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From Entry-Level Attrition to AI-Driven Upskilling: How Employer Preferences Are Reshaping the Labor Market

General Report July 28, 2025
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  • As of July 2025, the landscape of the labor market has undergone significant transformations as a result of the increasing reliance on artificial intelligence (AI). Employers are notably reducing entry-level hiring and favoring experienced candidates, creating a challenging environment for recent graduates. With reports indicating an alarming 33% drop in vacancy postings for these roles compared to the previous year, industries such as accounting and human resources seem particularly impacted. This underscores the broad sectoral changes rendered by AI technologies that automate tasks historically managed by entry-level workers. In stark contrast, non-tech roles requiring AI-related skills are blossoming, exhibiting substantial salary increases averaging $18, 000 more annually for employees skilled in AI integration. This dichotomy highlights the resilience of certain sectors, where organizations seek individuals equipped with AI competencies to drive productivity and efficiency. Moreover, significant layoffs, particularly in the tech sector—where TCS alone plans to cut 12, 000 jobs—reveal a reorientation towards automation as firms adapt during economic pressures, diminishing the need for traditional workforce structures.

  • The divergence in recruitment strategies points to a broader trend favoring mid-career professionals over recent graduates—a shift catalyzed by evolving employer demands and the pressing realities of the AI-driven workforce. This transition is vividly illustrated by the phenomenon labeled 'the Great Flattening, ' where middle management positions are eliminated, propelling experienced workers to seek roles once designated for new entries. Consequently, Generation Z is contending with intensified competition, exacerbated by a jobless rate for recent graduates peaking at 5.8%. In response to the labor market's complexities, Educational institutions have initiated the development of more adaptive curricula centered around AI literacy and digital transformation skills. These educational advancements are crucial as they attempt to bridge the gap between emerging job requirements and the skill sets of current and future employees.

  • Amidst these shifts in hiring practices, companies increasingly deploy AI in recruitment processes, which while enhancing efficiency, simultaneously raise concerns regarding algorithmic biases that may inadvertently exclude diverse candidates. This precarious balance between leveraging technological advancements and promoting inclusion underscores the urgent need for organizations to implement policies that safeguard fairness in hiring practices. With regional analyses from the US, Singapore, and the UK revealing varying impacts of these trends, it is apparent that comprehensive strategies will be essential in nurturing a labor market that is nimble and equitable.

  • Overall, the findings from this examination reveal a pressing need for policy interventions to ensure that all job seekers, especially recent graduates and entry-level candidates, are afforded equitable opportunities to thrive within an increasingly AI-centric job market. Continuous learning, adaptability, and strategic alignment between educational outcomes and employer expectations are key to mitigating the disruptive effects caused by the relentless integration of AI technologies in various sectors.

Sectoral Impact: Tech Layoffs vs. Non-Tech Salary Gains

  • Tech sector: rising AI-driven layoffs

  • As of July 2025, the tech sector continues to experience significant layoffs, with major corporate restructuring driven largely by the adoption of artificial intelligence (AI) technologies. A recent report indicated that approximately 80, 000 tech workers were displaced in the first half of 2025, following a broader trend where 169 tech firms noted job cuts. This wave of layoffs is primarily attributed to firms recalibrating their workforce to enhance efficiency amidst economic pressures and an increased focus on AI deployment. Notably, Tata Consultancy Services (TCS) announced plans to cut around 12, 000 jobs, approximately 2% of its global workforce. TCS’s CEO emphasized that these layoffs are part of a strategic shift towards automation, indicating that routine roles, especially in middle management, are most vulnerable to redundancy as AI capabilities expand. This trend is reflective of a larger pattern across the tech industry, where organizations are prioritizing automation to remain competitive in a challenging economic environment.

  • Non-tech roles: AI skills driving salary boosts

  • Conversely, non-tech roles that require AI-related skills are witnessing substantial salary increases. A study from Lightcast highlighted that positions integrated with AI competencies are offering averagely $18, 000 more annually than their predecessors. In 2024, over 66, 000 job postings specified generative AI as a requisite skill, marking an almost 800% increase since 2022. This shift signifies a growing recognition that workers with AI fluency, particularly in sectors such as customer support, sales, and manufacturing, are increasingly valuable to employers. As a result, non-tech industries are fostering salary growth to attract and retain talent that can leverage AI tools to enhance productivity.

  • Case study: TCS’s 12, 000 job reductions

  • The planned layoffs at TCS serve as a critical case study reflecting the intricacies of current workforce dynamics in the tech industry. These reductions, touted by the company as necessary for transitioning to a 'future-ready' organization, primarily affect middle and senior management roles. TCS's rationale behind such cuts involves not only a mismatch in skills and job availability but also a response to the evolving technological landscape necessitated by AI and automation. While the firm reports a modest rise in net profits, it has simultaneously faced a 3.1% decline in revenue in constant currency terms, illustrating the economic challenges influencing its decisions. As part of a broader restructuring strategy, TCS seeks to redeploy affected employees into emerging roles that require higher levels of technical prowess, underscoring the need for continuous skills development in an increasingly automated job market. This case exemplifies how larger systemic shifts in the tech sector are catalyzing job displacement, as organizations adapt to AI integration.

