Factors behind entry-level job decline

“The industry’s obsession with hiring bright-eyed grads right out of college is colliding with new realities: smaller funding rounds, shrinking teams, fewer new grad programmes, and the rise of AI,” it says. “Everyone took a hit in 2023, but while hiring bounced back in 2024 for mid- and senior-level roles, the cut keeps getting deeper for new grads.”

When combined with falling investment in training, this scenario is “creating fierce competition for the few entry-level jobs that remain”, the report points out. One unfortunate upshot here is that “companies are posting junior roles but filling them with senior individual contributors – a phenomenon known as the experience paradox”.

In other words, the research says, although AI is undoubtedly replacing some routine tasks, the “real story is more nuanced”.

“The bigger driver may be the end of the ‘free money madness’ driven by low interest rates that we saw in 2020-2022, along with the over-hiring and inflation it led to,” it adds. “Now, with tighter budgets and shorter runways, companies are hiring leaner and later.”

On the other hand, the study indicates, there is also a fundamental “hiring reset” taking place: “As AI tools take over more routine, entry-level tasks, companies are prioritising roles that deliver high-leverage technical output. Big Tech is doubling down on machine learning and data engineering, while non-technical functions like recruiting, product and sales keep shrinking, making it especially tough for Gen Z and early career talent to break in.”

The result of a market correction

Andy Heyes, managing director of IT recruitment consultancy Harvey Nash for the UK, Ireland and Central Europe, is seeing similar shifts, but he does not believe it is any single factor causing the squeeze either.

“Government policy on things like increasing National Insurance hasn’t helped the jobs environment and has hit business quite hard,” he says. “There’s also still the overhang from Covid-19 where businesses scaled up in 2022 and 2023 thinking there’d be much more remote working, which wasn’t the case, and we’re still seeing the long, slow downturn.”

Imran Akhtar is head of academy at mthree, a workforce solutions and graduate training programme provider. How he is seeing this scenario play out is in a reduction in the size of cohorts that recruitment managers are willing to hire.

“It’s not an eradication, but more of a correction,” Akhtar says. “People over-hired after Covid, but if you took out the Covid year, it would be a pretty steady stream.”

On top of such over-hiring, other factors having an impact here include an ongoing employer focus on staff retention, and general business uncertainty due to the wider geopolitical environment.

As to which entry-level positions are being cut the most, these are customer-facing roles, such as tech support and helpdesk, Heyes says – although he too is not seeing any roles being “taken out in their entirety”.

The changing nature of entry-level roles

Aliaksandr Kazhamiakin is chief executive and co-founder of IT hiring platform Yotewo. He has also noticed junior developer and designer jobs being affected.

“Posts are still available, but the benchmarks are changing a lot,” he says. “In the past, to get a developer’s role, you needed a degree and a good knowledge and understanding of coding and technology, but now it’s not enough.”

Instead, employers also want jobseekers to demonstrate soft skills, such as creativity and problem-solving. Candidates likewise need to show they have experience of using AI in their daily routine.

Moving forward, Kazhamiakin expects there to be a growing requirement for candidates to develop niche expertise in specific technologies or sectors, such as healthcare or financial services.

Such experience could potentially be gained through freelancing or “doing projects on the side”. However jobseekers do it though, the idea is that they will need to “bring more to the table”, he says.

Entry-level roles of the future

Professor David Barber is a distinguished scientist at workplace automation platform provider UiPath and Fellow of the data science and AI-focused Alan Turing Institute. He agrees that the nature of entry-level roles is changing.

In his view, as “technical capabilities are to some extent offloaded to AI”, the focus will increasingly move towards the provision of “high-quality experiences and services”. So, for example, a stage tester will no longer simply be expected to verify that software functions effectively and meets requirements.

“They’ll need to test the system in line with the company’s values and what they think the customer is looking for,” Barber says. “That will mean having an understanding of what the system can do so they can help improve the customer experience.”

He also expects to see the creation of an entire ecosystem around AI deployment, which will include entry-level positions.

“Organisations will be using technologies provided by a small number of tech providers, but the nuts and bolts of getting it all to work, which includes hooking systems up to databases and building usable interfaces for users, will require a lot of engineering,” Barber says. “So, as AI becomes more widely adopted, we’ll see an uptick in systems integration jobs to make systems reliable and responsive.”

The SignalFire report likewise points to a range of emerging roles. “Expect to see titles like AI governance lead, AI ethics and privacy specialists, agentic AI engineers, and non-human security ops specialists become commonplace,” it says. “It’ll take time to scale, but these are some of the roles new grads should be paying attention to.”

Blip or long-term dip?

Certainly, Heyes believes that the current reduction in entry-level roles is a blip rather than a long-term dip – although he would be concerned if the situation continued for any length of time.

“My view is that it’s too early to say whether AI will disrupt entry-level hiring in future,” he points out. “But I’ve not heard any companies saying so far they have any strategy to replace graduates with AI.”

Kazhamiakin takes a similar stance. “The short-term will be stressful for younger generations and there’ll be a gap between supply and demand for entry-level jobs, which will have a negative impact,” he says. “But longer-term, I don’t think it’ll be something to worry about – the market will bounce back, the main reason being that AI will create new jobs that become entry level at some point.”

But Rakesh Patel, managing director of workforce consultancy SThree, is concerned about the risk of creating a “pipeline gap”, which he believes will be most marked at the junior quality assurance testing, first-line support and coder level.

As a result, he says: “Rather than cut entry-level jobs, it makes more sense to reshape them to include more creative and collaborative AI-focused tasks. That would give people a chance to grow into more experienced roles.”

Otherwise, he believes: “There’s a real risk of creating a ‘lost generation’, not just in terms of unemployment but also underdevelopment as people may not get the chance to build the range of skills they need to be relevant to the market.”

What can employers do?

Christina Inge is an instructor for the AI in Marketing Graduate Certificate at Harvard University, and founder and chief executive of tech consultancy Thoughtlight. She agrees it is vital for employers to redesign rather than simply eradicate entry-level positions wholesale.

“We’re at risk of losing the ‘practice field’ where young professionals built both technical and emotional fluency,” she says. “Without entry-level work, people lack on-the-job learning, networks and informal mentorship.”

This situation not only damages individual career prospects. It also means that employers could end up “sleepwalking into a leadership vacuum”, with a dearth of middle managers within as little as five years, Inge warns.

As a result, she recommends “creating AI-augmented roles, where juniors interpret or validate AI outputs”. Expanding apprenticeship-style programmes that “combine structured learning with real responsibility” would also help.

But ultimately Inge says leaders must “resist the temptation to see junior workers as obsolete”, which will require setting an intentional strategy to the contrary.

“Success depends on pairing digital transformation with human development, and incentivising teams to mentor and upskill young staff. It also depends on tracking long-term return on investment, such as cost per hire, future promotability, loyalty and innovation,” she concludes.