BLOG
products
Solutions
Resources
Canada is heading into the second half of 2026 facing growing pressure on its labour market. U.S. tariffs continue to weigh on trade-exposed sectors including steel, aluminum, automotive, and softwood lumber, with steel and aluminum tariffs now reaching 50 percent. At the same time, the six-year CUSMA review is now approaching, adding another layer of uncertainty for employers already trying to plan around shifting trade rules, input costs, and demand.
At home, the economic signals reinforce the case for action. Business productivity fell again in the first quarter of 2026, marking a second straight quarterly decline. Canada also entered a technical recession after two consecutive quarters of economic contraction, while businesses reduced investments for a fifth consecutive quarter, creating additional uncertainty for employers and workers alike. While employment did rebound in May, with the first significant gain since late 2025, one strong month is not enough to resolve the larger challenge: whether Canada is producing enough value per worker, and enough pathways into productive work, to keep pace.
The federal response has been substantial, and it reflects a real commitment to the workforce side of this challenge. The Workforce Tariff Response is putting $570 million over three years into provincial and territorial training and employment programs, with the goal of helping up to 66,000 workers in vulnerable industries. Ottawa has also launched the first of six planned Workforce Alliances, starting with mining and minerals, backed by an $81 million investment over five years across sectors that together represent more than a third of Canada's GDP and employ approximately eight million people. Alongside this, Team Canada Strong aims to recruit, train, and hire 80,000 to 100,000 new Red Seal skilled trades workers by 2030-31.
For anyone running a workforce system, an employment-services contract, or one of these new alliances, this is a serious undertaking. It changes how outcomes are measured, how partners coordinate, and what the underlying workforce infrastructure needs to support.
It is also a major opportunity, and we can make the most of it by being clear-eyed about what this funding does well and where gaps remain. Much of the response focuses on the supply side: retraining workers, building skills, and preparing people for transition. That work is essential, but only pays off if there are good jobs at the end of the pathway. The next question is whether employers can absorb this talent, whether small and mid-sized firms can recognize transferable skills, and whether workforce partners can connect people to opportunities while those opportunities still exist.
That last capability, matching people to real jobs as quickly as the labour market moves, is the part Canada has the most room to build. It is also where this tariff response can become the start of a more modern workforce system rather than a short-term adjustment.
Workforce programs are often measured by enrollments, completions, and certifications. Employers measure success differently. A hiring manager notices whether a role remains unfilled, whether a hire feels risky or expensive, and whether that person can do the job after a few weeks. A program can meet every target it sets and still fail to translate into hiring if the decision to interview, hire, and retain someone, sits outside the program's field of view.
There is also a question worth asking alongside the training conversation: whether the jobs at the end are the ones worth training for. A RAND Corporation study of the U.S. workforce system found that only about a third of the occupations targeted under WIOA, the main federal workforce law in the United States, were both in demand and high quality. Canada's funding rules are different, but the lesson travels well. Public retraining dollars go furthest when they point people toward roles that are growing, resilient, and able to support a decent living.
This is where small and mid-sized employers matter most. SMEs employ nearly two-thirds of Canada's private-sector workforce, yet many have limited hiring infrastructures. A large company has recruiters, structured interviews, applicant tracking systems, and enough hiring volume to take chances on nontraditional candidates.. A forty-person manufacturer, a regional logistics firm, or a growing construction company usually does not.
An employer may be open to hiring a displaced worker from another industry or a newcomer with international experience, but openness is not the same as capacity. Small firms often lack the time to interpret unfamiliar resumes, assess transferable skills, compare candidates from different backgrounds, or design onboarding for someone who isn’t an obvious fit. When a workforce program ends when someone is "trained," it leaves the hardest part of the hiring process, like screening, vetting, interviewing, and onboarding, to the employers least equipped to handle them.
Tariffs add pressure at both ends. The small firms being asked to retain and retrain staff have limited capacity to absorb disruption. At the same time, the firms expected to hire displaced workers are often small and mid-sized employers in neighbouring sectors with the same constraints. An effective response asks not only whether workers are ready for employers, but whether employers are set up to hire them.
That same lens is what makes the Workforce Alliances so promising. By bringing employers, labour, colleges, training providers, and community partners to the same table, they create a credible way to aggregate employer demand, especially among small firms.
