What’s actually happening with entry-level and graduate jobs?
The rapid advancement and adoption of AI is reshaping the labour market, with implications for workers across sectors and career stages, but especially so for young people entering the workforce. While AI offers opportunities to enhance productivity and streamline operations, its impact on entry-level roles is becoming a growing topic of conversation with increasing concerns about the future of early careers.
Entry-level and graduate roles serve as a foundation for career development, but appear to be at risk. Over recent months, there has been a consistent stream of reporting around declines in these roles, and attributing much of the blame to automation and AI.
It is important to remember that these junior roles are not just about completing tasks, but about building experience, developing skills, and progressing into leadership and management roles. An age-diverse workforce is also one that is reflective of society, and young people are sources of fresh ideas and knowledge that can drive organisational and product innovation.
A decline in these roles and opportunities would threaten the UK’s talent pipeline, undermining efforts to improve social mobility and workforce diversity, with implications for firm performance. Without a robust internal talent pipeline that creates the senior professionals and leaders of the future, the result will likely be an increase in hiring costs.
At the same time, young people are navigating a labour market that increasingly values human competencies (‘soft skills’), AI literacy and digital fluency – with AI changing the expectations of employers, and a new generation of workers entering the workforce with different expectations of work.
But is reporting of an entry-level job-pocalypse accurate or hyperbole? Is AI really to blame? How are employers responding to AI and what do labour market trends mean for policy? In this article, techUK seeks to answer these questions.
- Entry-level and graduate roles are under pressure, with data from Adzuna showing UK entry-level postings down nearly a third since ChatGPT launched; apprenticeships show growth as graduate hiring falls, but competition for fewer roles is intensifying.
- AI and economic factors are impacting hiring, as automating routine tasks prompts some employers to consider cutting junior roles or redesign them for creativity, strategy, and higher-value work – while rising employment costs and low economic confidence drive hiring caution.
- Skills and expectations are shifting, with rising demand for AI literacy and soft skills, gaps between employer expectations and young people’s preparedness for work, and a growth in skills-based hiring – requiring coordinated action from employers, policymakers, and education.
The state of entry-level jobs
- AI is increasingly able to take on many tasks that used to be done by junior staff.
- Employers are more cautious about hiring due to rising costs and low confidence in the economy; measures in the Employment Rights Bill and potential tax rises in the upcoming budget pose further risks
- Looking ahead, ISE data says graduate hiring is forecast to fall further in 2025/26, mainly due to sharp cuts by a few large employers.
- Competition for roles is increasing as more candidates apply for fewer positions.
- However, according to ISE data, while job postings for graduates have dipped by around 8%, opportunities like apprenticeships show some growth.
- McKinsey research shows a similar drop in overall online job postings, with more AI-exposed sectors seeing a higher reduction.
- Data from Adzuna shows a drop of nearly a third in UK-entry level job postings since ChatGPT launched.
According to the World Economic Forum, AI is increasingly capable of performing tasks traditionally assigned to junior staff, around 50-60% of such tasks, from scheduling and data cleaning to customer service and basic coding.
On the surface, this shift appears to be reflected in hiring trends. Adzuna has seen a 30% drop in UK entry-level job postings since ChatGPT’s launch, and it has been reported that graduates are facing the toughest job market since 2018. This chimes with McKinsey research that reported online job advertisements fell by 31% since the three months ending in May 2022 and that roles expected to be heavily affected by AI, in sectors like technology, saw a higher reduction (38%) in online job advertisements than those with low exposure (21%).
However, the picture is nuanced. Data from the Institute of Student Employers – which tends to reflect insights from larger businesses with dedicated graduate and apprenticeship programmes – graduate hiring has fallen by 8% year-on-year, but apprentice hiring increased by 8%, resulting in an overall drop in 5% in the entry-level job market. Indeed, there is evidence of some employers shifting their focus on early careers towards apprentices. They caveat these findings by noting that trends vary between sectors and employers; although 42% reduced graduate hiring and 40% school/college leaver hiring, over a third increase hiring across both pathways.
Moreover, their data identifies significant increases in application volume. They find a 44% increase, following the 59% increase the ISE reported in 2024, suggesting that growing competition, reductions in academic requirements, and the ease of online technology are driving increased applications. Looking ahead to 2025/26, they forecast a 7% reduction in graduate hiring owing to sharp declines by small numbers of large employers, while among other employers such hiring is forecast to grow by 1%.
In any case, a shifting graduate labour market is not unusual, according to techUK member Bright Network that connects graduates and young professionals to employers, and fluctuates by around 10-15%. While these fluctuations in the graduate job market are not uncommon, AI is adding a new dimension to the debate, and any shifts require careful monitoring.
