Young people are finding it increasingly difficult to get a foothold in the labour market and artificial intelligence (AI) is an obvious culprit. But James Robson argues that blaming it all on the bots risks letting employers, policymakers and a failing skills system off the hook.
Generative AI is fundamentally transforming the nature of work across all industries, particularly by automating many of the tasks traditionally undertaken by junior workers. Public narratives are increasingly linking these shifts in the labour market with the growing challenges young people are experiencing in transitioning from education into work and the growing number of young people who are not in education, employment, or training (NEET).
Data over the last two years have shown a consistent contraction in the number of entry level roles, a reduction in graduate jobs, increasing numbers of graduates who are underemployed or unemployed, and now record numbers of NEETs. The fact is that getting a job as a young person leaving school, college, or university is now a real challenge.
It’s important to take a nuanced position when discussing the links between AI, the changing nature of work, and the challenges young people face in transitioning into the labour market.
The scarring effects of failing to transition from education into work effectively, or at all, on young people are well documented and include worse career prospects, reduced earnings over the life course, and less job and life satisfaction. These effects are not experienced equally. Disadvantaged young people are more likely to struggle with the transition into work, while more advantaged young people can leverage existing capital and family connections to gain the experience and work they need at a critical point in their careers. Therefore, a weak youth labour market deepens social inequalities, while also providing constant pressure on the overall economy through inactivity and unpaid student loan debt.
These issues are now so acute that they’re very likely to be the defining policy challenge of the new Burnham government. Already, there’s significant focus on addressing growing NEET numbers, repositioning post-16 skills, education and training policy, and leaning into place-based approaches to address both the weak youth labour market and shifting employer skills needs
However, it’s important to take a nuanced position when discussing the links between AI, the changing nature of work, and the challenges young people face in transitioning into the labour market. The issues intersect, but we should avoid simple causal diagnoses that position AI as decimating entry level jobs and the youth labour market. Causal simplicity, particularly when whipped up with a sense of moral panic that always accompanies technological advancements, will just mean that the policy responses will lack the complexity required to address the issues in a meaningful way.
The evidence that AI is responsible for a large-scale disappearance of entry-level jobs or sits behind the weak youth labour market is, at best, patchy. Rather, research that we’ve been doing at the Oxford University Centre on Skills, Knowledge and Organisational Performance (SKOPE), points towards three clearer contributing factors. Firstly, weak economic growth inevitably impacts recruitment practices and employers’ willingness to invest in entry level positions. These are perceived as coming with potential risks (to productivity and that employees will be poached by competitors just as they become productive) and costs (in terms of training new hires). These risks and costs are increasingly seen as too great in a context where all industries are struggling.
Secondly, for at least the last decade, low-skill, low-investment business models have persisted. This has contributed to low levels of investment in capital infrastructure and, importantly, low levels of absorptive capacity – an organisation’s ability to recognise the value of new knowledge, absorb it, and apply it effectively. This has led to static workforce models, with entry level positions used largely to fill retirement and attrition, rather than actually meeting changing business models. This limits workforce growth and makes entry level positions particularly vulnerable to periods of economic challenge when labour mobility is reduced.
Market policy logic has positioned employers as skills consumers with rights, rather than as contributors to education and training with responsibilities. This has led to an arbitrary separation of education and the labour market.
Finally, and most importantly, skills and labour market policy approaches have increasingly positioned employers as consumers of skills rather than engaged in the process of skills formation. This is a result of market-based policies of the Conservative government which attempted to use competition to improve quality of skills supply and ensure better alignment between skills supply and labour market demand. This is distinct from many European countries, with arguably stronger skills alignment and youth labour markets, which take more systems-based approaches, with employers playing an active role in skills formation. This ensures real responsibilities for employers in the process of education and training, clear pathways for young people to transition into work, and a more agile skills system that can respond better to shifting skills demands.
Market policy logic has positioned employers as skills consumers with rights, rather than as contributors to education and training with responsibilities. This has led to an arbitrary separation of education and the labour market. The result is a bizarre situation where the UK is experiencing both poor skills alignment, with employers frequently reporting an inability to recruit, and a weak youth labour market with high NEET numbers and a reduction in entry level positions.
Of course, this does not mean that the effects of AI should be dismissed. Work is being reorganised, tasks are changing, and employers are understandably cautious about recruiting into roles whose future shape is uncertain. The policy challenge is therefore to avoid treating the problem of a weak youth labour market and growing NEET numbers as either a simple shortage of skills or an inevitable consequence of technological change.
On the supply side, education and training pathways must respond to changes in occupations and tasks while providing young people with credible routes into work
A more effective response needs to take an approach that looks at wider structural and economic issues, the intersecting nature of the challenge, and takes interventions that cut across both skills supply and demand (as well as broader social and educational issues and challenges related to mental health, that I haven’t even discussed here). This is a complex set of issues and an effective policy response requires far more space to outline than is possible in this article. However, as a starting point, it’s critical to acknowledge the importance of demand side interventions and to create a set of policy levers that encourage employers to engage in more strategic approaches to workforce planning, job and career design, and recognise entry-level employment not simply as a cost but as an investment in the future supply of experienced workers. On the supply side, education and training pathways must respond to changes in occupations and tasks while providing young people with credible routes into work and opportunities to continue learning once there. This must include rethinking the balance between academic and vocational pathways.
Perhaps most importantly, a fundamental change in the relationship between employers and the skills system is required. Employers cannot reasonably expect schools, colleges, and universities to produce fully ‘work-ready’ recruits while investing too little themselves in training or in the development of young workers. A sustainable skills system requires greater employer engagement and investment, stronger work-based learning, and a shared responsibility for turning labour-market entrants into skilled workers.
