
This is where rural Canada stands out. As discussed earlier, rural communities are already rich in innovative practices born of necessity. But equally important — and perhaps underrecognized — is the vast reservoir of resilience embedded within rural culture.
Dr. Eric Grimson, Chancellor for Academic Advancement at the Massachusetts Institute of Technology (MIT) and a native of Estevan, Saskatchewan, captured this sentiment during a 2023 visit to Southeast Saskatchewan. He remarked:
The reason, he explained, is resilience.
This insight speaks volumes. While innovation policy discussions in Canada often focus on infrastructure, investment and intellectual property, they tend to overlook the human dimensions of innovation — particularly the importance of resilient leadership in periods of transition.
As Canada confronts complex national and global challenges, there is a compelling case for incorporating rural resilience into the very DNA of our innovation frameworks.
Why are so many rural communities resisting the energy transition? Beyond the fact that these decisions are often made in distant urban centres and then imposed on rural regions, it is also because the framing itself is flawed — typically presented as a binary: fossil fuels or clean energy.
Instead, true innovators embrace the “Genius of the AND,” the ability to pursue multiple, sometimes contradictory, objectives at once.
One example I often share is my own experience owning an electric vehicle (EV) for the past four years while living in a coal town in the heart of Saskatchewan’s oil patch. It is an illustrative example for people who subscribe to the “OR” mindset.
I like to point out to both sides of the divide that my EV is made from approximately 30 per cent oil and gas products and 70 per cent mining products. It drives on a road made of oil, and when I plug it into the grid to charge, I am employing a coal worker.
SETH recognizes this complexity. Southeast Saskatchewan is ground zero for the coexistence of legacy and emerging energy systems. It is home to the world’s only operational coal-fired power plant with a CCS facility, a major hub for oil and gas, and the site of expanding geothermal, wind and solar developments. Soon, it will also host two GE Hitachi Small Modular Nuclear Reactors (SMRs).
One project led by SETH that embodies this integration is the coal-to-graphite initiative, known as Prairie Graphite, developed in partnership with George Washington University. This initiative is reimagining lignite coal as a feedstock for battery-grade graphite — positioning Estevan to become one of only two graphite producers in North America.
This innovation is not just economic — it is strategic. In 2024, China produced approximately 78 per cent of the world’s natural graphite, according to the U.S. Geological Survey (USGS), and over 90 per cent of spherical graphite — the form required for lithium-ion batteries. This gives China considerable control over global battery supply chains. The Prairie Graphite project disrupts this dependency and contributes to Canada’s national and energy security.
But the “OR” mindset argues that coal has no future in a clean energy economy. By embracing the “AND,” SETH is helping to turn a perceived liability into a national asset.
Another initiative demonstrating this principle is SETH’s Certified Clean Hydrogen Power Project, developed in partnership with a local First Nation and Hydrogen Principia. This project leverages existing CCS infrastructure to generate low-emission hydrogen.
It utilizes proven gasification processes that produce two liquid streams, hydrogen and COâ‚‚. Because the COâ‚‚ is already in liquid form, there is no need for post-combustion carbon capture; the COâ‚‚ can be directly transported to Whitecap Resources for permanent geological storage.
As a result, the hydrogen produced meets or exceeds the clean fuel standards set by both the U.S. GREET model and Canada’s Carbon Intensity Score for clean hydrogen.
Importantly, because the technology is well established and commercially available, the project’s Levelized Cost of Electricity (LCOE) at Front-End Loading 2 is estimated at 8 to 10 cents per kilowatt hour.
SETH is now pursuing additional partnerships to convert this clean hydrogen into electricity on-site, using existing fuel cell technologies. Once again, this initiative shows how the “AND” approach can generate clean, dispatchable power in a region without access to hydropower.
In April 2025, the Southeast Techhub hosted the inaugural Critical Resources, Innovation, and Technology (CRIT) Conference in Estevan. The event focused on Canada’s future in critical minerals and featured speakers from Arizona Lithium, the Saskatchewan Research Council, and applied researchers exploring coal fly ash extraction and rare earth elements.
One of the conference highlights was a presentation by Zach Maurer of Arizona Lithium. His team is applying oil and gas drilling technologies to access lithium-rich subsurface brines. They are already producing small quantities of lithium carbonate and are nearing the stage where they could provide Canada with a new domestic source of lithium — an essential input for battery manufacturing and energy storage systems.
Following the conference, CRIT initiated Saskatchewan’s first battery cluster session, held on April 30, led by the Battery Metals Association of Canada. The session convened representatives from the federal and provincial government, industry and non-governmental organizations to assess current assets and identify the critical gaps that need to be addressed to strengthen Saskatchewan’s battery supply chain ecosystem.
In this way, CRIT was more than just a conference; it served as a demonstration that small centres can lead national conversations. With more than 150 attendees from across the country, the event underscored Southeast Saskatchewan’s potential not only as a resource extraction region, but as a future hub for value-added processing and technology-driven innovation.
