Gen AI holds the potential to get Canada’s economy growing again through accelerated innovation and productivity. The big question is whether Canadian businesses and public sector organizations will seize the moment, according to a new report by RBC Economics.
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“Canada’s productivity rate—the amount we produce for each hour worked—has been declining in recent years, and is now 30% below U.S. levels. A key reason is a decline in capital spending and investments in intellectual property (which is now about 40% less than the U.S.). Our manufacturing sector invests just a quarter of what the U.S. does by the same measure. Investing in Gen AI, along with other technologies, would not only help close the productivity gap; it could add to higher wages and help Canada compete in an increasingly digital and data-driven world,” said the report.
“In business, such investments can make workers—be they white collar, green or blue—more productive by saving time and streamlining routine tasks. A study by Microsoft found coders who used Gen AI tools could complete tasks in 56% less time than non-users, and the time taken for writing tasks was reduced by more than a third (37%). Estimates for how much time it could save range from 100 to 125 hours per worker per year, boosting labour productivity by 8% by 2030.
“What business wants from Gen AI is to help save employees time to work on more important tasks and create more value. A survey of Canadian start-ups by the Conference Board of Canada found 63% said implementing AI would not reduce headcount and 30% said they weren’t sure. (Two-thirds said it has already made them more competitive).
“The productivity boost from Gen AI could add $180 billion per year to the Canadian economy by 2030, with another $ 5 billion coming from the creation of new Gen AI products and services. The Conference Board sees it adding almost 2% to Canada’s gross domestic product with tech centres like Toronto, Waterloo and Vancouver gaining the most.”
Why then are Canadian businesses so far behind in adopting Gen AI?
“A recent report from the Canadian Chamber of Commerce revealed that one in seven Canadian businesses, or 14%, are using Gen AI or have plans to use it soon. Almost three out of four, or 73%, are not even considering it yet. The reasons are what one might expect for any revolutionary new technology—cost, concerns over data safety, doubts that workers have the skills to use it, and fear of making a mistake. Fear of AI is not limited to those who run businesses or public sector companies. Polling shows less than a third of Canadians (32%) trust AI systems, compared to 39% globally and 40% in the U.S. Only 28% of Canadians believe current regulations are sufficient to make AI use safe,” said RBC.
“The risks may be too big to ignore, but so too, are the benefits. To be part of the Gen AI generation, Canadian organizations will need to close the “readiness gap.” Because ready or not, the next technological transformation is coming. It may already be here.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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