Indeed, hiring trends are also being impacted by macro trends, broader economic conditions and the hiring environment. There is a need to consider that we have been seeing a correction in the labour market since the pandemic spurred a huge growth in hiring – meaning not just a correction hiring trends but also more candidate re-entry into the labour pool.
A recent report by the CIPD found that 61% of employers plan to recruit staff in the next three months, compared to 67% a year ago, with hiring intentions lower in the private sector (58%). There are clear sectoral differences, with positive employment intentions reported in IT and other professional and scientific services. But recruiters continue to highlight weak confidence in the economy and higher payroll costs, with 84% of UK businesses saying their employment costs had risen since NIC changes took effect in April, and a third saying they had risen by a large extent.
Latest information from the ONS found unemployment had reached 5%, the highest level in 4 years, while HMRC figures note the largest drops in payrolled employment has come in sectors including wholesale and retail and IT. The data appears to suggest the NI increase for employers – along with changes to the minimum wage – is being met with cuts to staffing. Further measures set to be introduced in the Employment Rights Bill and any potential tax rises in the upcoming budget may risk exacerbating hiring caution among firms that are already concerned about the costs of employment.
The impact of AI on entry-level and graduate jobs
- AI adoption is accelerating among businesses, and some say AI is allowing them to cut employee numbers.
- Larger organisations are more likely to report an expectation that they will reduce headcount due to AI than SMEs, especially in sectors like finance and IT.
- AI is redistributing tasks, changing how workers spend their time and the roles that comprise the workforce.
- Some employers are bypassing traditional entry-level pathways, hiring graduates directly into more advanced roles, while others are redesigning junior positions to focus on creativity and strategy.
Over a third of SMEs say they are now actively using AI, and 24% say they plan to adopt it in the future. In the past year, AI adoption by UK businesses has grown by 33%, and 52% of them are now using AI. In the context of AI adoption, skill gaps, and a challenging economic and hiring environment, employers may be more likely to attempt to fill productivity and talent gaps with technology.
The World Economic Forum’s Future of Jobs Report 2025 noted that 40% of employers expect to reduce their workforce where AI can automate tasks. Another study of global business leaders by the BSI found that 41% of bosses said AI was allowing them to cut the number of employees, nearly a third said their organisation was looking at AI solutions before considering hiring a person, and two-fifths said entry-level roles had already been reduced or cut as a result of efficiencies made by using AI tools.
Further data from the CIPD suggests that in over a quarter of larger UK businesses, there is an expectation that headcount will be reduced due to the impact of AI, and junior roles are most likely to be affected. In SMEs, this is expected to be the case for just 9%. For employers who said AI would reduce their headcount, a quarter said the reduction would be of more than 10%. Some sectors are more exposed to these potential shifts than others, with employers in financial services (37%) and IT (26%) most likely to report that they will reduce headcount.
However, there is also research that suggests AI is positively impact hiring and jobs. A global study by Access Partnership and LinkedIn reported that a third of businesses planned to increase hiring and expand headcount, while another third planned to focus on retention, with growing demand for technical, creative and customer-facing roles. An FDM Group survey found only 2% of organisations expected a decline in graduate roles because of AI, indicating their intent, and that other factors are likely to be at play.
The ISE’s Generative AI Susceptibility Index (GAISI) finds that a third of graduate job tasks can already be sped up by chatbots, with more likely as AI tools embed into everyday systems. Tech and science roles are most exposed, but this is typically about automating tasks and not entire roles. Though GenAI is particularly powerful in boosting the productivity of less-experienced staff, meaning employers may achieve the same output with fewer junior hires.
Indeed, the rise of AI is driving other trends for jobs and tasks, reshaping workforce composition and task allocation. IBM replaced hundreds of HR roles with its AskHR agent (automating 94% of routine tasks) while expanding hiring in programming and sales – increasing headcount. KPMG's AVA platform, used by over 15,000 employees, reduces document generation from 3 hours to 15 minutes, freeing professionals for strategic tasks. At Lloyds Banking Group, GitHub Copilot halved the time engineers needed to convert legacy code, while Microsoft 365 Copilot is reducing administrative overhead, enabling more "face-to-face time" for building new ideas, products, and propositions. Each demonstrates AI augmenting productivity by automating routine, high-volume work while humans focus on judgment and strategy.
Some employers are also hiring graduates directly into higher-level roles, bypassing traditional entry-level pathways. A UK survey found that 73% of HR professionals had done so, citing AI’s ability to automate routine tasks. Others are using AI to enhance junior roles, rather than eliminate them. 24% of HR professionals said they have reimagined entry-level roles to be more strategic and creative, leveraging the benefits of AI to enable a greater focus on higher value work, and 24% reported that AI reduced the experience required for such positions, potentially broadening access.