A single small employer cannot build a regional talent pipeline by itself. Fifty employers, working through a sector or regional intermediary, can do something much more powerful. They can identify the roles that are open and worth targeting, agree on what job-ready looks like, share the cost of screening, and commit to interviewing from a common pool of candidates. That is the point where a workforce alliance becomes more than a forum and starts to operate as infrastructure.
Workforce alliances will deliver the most value when they measure success by employer outcomes. Convening partners and mapping pathways are valuable first steps. The ultimate measure of success is whether participating firms are hiring from the talent pool, hiring faster, retaining workers and whether workers are earning more a year later. An alliance that can answer those questions is operating as real workforce infrastructure, and that is a worthwhile bar to set from the start.
The retention challenge is often treated as a separate issue, but it is closely connected to the rest of the workforce system. It also requires some precision, because the common narrative, that skilled Canadians simply leave for the United States, no longer fully fits the evidence. Permanent migration from Canada to the United States has fallen over the past two decades, and since 2018 migration flows between the two countries have been roughly even.
The bigger issue is that Canada does not always retain the people it works hardest to attract. The Institute for Canadian Citizenship's Leaky Bucket research, built on four decades of data, finds that about one in five immigrants leaves Canada within 25 years, with the risk of departure peaking around year five. Highly skilled newcomers are more than twice as likely to leave as lower-skilled newcomers. Some of the weakest retention is in fields Canada most needs, including engineering, information and communications technology, business and finance management, and manufacturing and processing engineering.
Why people leave matters for what we build. Stagnant or declining earnings are strongly associated with onward migration, particularly among immigrants with graduate degrees. The answer is not simply attracting more talent or strengthening settlement services. Many skilled newcomers leave because the jobs, wages, or career trajectories they find do not match the experience they arrived with. That makes retention a job-quality and matching challenge. When skilled newcomers move quickly into roles that align with their skills and experience, Canada turns hard-won talent into lasting contribution. Getting there depends on whether employers can recognize transferable skills, evaluate non-linear career paths, and hire with confidence beyond the resume signals they already know, which is exactly the kind of support a stronger workforce system can provide.
The good-jobs question, the employer opportunity, the alliances, and retention all point in the same direction. Few workforce systems can yet see employer demand, training supply, and job seeker readiness in one place in real time. Fewer still can turn that information into actionable matches for employers, job seekers, and career advisors.
Canada is not short of programs, pilots, partners, or good intentions; what it can build now is the connective tissue between them. A retraining dollar, an alliance, and a job seeker, only become a hire when someone can translate a worker's skills into an employer's needs—and act before the opportunity passes. This is where the next generation of workforce infrastructure can move things forward. Rather than another standalone portal, job board, or after-the-fact dashboard, it can act as a shared intelligence layer across the labour market, connecting employer demand, workforce supply, and decision-making in real time.
That is the problem FutureFit AI is building for. Our work sits in the space between career navigation, skills-based matching, labour market intelligence, employer engagement, and workforce system coordination, which in practice means helping workforce partners a shared real-time view of employer demand, worker readiness and opportunity. Used well, AI does something practical here. It makes sense of messy labour market signals and turns them into decisions about which roles are growing, which skills transfer, which training pathways are relevant, which candidates are strong matches, and which employers could benefit from support to hire from a broader talent pool. It strengthens human judgment rather than replacing it, helping advisors be more effective and employers hire with more confidence, workers see their options faster, small businesses find talent they would have missed, and regional leaders understand whether training dollars are turning into good jobs.
None of this has to wait for the final rules. The starting point is to measure what happens after training. Most workforce programs track enrollments and completions but not whether employers hire, how long roles stay open, whether workers stay or whether they earn more over time. It also means treating employer time as the scarce resource it is, giving small firms one clear way to signal demand and receive qualified candidates rather than asking them to navigate a dozen separate programs.
Workforce Alliances are well positioned to lead this when they are built around employer demand as much as program supply. That means aggregating demand from small employers and investing in the matching that connects workers to real jobs.Tariffs may have forced the moment, but they do not have to define it. The question is no longer whether to fund training; it is whether Canada can build the system that turns training into hiring, hiring into retention, and disruption into durable economic mobility.
