The number of entry-level job openings in the U.S. has fallen by about 35% since January 2023, according to data from labor research firm Rebellio Lab.
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As more and more companies brazenly declare that they will use AI to reduce their workforce by 2025, the first jobs are likely to be junior positions and entry-level jobs.
Graduate school programs and internships are in danger of becoming a thing of the past as major companies accelerate the introduction of AI and reduce headcount. Amazon recently laid off 14,000 employees as it looks to invest in its “biggest bet,” including generative AI.
Other companies relying on AI to reduce headcount include Accenture, Salesforce, Lufthansa and Duolingo.
There are currently growing concerns about whether AI can do the jobs of new employees and graduates, raising barriers to entry.
In fact, a new survey of 2,019 senior HR professionals and decision makers by the Chartered Institute of Personnel and Development (CIPD) found that 62% of UK employers expect junior, administrative, managerial and managerial roles to be most likely to be lost to AI.
And further data shows that the number of graduate student roles has declined over the past year. The number of entry-level job openings in the U.S. has fallen by about 35% since January 2023, according to data from labor research firm Rebellio Lab.
In the UK, the Student Employers Association’s annual Student Recruitment Survey found that there were 1.2 million applications for 17,000 postgraduate vacancies in the UK, highlighting intense competition and the limited number of positions available to young people.
As companies cut back on hiring of junior employees, Fabian Stefani, assistant professor of AI at the Oxford Internet Institute, said hiring entry-level employees is actually an “investment” in the future.
Despite their propensity to make mistakes and the need for hands-on training, experts tell CNBC why replacing junior employees with AI could be counterproductive for companies in the long run.
“Future Leadership”
Chris Eldridge, CEO of UKI and North America at technology recruitment agency Robert Walters, says healthy organizations develop their own talent and it’s not practical to hire externally for every position.
“If you eliminate too many junior roles, you can deplete your internal talent pipeline,” Eldridge said.
“Entry-level and junior-level roles are the training ground for future leaders, and I believe that cutting too many junior positions will create a talent bottleneck at some point in the business, which will invariably lead to increased hiring costs.”
If a company does not have enough young talent, it will be forced to hire externally in the future, creating a “talent doom cycle” that increases costs, increases salary inflation, and becomes dependent on external talent markets.
“As a principal at a talent consultancy, my advice to all organizations is to have several routes to market for talent and create one of your own,” Eldridge said.
“It’s also very important to retain talent through training development and the opportunities we can offer people…but if you cut off the pipeline of bringing junior or entry-level talent into your organization, you’re missing out on an important aspect of growth,” he added.
“Bridge between generations”
Stephanie from the Oxford Internet Institute says companies that don’t develop young talent will ultimately lose touch with consumers and mainstream culture.
“Companies are part of society, and if they don’t properly reflect society, it’s very hard to imagine business models and products that don’t require this generational bridge… and young people bring fresh ideas that bring new perspectives,” Stefani told CNBC Make It.
Companies that fail to adapt and hire younger employees “will end up looking like nursing home companies,” Stefani said. “It’s like a company full of people who are about to retire, because they might not have the edge or the vibe that you need to bring new products to market.”
Eldridge agreed that while there is a stereotype that all great ideas come from the top, “a very healthy percentage of great ideas within a company come from people within the first two to three years of being in the organization, because they’re looking at it with fresh eyes.”
A further advantage of having young people in an organization is that it provides an opportunity for reverse mentoring, especially since young people bring important knowledge about technology and losing it would be a “real threat” to the organization.
“If something erodes the opportunities for two-way instruction and two-way knowledge transfer, you’re going to see a decline in knowledge within the organization and a gap in the organization,” he said.
Cloudflare co-founder and CEO Matthew Prince told CNBC’s “Worldwide Exchange” last week that the tech company plans to hire 11,000 interns for the AI era to not only improve the next generation’s skills but also bring in fresh new ideas.
“A 50-year-old CEO like me can’t tell companies how to use AI. We need to learn from the next generation,” Prince said.
“Carrier of culture”
According to Stephanie, “tacit knowledge” is an important element in keeping an organization healthy. This refers to the tacit, tacit information about a company’s culture shared by colleagues.
“There’s a lot more to making a company work than I can write about,” he says. “They come out of a network of people, people who sometimes sit in the cafeteria and say, ‘I’ve been at this company for 25 years, so I can explain to you what’s going on and why X is having problems with Y.’
“This is a type of corporate wisdom, tacit knowledge, that is the lubricant for a company’s economic health,” he said.
Robert Walters’ Eldridge added that young people are sponges and “absorb the best of business,” including this kind of tacit knowledge that can only be transferred through people.
“They are also the carriers of the culture of the future. So if we don’t take that group there, what does that mean in terms of culture in the future?”
“I think companies rely on that upward pressure. When you bring in a group of inexperienced people, they’re hungry and they want to learn. They demand so much from the organization and sometimes test them and keep the company on their toes. Without that, it can have a negative impact on the culture and performance of the organization,” Eldridge added.