This demonstrates the potential for employers to reimagine entry-level opportunities, deploying technology like AI and changing the complexion of these roles to upskill and train young people into more senior positions. Early career opportunities will need to continue to facilitate development in different domains, but also foster core human skills like critical thinking, collaboration and leadership which hold enduring importance amid automation, as well as the skills to use AI effectively.
Perspectives on skills and work
Employers:
- Businesses are seeing productivity gains from AI but are slow to invest in upskilling, leaving a gap between tech adoption and workforce readiness.
- Demand for AI and digital skills is rising, while some traditional junior tech roles like those in software engineering are declining.
- IT and data, and engineering, remain areas where employers struggle to meet their skills needs.
- Employers report ongoing challenges in recruiting young talent with the right mix of technical and human skills.
- There’s a perceived mismatch between young people’s preparedness for work and employer expectations, especially in soft skills and collaboration.
- Skills-based hiring is becoming more common, with many employers removing degree requirements and increasing their focus on soft skills
66% of UK businesses are already experiencing notable productivity improvements from AI, however this is not translating into AI upskilling for workers. Only 38% of UK organisations are prioritising training in AI, with implications for the rollout of internal AI projects – highlighting how people and skills remain a key part of delivering on the promise of AI. In response to these shifts, Skills England has launched an AI Skills Framework that maps competencies across three levels: entry-level, mid-level, and managerial and includes technical, responsible and ethical, and non-technical skills.
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We know the value of AI skills. A recent report by PwC found that workers with AI capabilities were paid 56% more than those without, a sharp increase from 25% the year before. Interestingly, LinkedIn data covering EMEA shows that while demand for junior software engineers is weakening, demand for AI savvy developers and engineers far outstrips supply – and demand for broader AI literacy skills like prompt engineering has risen by more than 70% across job fields. FDM Group research reported that 54% of organisations think AI skills will underpin all early-career roles. This signals that employers are willing to invest in talent that can help and them navigate the AI transition.
Competition for talent remains a concern. Although a report from ManpowerGroup showed that businesses are reporting a decrease in skills shortages in 2025 compared to 2024 (80%), 76% still said they had difficulty recruiting due to skills gaps. Hiring talent with IT and data skills, as well as those with skills in operations and logistics and engineering, are areas where businesses are having the most difficulty.
When it comes to young people and work, according to a study by The Open University from 2024, around half of employers are struggling to recruit and retain young people in the workplace – and around three quarters have seen a shift in young people’s workplace values. The study sheds interesting light on employer’s opinions on young people’s preparedness for work. 58% of leaders said that employer expectations and young people’s skills are misaligned – due to a perceived decline in both technical (55%) and soft skills (54%).
In an AI-enabled future, soft skills have an enduring importance, because technology can automate tasks, but not human judgment, empathy, and collaboration. Skills like communication, adaptability, critical thinking, and creative problem-solving enable workers to interpret and actualise AI outputs, build trust, and navigate complex challenges.
This perceived skills mismatch is attributed to a number of factors: a lack of work experience due to the pandemic, a lack of social, work and study interaction due to Covid-19, and the impacts on collaboration in remote and hybrid work settings.
Employer hiring shifts are taking place in light of an increasing emphasis on skills. Skills-based hiring is growing in popularity, with AI tools being deployed to support hiring managers. One report found that 77% of employers now use skills tests for candidates, saying these are an improvement on CVs in predicting job success, and half have removed degree requirements for roles. The same report found that soft skills are critical, with 69% using those skills tests to assess them, and 60% saying the importance of soft skills had grown in the last five years.
Young people:
- Gen Z values wellbeing, flexibility, and purpose-driven work over traditional career goals like leadership positions.
- Young people expect employers to align with their ethics and provide mental health support and learning opportunities.
- Creativity is seen as essential for career success, but many graduates wish they’d developed strong creative skills.
- Young people are embracing AI tools for work and career planning, with many using generative AI for advice and applications.
- Despite disruption, Gen Z remains optimistic and proactive about upskilling, though AI is beginning to influence career choices and behaviour.
As AI reshapes the workplace, young people are engaging with the implications and re-evaluating what they want from their careers. Gen Z, in particular, is entering the labour market with clear expectations around wellbeing and purpose.
They expect their employers to provide mental health support, flexible work and an open culture. They want work that is purpose-driven and transparent, with nearly 90% of Gen Z and millennials saying it is essential to work for a company that shares their ethics, and over half of Gen Zs saying they’d declined work tasks or projects because of their values.
Moreover, they place a greater emphasis on work-life balance and learning and development when choosing their employer, with just 6% of Gen Z and millenials saying their primary career goal is reaching a leadership position. Interestingly, Gen Z workers are also those most likely to say they will seek greater pay and rewards, or change roles, in the next year.