.png)
Canada is heading into the second half of 2026 facing growing pressure on its labour market. U.S. tariffs continue to weigh on trade-exposed sectors including steel, aluminum, automotive, and softwood lumber, with steel and aluminum tariffs now reaching 50 percent. At the same time, the six-year CUSMA review is now approaching, adding another layer of uncertainty for employers already trying to plan around shifting trade rules, input costs, and demand.
At home, the economic signals reinforce the case for action. Business productivity fell again in the first quarter of 2026, marking a second straight quarterly decline. Canada also entered a technical recession after two consecutive quarters of economic contraction, while businesses reduced investments for a fifth consecutive quarter, creating additional uncertainty for employers and workers alike. While employment did rebound in May, with the first significant gain since late 2025, one strong month is not enough to resolve the larger challenge: whether Canada is producing enough value per worker, and enough pathways into productive work, to keep pace.
The federal response has been substantial, and it reflects a real commitment to the workforce side of this challenge. The Workforce Tariff Response is putting $570 million over three years into provincial and territorial training and employment programs, with the goal of helping up to 66,000 workers in vulnerable industries. Ottawa has also launched the first of six planned Workforce Alliances, starting with mining and minerals, backed by an $81 million investment over five years across sectors that together represent more than a third of Canada's GDP and employ approximately eight million people. Alongside this, Team Canada Strong aims to recruit, train, and hire 80,000 to 100,000 new Red Seal skilled trades workers by 2030-31.
For anyone running a workforce system, an employment-services contract, or one of these new alliances, this is a serious undertaking. It changes how outcomes are measured, how partners coordinate, and what the underlying workforce infrastructure needs to support.
It is also a major opportunity, and we can make the most of it by being clear-eyed about what this funding does well and where gaps remain. Much of the response focuses on the supply side: retraining workers, building skills, and preparing people for transition. That work is essential, but only pays off if there are good jobs at the end of the pathway. The next question is whether employers can absorb this talent, whether small and mid-sized firms can recognize transferable skills, and whether workforce partners can connect people to opportunities while those opportunities still exist.
That last capability, matching people to real jobs as quickly as the labour market moves, is the part Canada has the most room to build. It is also where this tariff response can become the start of a more modern workforce system rather than a short-term adjustment.
Workforce programs are often measured by enrollments, completions, and certifications. Employers measure success differently. A hiring manager notices whether a role remains unfilled, whether a hire feels risky or expensive, and whether that person can do the job after a few weeks. A program can meet every target it sets and still fail to translate into hiring if the decision to interview, hire, and retain someone, sits outside the program's field of view.
There is also a question worth asking alongside the training conversation: whether the jobs at the end are the ones worth training for. A RAND Corporation study of the U.S. workforce system found that only about a third of the occupations targeted under WIOA, the main federal workforce law in the United States, were both in demand and high quality. Canada's funding rules are different, but the lesson travels well. Public retraining dollars go furthest when they point people toward roles that are growing, resilient, and able to support a decent living.
This is where small and mid-sized employers matter most. SMEs employ nearly two-thirds of Canada's private-sector workforce, yet many have limited hiring infrastructures. A large company has recruiters, structured interviews, applicant tracking systems, and enough hiring volume to take chances on nontraditional candidates.. A forty-person manufacturer, a regional logistics firm, or a growing construction company usually does not.
An employer may be open to hiring a displaced worker from another industry or a newcomer with international experience, but openness is not the same as capacity. Small firms often lack the time to interpret unfamiliar resumes, assess transferable skills, compare candidates from different backgrounds, or design onboarding for someone who isn’t an obvious fit. When a workforce program ends when someone is "trained," it leaves the hardest part of the hiring process, like screening, vetting, interviewing, and onboarding, to the employers least equipped to handle them.
Tariffs add pressure at both ends. The small firms being asked to retain and retrain staff have limited capacity to absorb disruption. At the same time, the firms expected to hire displaced workers are often small and mid-sized employers in neighbouring sectors with the same constraints. An effective response asks not only whether workers are ready for employers, but whether employers are set up to hire them.
That same lens is what makes the Workforce Alliances so promising. By bringing employers, labour, colleges, training providers, and community partners to the same table, they create a credible way to aggregate employer demand, especially among small firms.
