Representing over 2.4 million jobs—11.7% of the workforce—Canada’s digital economy is a core driver of national economic development.
However, ICTC’s Digital Economy Pulse: Productivity and Employment Trends in Canada highlights that the digital economy’s high average employment growth over the last decade masks larger year-to-year volatility, with rapid shifts in talent and skills demand.
Between 2020 and 2021, employment surged as the pandemic accelerated demand for digital tools and services, prompting organizations to increase hiring to meet their needs. However, as that initial surge in digital tools and services declined, the demand for labour shifted. The large-scale layoffs that followed between 2022 and 2024 reflected several factors, including over-hiring by technology companies during the pandemic, declines in product and service demand after the recovery, and a tightening of venture capital funding. Many displaced workers found opportunities outside the traditional tech sector.
Labour market demand in the digital economy has become increasingly specialized
While earlier phases of Canada’s digital transformation focused on broad-based hiring, rapid technological development and adoption across industries has created sustained demand in niche fields such as artificial intelligence (AI), cybersecurity, and cloud computing. At the same time, companies are increasingly seeking mid-career or senior talent. This combined demand for specialized technical knowledge and professional experience creates unique barriers for early-career professionals and recent graduates as they enter the workforce.
New barriers for early-career professionals and recent graduates
The rising demand for work experience means that entry-level job seekers and university graduates face unique challenges. With post-secondary education and technical skills now a baseline expectation rather than a differentiator in hiring decisions, soft skill development and experiential learning will be crucial to ensuring labour market competitiveness.
The unique value that mid- and late-career talent bring is their ability to understand, apply, and integrate technical skills, leadership, and business acumen across a variety of real-world settings. Employers are looking for candidates who can “hit the ground running” and critically think through practical technical problems, underscoring the importance of moving beyond foundational technical skills and accruing hands-on experience through activities such as co-op placements and open-source, professional projects.
Job posting data and employer insights highlight that employers are increasingly seeking candidates who can demonstrate skills such as teamwork, emotional awareness, and curiosity alongside technical proficiency. Moving forward, the combination of these traits, along with demonstrable applied experience, will increasingly determine employability, influencing which candidates can successfully transition into entry-level roles in today’s digital economy.
To successfully navigate this shift, businesses must invest in talent development and internal upskilling
This shift in expectations affects employers navigating the digital economy. Although the supply of entry-level digital talent is plentiful, the demand for niche skills has grown faster than the labour market can adjust. This presents a challenge for employers – despite the abundance of candidates, many lack the specific combination of advanced technical skills and industry knowledge needed to meet current demands.
As a result, businesses face a dilemma. While technical skills alone are not enough for early-career professionals to secure technical roles, those positions that do require technical expertise are often concentrated in emerging, specialized fields. Employers that effectively manage this challenge will be those that invest in talent development pipelines, such as co-op and internship programs, which engage younger candidates. Additionally, fostering a supportive workplace culture and providing mechanisms for internal upskilling and professional growth are essential for retaining existing talent.
Canada’s long-term competitiveness hinges on its ability to transform early career talent into experienced professionals
If early-career professionals do not receive adequate support, Canada risks underutilizing a vital part of its current and future digital workforce. While Canada’s digital economy continues to grow, the challenges of matching employee skills with employer needs also increase. Therefore, to effectively harness technology and innovation, Canada’s digital economy needs more than just growth; it requires sufficient channels to reduce labour market friction and better align the supply of technical talent with the sector's evolving needs.
Three evidence-based ways to achieve this include:
- Invest in work-integrated learning pathways for new graduates: Develop and enhance pathways from education to employment so graduates can acquire practical experience. While post-secondary programs have traditionally focused on academic learning and skills, industry demands have evolved. Integrating experiential learning into academic programs through co-ops, internships, and mentoring will significantly help new graduates transition into careers in the digital economy.
- Prioritize long-term, adaptable learning through investments in upskilling and continuous learning: Technological developments are rapid. Providing sufficient support for mid-career workers and career transitioners through upskilling and continuous learning will be vital for Canada to stay competitive in key digital areas.
- Recognize and utilize international talent: Leveraging the pool of internationally educated professionals already living in Canada will help address current gaps in mid- and late-career roles. Official recognition of international credentials and the creation of pathways for their integration into the Canadian workforce will allow newcomers to share their expertise and help fill vital gaps in Canada’s digital economy.
→ Read more about productivity and employment trends in Canada’s digital economy in Digital Economy Pulse: Productivity and Employment Trends in Canada.
Chris Lindstrom is an Economist at the Information and Communications Technology Council (ICTC).
