After graduating from college, your first job provided a steady professional path.
Since the first few rungs of the career ladder are disappearing in many jobs, the future of 2025 graduates is unknown.
Indeed, an employment marketplace, reports that between 2024 and 2025, graduate vacancies in Britain decreased by almost 33%. The unemployment rate among university graduates is higher than the national unemployment rate, so this is not just a reflection of the UK economy slowing down.
In the era of artificial intelligence, the business world is evolving, and recent college graduates will need to adapt fast.
The same is true for businesses in Australia as well.
Why are there fewer job ads for graduates? Three factors are coming together at once: basic demography, AI investment, and economic uncertainty.
First, when companies see a bright future, they want to invest and grow. There are many unknowns in the current economic projections.
No one knows where tariffs will fall, how interest rates will change, or how wars and geopolitics will play out. Businesses hit "pause" due to the numerous uncertainties in the air. They did not make any significant modifications, but they continued operations.
The "halt" in graduate admissions that started during COVID-19 has been subtly extended into 2025.
Second, all of the big companies are embracing AI. It makes sense because AI is perfectly capable of doing a lot of lower-level jobs, such as the manual labor-intensive legal, accounting, consulting, and banking responsibilities.
Given that a few graduates with AI tools can produce the same amount of work, why would a large company hire twenty graduates?
Third, we annually force more than half of our high school graduates to enroll in the university system. More recent grads are vying for the few graduate jobs available due to the large number of young people attending college.
As a result, large professional service companies have a "diamond-shaped" workforce: There are few recent graduates at the bottom, a large cohort of workers in the middle, and a tiny group of leaders at the top. This raises the question of where the middle managers of the future will come from.
A compelling case study is law. Most of the work that junior attorneys used to do can be automated, according to senior partners, either now or very soon. In many businesses today, the average lawyer is in their mid-fifties.
Where will a legal practice that no longer employs recent graduates find more experienced attorneys in the future? Businesses need the long-term pipeline of human talent even as they seek the short-term efficiency of technology.
A company's internal talent pool is constrained when it hires too few recent graduates. As a result, current employees may be "overpromoted," creating a cohort of less capable leaders. For a while, that works, but eventually, too many people are placed in positions for which they are not yet prepared.
Demographically, we are still running out of labor, as I explained in earlier columns. Businesses cannot only draw from the general labor pool to recruit mid-career professionals in the 2030s and 2040s when they need them because of this ongoing general skills deficit.
We have witnessed similar errors in the past. Apprenticeships were vital conduits in medieval Europe. Even masters were paid by families to raise their children.
We might need to rethink this strategy if entry-level positions are eliminated right away. I am not suggesting that the feudal system will make a triumphant return, but we need to reconsider the formative years of professional service careers.
It is reasonable for the class of 2025 to wonder what they ought to do. If there is not a clear job route at the end, why accrue tens of thousands of dollars in HELP (formerly HECS) debt?
It is not a straightforward response. Even now, a degree from a reputable university can open doors. However, colleges in general are under pressure because they produce graduates who frequently lack the practical skills, savvy, and adaptability that the market today requires.
University degrees were more expensive and harder to obtain in the past; a bachelor's degree was a sign of being among the top 1% of the intellectual elite. Now, a bachelor's degree will cost you a lot more money and merely prove that you are among the brightest half of the class.
University degrees were no longer a major concern for the major professional service firms (banks, consultancies, etc.). Avoid pursuing a PhD or master's degree.
These employers are more comfortable educating their employees the NAB-way or the PWC-way internally because they desire youthful, inexpensive labor.
This issue is not limited to today's grads. The issue affects society as a whole. The entire workforce pyramid becomes weaker if the base is hollowed out.
The 22-year-olds of today will be the mentors, executives, and middle managers of tomorrow. In ten years, we will all be affected by the shortage if they are unable to gain access.
AI is indeed altering the nature of labor. However, it is important to remember that the workplace has always evolved. The typewriter vanished. The typing pool did the same. However, speed is now the main distinction. Years, not decades, are passing before the transformation occurs.
Companies have a difficult decision to make. Spend less on recent graduates now to gain efficiency in the short term, but run the risk of having a workforce that is hollowed out in ten years. Alternatively, make an investment in young talent now to develop the human capital that AI cannot supply on its own.
There will not be anything for anyone to climb if we do not repair the first rung of the ladder.
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