Bank of Canada Governor Tiff Macklem raised concerns on Friday about the potentially disruptive effects of artificial intelligence (AI) on the job market, warning that it might eliminate more jobs than it generates in the long run.
Speaking at the National Bureau of Economic Research’s Economics of Artificial Intelligence Conference in Toronto, Macklem noted, “As AI becomes more integrated into the economy, its transformative effects could result in greater job losses than new opportunities.” He highlighted that individuals displaced by automation might face challenges in finding alternative employment, a significant concern for society as a whole.
Macklem emphasized the growing need to comprehend and address the labor market impacts of AI as it continues to evolve and spread across economies. He also pointed out that AI could influence how businesses price their products, stating, “Evidence suggests that digitally intensive firms adjust their prices more frequently than those that are less digitized.”
Furthermore, he discussed AI’s potential effects on market competition, noting the uncertainty surrounding its outcomes. “AI-focused startups might initially gain market share by undercutting established companies, leading to increased competition and lower prices. However, there is a risk that it could create monopolistic scenarios where a few firms dominate the market, resulting in reduced competition and higher prices,” he explained.
Macklem underscored the importance for central banks to understand AI’s influence on inflation—both indirectly, through overall demand and supply, and directly, via pricing strategies. He urged collaboration among academics, businesses, and policymakers to better grasp and anticipate AI’s impacts.
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