As AI reshapes the workplace, cutting entry-level jobs today could create a skills shortage tomorrow.
From customer service and marketing to software development and human resources, tasks that once required teams of people can now be completed by increasingly sophisticated AI tools. While the technology promises productivity gains, it is also raising questions about what happens when the jobs that traditionally helped people start their careers begin to disappear.
Scientia Professor Toby Walsh , Chief Scientist at the UNSW AI Institute , believes one of the biggest challenges is not whether AI can do the work, but what businesses choose to do with the time and resources it frees up.
“AI is a wonderful technology, but you’re the best people to solve your business problems,” he says. “There’s no AI problem, there’s a business problem, and AI might be a tool that helps you solve that problem.”
As organisations race to adopt AI, Prof. Walsh says the most successful businesses will be those that use the technology to support their people, rather than simply replace them. “It’s your employees who understand exactly where the pain and pressure is and where the opportunity for innovation is in your business. You need to empower those people, give them the AI tools so that they can go off and make your business a better business,” says Prof. Walsh.
Is every AI layoff really about AI?
As companies race to invest in artificial intelligence, headlines about layoffs and restructuring have become increasingly common. Prof. Walsh says that not every job cut attributed to AI is necessarily being driven by the technology itself. While businesses are making significant investments in AI, many are still waiting to see a return on that spending.
“Certainly, there are spectacularly large investments being made, and we’re not seeing the returns yet,” he says. “Companies are having to look at where to get that money from and where to make savings to afford those very large investments.”
Prof. Walsh says some organisations may be using AI as a convenient explanation for broader business challenges. “There’s a bit of AI washing,” he says. “A company that’s perhaps not been very well managed, and rather than saying that we’ve been poorly managed, they’ve been saying, ‘Well, we’re investing in AI’.”
According to Prof. Walsh, framing job cuts as part of an AI strategy can be more appealing to investors than admitting to management mistakes or poor business performance. “If you say it’s AI and you’re making 10% layoffs of your staff, as opposed to admitting, ‘Actually, it was my fault, and we’ve been poorly managed’, your share price goes up,” he says. Prof. Walsh says the distinction matters because it can create the impression that AI is replacing jobs faster than it actually is.
What happens when AI replaces entry-level jobs?
While some claims about AI-driven layoffs may be overstated, Prof. Walsh says there is one area where the technology is already having a measurable impact: entry-level work. Today’s AI tools are particularly effective at tasks traditionally carried out by graduates and early-career employees.
“It’s certainly the case today that the sorts of capabilities that the AI models have, the sorts of things that people do when they start in their career, graduate level or entry level jobs, those are the sorts of things that AI seems to be able to do very well,” he says.
But Prof. Walsh warns that businesses need to think beyond short-term efficiency gains. “Most business organisational structures are pyramids,” he says. “A lot of people go into the bottom, and fewer and fewer people rise up through the ranks and become managers.”
For organisations reducing graduate hiring, that raises a longer-term challenge. “Where are those middle managers and higher managers going to come from?” says Prof. Walsh. “Where are they going to learn about the business?”
The concern is not simply about fewer graduate jobs today, but about the pipeline of future talent businesses will need tomorrow. Signs of that shift are already emerging. “There’s data showing that there’s been a decline in graduate-level recruitment,” says Prof. Walsh. “There was a chart in the Financial Times showing in the UK and the US, and I suspect very similar numbers in Australia, a 30% decline in graduate-level job adverts in the last three years.”
Prof. Walsh says students are already feeling the impact. “I’m certainly hearing from students at the university that they’re finding it much harder to get their foot in the door.”
The skills AI cannot replace
As AI becomes more capable, Prof. Walsh believes the most valuable skills in the workplace will increasingly be the ones machines struggle to replicate. Judgement, communication, empathy and social intelligence are likely to become more important, not less.
“That’s the human advantage,” says Prof. Walsh. “Those are the things that distinguish us from the machines. Those are the things that, however capable, however smart the machines become, humans are always going to have the edge.”
For workers already established in their careers, he says the challenge is not necessarily competing with AI but learning how to work alongside it. “Their challenge is that the technology is moving very fast and much faster than they’re perhaps comfortable with,” he says.
Prof. Walsh believes AI can amplify the abilities of highly skilled workers, but it can also expose weaknesses. “If you’re a really competent programmer, then the AI tools really double and triple the speed at which you can write code,” he says.
However, he warns that relying too heavily on AI can come at a cost if people stop developing their own expertise. “There’s also evidence that unless you put the effort in, you don’t learn,” he says. “Your brain is a muscle, and if you outsource too much to the tools, then sure, you get those things done, but you never actually stretch yourself.”
The risk, says Prof. Walsh, is that workers become more productive in the short term while losing opportunities to build the knowledge and judgement that careers are built on.
There’s no AI problem, there’s a business problem, and AI might be a tool that helps you solve that problem.
How businesses can prepare for an AI future
For Prof. Walsh, the biggest question facing business leaders is what they do with the productivity gains AI creates. Economists estimate AI could deliver productivity improvements of around 10 to 15% across some sectors. The question is whether businesses use those gains to reduce headcount or invest in their people.
“You’ve got a choice now,” says Prof. Walsh. “You could say we’re going to cut our workforce by 10%, which is an entirely reasonable economic return from that.” Or businesses could take a different approach. “We’ve got 10% of these people’s time freed up,” he says. “We can now put those people to improving our product, improving our service, talking to our customers and understanding them better.”
Prof. Walsh believes organisations that focus on developing their workforce will be better positioned for the future than those focused solely on short-term savings. “The most valuable thing a business has is people,” he says. “You should be investing in those people and helping them become AI capable and AI literate.”