A single small employer cannot build a regional talent pipeline by itself. Fifty employers, working through a sector or regional intermediary, can do something much more powerful. They can identify the roles that are open and worth targeting, agree on what job-ready looks like, share the cost of screening, and commit to interviewing from a common pool of candidates. That is the point where a workforce alliance becomes more than a forum and starts to operate as infrastructure.
Workforce alliances will deliver the most value when they measure success by employer outcomes. Convening partners and mapping pathways are valuable first steps. The ultimate measure of success is whether participating firms are hiring from the talent pool, hiring faster, retaining workers and whether workers are earning more a year later. An alliance that can answer those questions is operating as real workforce infrastructure, and that is a worthwhile bar to set from the start.
The retention challenge is often treated as a separate issue, but it is closely connected to the rest of the workforce system. It also requires some precision, because the common narrative, that skilled Canadians simply leave for the United States, no longer fully fits the evidence. Permanent migration from Canada to the United States has fallen over the past two decades, and since 2018 migration flows between the two countries have been roughly even.
The bigger issue is that Canada does not always retain the people it works hardest to attract. The Institute for Canadian Citizenship's Leaky Bucket research, built on four decades of data, finds that about one in five immigrants leaves Canada within 25 years, with the risk of departure peaking around year five. Highly skilled newcomers are more than twice as likely to leave as lower-skilled newcomers. Some of the weakest retention is in fields Canada most needs, including engineering, information and communications technology, business and finance management, and manufacturing and processing engineering.
Why people leave matters for what we build. Stagnant or declining earnings are strongly associated with onward migration, particularly among immigrants with graduate degrees. The answer is not simply attracting more talent or strengthening settlement services. Many skilled newcomers leave because the jobs, wages, or career trajectories they find do not match the experience they arrived with. That makes retention a job-quality and matching challenge. When skilled newcomers move quickly into roles that align with their skills and experience, Canada turns hard-won talent into lasting contribution. Getting there depends on whether employers can recognize transferable skills, evaluate non-linear career paths, and hire with confidence beyond the resume signals they already know, which is exactly the kind of support a stronger workforce system can provide.
The good-jobs question, the employer opportunity, the alliances, and retention all point in the same direction. Few workforce systems can yet see employer demand, training supply, and job seeker readiness in one place in real time. Fewer still can turn that information into actionable matches for employers, job seekers, and career advisors.
Canada is not short of programs, pilots, partners, or good intentions; what it can build now is the connective tissue between them. A retraining dollar, an alliance, and a job seeker, only become a hire when someone can translate a worker's skills into an employer's needs—and act before the opportunity passes. This is where the next generation of workforce infrastructure can move things forward. Rather than another standalone portal, job board, or after-the-fact dashboard, it can act as a shared intelligence layer across the labour market, connecting employer demand, workforce supply, and decision-making in real time.
That is the problem FutureFit AI is building for. Our work sits in the space between career navigation, skills-based matching, labour market intelligence, employer engagement, and workforce system coordination, which in practice means helping workforce partners a shared real-time view of employer demand, worker readiness and opportunity. Used well, AI does something practical here. It makes sense of messy labour market signals and turns them into decisions about which roles are growing, which skills transfer, which training pathways are relevant, which candidates are strong matches, and which employers could benefit from support to hire from a broader talent pool. It strengthens human judgment rather than replacing it, helping advisors be more effective and employers hire with more confidence, workers see their options faster, small businesses find talent they would have missed, and regional leaders understand whether training dollars are turning into good jobs.
None of this has to wait for the final rules. The starting point is to measure what happens after training. Most workforce programs track enrollments and completions but not whether employers hire, how long roles stay open, whether workers stay or whether they earn more over time. It also means treating employer time as the scarce resource it is, giving small firms one clear way to signal demand and receive qualified candidates rather than asking them to navigate a dozen separate programs.
Workforce Alliances are well positioned to lead this when they are built around employer demand as much as program supply. That means aggregating demand from small employers and investing in the matching that connects workers to real jobs.Tariffs may have forced the moment, but they do not have to define it. The question is no longer whether to fund training; it is whether Canada can build the system that turns training into hiring, hiring into retention, and disruption into durable economic mobility.
.png)
.avif)
