With one of the worst productivity crises in the G7, Canada is banking on AI to turn things around. So far, it hasn’t gone to plan.
Driving the news: Despite AI adoption doubling in the past year, Canada’s labour productivity grew by just 0.2% in the first quarter of the year, according to new Statistics Canada data. Productivity in the services sector, which includes finance, consulting, and tech companies, declined by 0.5%.
Why it matters: Low productivity is the Achilles heel of the Canadian economy, and AI has been hailed by many as the cure. Some forecasts expect AI to boost GDP by up to 2%, but, right now, corporate adoption isn’t translating to productivity gains.
- In a survey last year, 77% of workers said AI tools made them less productive, citing blocks like time wasted reviewing AI-generated content or learning new systems.
- More recently, some companies, like fintech Klarna, have been walking back their drastic shift to AI after experiencing work quality issues.
Why it’s happening: Only 1% of companies in the U.S. that have invested in AI say they’ve scaled it up successfully. Some experts argue that the tech won’t increase productivity if it's still in the pilot phase or is only used in small parts of a business.
Bottom line: As many people in the industry are quick to point out, it's still early to judge AI’s impact. Still, given that companies shovelled over US$250 billion into AI just last year, pressure is mounting to prove that the pricey tech can deliver results.—LA