Creativity also stands out as a priority. According to Canva, 77% of recent graduates view creativity as essential for securing a job, and 56% wish they had developed stronger creative skills during university. Notably, while 64% of graduates feel well-prepared for the workforce, only 44% of hiring managers agree, revealing a gap between graduate confidence and employer expectations
As for AI, over half of Gen Z workers view AI as key to their job functions, and a third say AI tools improve their experience of work. Graduates are also using it to navigate careers, around a fifth had used generative AI for careers advice, with 84% saying they were helpful. In line with findings on application volumes, a quarter said they are applying for as many jobs as possible. And among teenagers, two thirds of those aged between 13 and 18 report using generative AI.
Despite AI disrupting work, PwC’s survey found that Gen Z are around twice as optimistic as Gen X when it comes to career prospects, and also more likely to upskill; nearly half have learnt new career-relevant skills in the past year. However, AI is changing behaviours. According to a Prospects survey, 1 in 10 graduates have changed career plans in response to AI – and 43% already wanted to leave their current employer.
How do we respond?
It is clear that work is changing. Expectations of employers, employees and young people entering the workforce are evolving in response to AI. Job roles and the tasks within them are shifting as skills demands change. Responding to these dynamics requires attention on multiple fronts.
Balancing apprenticeships and modular learning: Apprenticeships and vocational training offer a structured route into employment, while flexible bite-sized learning options also allow workers to upskill or reskill quickly as roles change. The Lifelong Learning Entitlement and the Growth and Skills Levy are critical in this context.
Addressing hiring caution and cost pressures: Efforts to reduce employment costs and encourage hiring must be considered to avoid unintended impacts on early-career opportunities.
Embedding AI literacy and digital skills: Integrating AI literacy – considering Skills England’s framework – and digital fluency into education and workplace training ensures young people can work effectively alongside technology and adapt to human-AI workflows.
Promoting essential ‘soft’ skills: Prioritising skills like communication, adaptability, critical thinking, and creative problem-solving are key. These human competencies remain critical in an AI-driven world and enable workers to navigate change, as well as interpret and apply technology outputs.
Safeguarding early-career opportunities: Employers should consider how to foster their talent pipeline and support young people into the workforce, such as through reimagining junior roles to focus on strategic and creative tasks, preserving experiential learning, and ensuring initiatives like employer academy programmes are supporting young people and graduates as much as career changers.
Aligning education, training and industry needs: There is a mismatch between what students learn and what businesses need, particularly for tech like AI. Strengthening collaboration between educators and employers can help align curricula with emerging skills demands. Industry-led projects and internships can offer students real-world exposure.
Improving career guidance: Modernising career services through the better use of AI tools and personalised advice can help young people navigate a changing labour market and identify pathways into growth sectors.
Embedding values: Employers should be thinking about how they integrate wellbeing, flexibility, and purpose into early career programmes.
Monitoring shifts: Government will need to ensure it has the right mechanisms in place to track labour market trends and AI’s impact on entry-level roles, using data to inform policy.
Looking ahead
The entry-level and graduate job market is being shaped by multiple forces: economic conditions, employer cost pressures and the accelerating adoption of AI. While headlines often frame this shift as an AI-powered crisis, at present, the reality is more nuanced: roles are shifting and new pathways such as apprenticeships and skills-based hiring are gaining traction.
Though a number of factors are at play now, it appears that AI is likely to have a growing impact on these jobs roles in the not too distant future, particularly in larger organisations – but it also creates opportunities to redesign junior roles and unlock higher-value work. The technology sector, in particular, has been grappling with long-standing skills gaps that will only worsen without investment in early career talent.
Responding effectively means safeguarding early career routes, encouraging hiring, developing digital and soft skills, and aligning education with industry needs. These steps will help ensure that young people can thrive in a changing labour market and that the UK maintains a strong, diverse talent pipeline.
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Authors
Jake Wall
Policy Manager, Skills and Future of Work, techUK
Jake has been the Policy Manager for Skills and Future of Work since May 2022, supporting techUK's work to empower the UK to skill, attract and retain the brightest global talent, and prepare for the digital transformations of the future workplace.
Previously, Jake was the Programme Assistant for Policy. He joined techUK in March 2019 and has also worked across the EU Exit, International Trade, and Cloud, Data Analytics and AI programmes.
He also holds an MA in International Relations from the University of Sussex, as well as a BA(Hons) in International Politics from Aberystwyth University. During his time at Aberystwyth University, he won the International Politics Dissertation Prize.
- Email:
- [email protected]
- LinkedIn:
- www.linkedin.com/jwwuk
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