Each June, rural schools celebrate the achievements of the students graduating and heading off to pursue post-secondary education in technology — almost always in urban centres. According to Statistics Canada, more than 60 per cent of rural youth leave their home communities to access technology-focused education. The underlying message is clear: “Your future is not here.”
SETH is working to change that narrative.
Through its partnership with Southeast College, SETH co-developed the Computer Science Training Through Projects initiative. This program enables students to apply their skills by developing real-world solutions for local industries. A prime example is the AI-powered conference app, designed and built by students, that was successfully deployed during SETH’s ICED Rural Conference in the fall of 2024.
In 2025, SETH formally launched R.I.S.E., establishing a dedicated support structure for rural tech startups that includes infrastructure, mentorship and access to funding.
The 2023 rural pitch competition awarded $22,250 in startup funding to two Grade 12 students who designed an automated irrigation system, a practical solution rooted in agricultural innovation. Notably, the program already has three years of secured funding, ensuring sustained support for the next generation of rural innovators.
Innovation is not solely a technical endeavour, it is also psychological. For innovation to be adopted and sustained, people must trust it. SETH actively builds that trust by engaging the public in accessible, community-driven initiatives, including:
These are not superficial initiatives or marketing gimmicks. Rather, they serve as meaningful platforms for education, empowerment, and informed dialogue. By making technology visible, hands-on, and locally relevant, SETH fosters both literacy and confidence in innovation, key prerequisites for long-term community adoption and support.
In April, the University of Regina, Southeast College and SETH signed a memorandum of understanding (MOU) to create the Innovation Centre for Energy Development (ICED). The MOU outlines a five-year commitment to collaborate on opportunities in energy generation and storage, the SMR supply chain, battery supply chains and advanced manufacturing. The partnership will also focus on attracting investment, supporting startups and building a workforce equipped with hands-on, industry-relevant skills.
ICED can be seen as Canada’s National Energy Innovation Centre, amalgamating all the above-mentioned forms of energy generation and storage. But ICED needs policy that provides the resources to make it happen.
Despite its demonstrated success, SETH continues to face significant structural challenges:
SETH has established collaborative relationships with key federal partners, including PrairiesCan, Natural Resources Canada (NRCan), the National Research Council, and Investment Canada. However, meaningful progress will require more than co-operation — it demands stronger alignment, policy flexibility and recognition that a win in Southeast Saskatchewan reverberates across the entire country.
Rural innovation is not a franchise model; it cannot simply be copied and pasted. It can, however, be replicated, if tailored to local assets and realities. What is required is not a rigid blueprint, but an adaptable approach grounded in:
Regional Development Agencies and Community Futures organizations are well positioned to serve as delivery partners. SETH has demonstrated proof of concept; the imperative now is to scale it.
Federal and provincial governments can strengthen rural innovation ecosystems by:
Rural-led, shovel-ready projects are already underway across the country. What remains missing is the political and financial will to unlock their full potential.
Southeast Saskatchewan is not waiting for Ottawa. It is actively building its own future. But both federal and provincial governments have a choice: to observe from the sidelines or to become true partners in this transformation.
Rural Canada is not a peripheral actor in the innovation economy — it is central to it. These regions possess the natural resources, the cultural resilience and the community-driven motivation to lead. With the right support, rural Canada also has the roadmap.
At the head of the Douglas Channel, on British Columbia’s northwest coast, lie the ancestral lands of the Haisla people. Land, water and fishing have long been central to their way of life.
The arrival of European settlers ushered in a period of disease, oppression and discrimination from which the Haisla people are still recovering. But the Haisla have recently taken control of their destiny by dreaming bigger than others thought possible.
The area, which includes the municipality of Kitimat and the Haisla Nation’s Kitamaat Village, has attracted big industrial projects for decades because of its deepwater port that provides ready access to global markets.
The region has been a hub for industrial development since Alcan first arrived in the early 1950s to build an aluminum smelter and hydroelectric facility. More recently, LNG Canada, led by a consortium of companies, has built a $40-billion liquefied natural gas processing and export facility on the doorstep of the Haisla Nation.
The Haisla historically saw little benefit from industry, and significant harm. That changed when they negotiated a share of natural gas from the Coastal GasLink pipeline feeding the LNG Canada terminal and embarked on their own LNG project. Construction of Cedar LNG, a floating LNG processing facility that is majority owned by the Haisla Nation, is now underway and is expected to launch in late 2028, three years after LNG Canada’s project.
As Canada faces a changing trade relationship with the U.S., the prospect of reaching Asian markets is making Kitimat an increasingly appealing location. There have been suggestions of reviving the idea of oil exports from there, a prospect that the Haisla and others in the community say they would oppose.
The Haisla Nation has thrown its support behind the burgeoning LNG industry because it says it displaces coal power in Asia, helping to reduce global greenhouse-Âgas emissions. Others in the community and province have argued that the new projects will hinder the attainment of climate-change goals.
The success of these major projects shows that big things can get built in Canada, and in ways that provide lasting benefits to Indigenous Peoples and limit environmental harm. But the delicate balance achieved may be tested if growth expands.
And some have raised concerns about whether the renewed industrial activity will increase Kitimat’s reliance on a boom-and-bust economy.