Entry-Level Decline and Preference for Experienced Hires

  • Reduction in graduate and entry-level recruitment

  • As of July 2025, the job market for new graduates has sharply declined, leading to significant concern among recent degree holders. Data indicates that vacancy postings for entry-level positions have dropped dramatically, with some reports highlighting a 33% decrease compared to the previous year. This contraction is most evident in sectors traditionally reliant on new talent, such as accounting and human resources, where the advent of AI technologies has altered hiring practices. Employers are increasingly replacing tasks once performed by entry-level workers with automated solutions, which diminishes the overall availability of these roles. The decline in entry-level opportunities can be attributed to both economic caution among employers and the efficiencies introduced by AI in various professional tasks, leading to a reduced demand for fresh graduates.

  • In the tech sector, for instance, companies are choosing to leverage AI tools to fulfill many of the analytical roles that new graduates would typically occupy, effectively reshaping entry-level job expectations. A recent editorial from The Guardian has raised alarms about this trend, suggesting that the growing use of AI for routine tasks ultimately threatens to eliminate many of the pathways newer graduates historically relied on for career progression.

  • Employers’ tilt toward mid-career professionals

  • Employer preferences are increasingly skewing toward hiring mid-career professionals, often with several years of experience. The ongoing restructuring of corporate workforces—sometimes referred to as 'the Great Flattening'—involves the elimination of many mid-level management positions, prompting experienced professionals to seek lower-level roles. This shift causes further competition for entry-level positions, as older and more experienced candidates apply for jobs that were once reserved for recent graduates. According to reports from Business Insider, this transition has led to a situation where mid-career professionals, feeling the squeeze from reduced management roles, are actively pursuing junior or contract roles, thereby intensifying the competition faced by new graduates.

  • Additionally, a report by the World Economic Forum has emphasized that up to 40% of employers plan to reduce positions where AI can automate processes, further entrenching the preference for candidates with proven experience and skill sets. The prevalence of highly skilled, experienced individuals in the job market means that fresh graduates must continuously adapt to stand out among seasoned candidates.

  • Impact on new graduates and Gen Z job seekers

  • The ramifications of the declining entry-level opportunities are dire for new graduates, particularly within Generation Z, who are facing unprecedented challenges in launching their careers. The unemployment rate among recent college graduates has reached 5.8%, which is the highest since the recovery phase following the COVID-19 pandemic. This statistic underscores the increasingly competitive job market, where the number of qualified applicants for each open position is on the rise.

  • As detailed in various analyses, including those published in The Tennessee Tribune and Business Insider, many graduates are contending not only with their peers but with older applicants and professionals pivoting careers—resulting in a saturated job market where securing a position becomes more difficult. The automated résumés filtering employed by many organizations exacerbates this issue; candidates with non-traditional experiences or gaps in employment history frequently find their applications rejected outright. Thus, Gen Z and recent graduates are compelled to explore alternative routes, including personal networking and skill enhancement, to bypass traditional hiring barriers created by AI-driven systems.

Skills and Education: Bridging the AI Gap

  • Critical AI and Digital Transformation Skills

  • The rapid advancement of artificial intelligence (AI) is fundamentally transforming the job market, necessitating a shift in the skills that workers must acquire. According to the World Economic Forum's 2025 Future of Jobs Report, analytical thinking remains the most sought-after core skill amid this transformation. Employers are increasingly looking for candidates who possess not only technical skills related to AI but also soft skills such as creativity, emotional intelligence, and complex problem-solving abilities.

  • As industries integrate AI into their operations, the skills required are evolving. For example, positions such as AI trainers, data analysts, and human-machine teaming managers are emerging as significant roles within the labor market. The ability to effectively communicate with AI systems and leverage machine learning will be essential for workers in various sectors. A report from PwC projects that about 11 million new roles may be created by 2030, while 9 million could be displaced, emphasizing the need for a workforce that is adaptable and skilled in AI technologies.

  • Education Sector Responses and Training Programs

  • In response to the evolving demands of the job market, educational institutions are adapting their curricula to include more AI-focused training and digital literacy programs. For instance, Saudi Arabia has announced a nationwide integration of AI education throughout its public school system, ranging from elementary education to higher learning. This initiative demonstrates a proactive approach to preparing students for a workforce increasingly reliant on AI technologies, aligning with the country's Vision 2030 goals for enhancing global competitiveness and innovation.

  • Furthermore, new educational pathways are being developed to ensure that students not only learn theoretical concepts but also practical skills that can be applied in real-world scenarios. Online platforms such as Coursera and Udemy are offering courses specifically focused on AI and digital skills, which have seen tremendous increases in enrollment recently — by 1, 100% among employed professionals and 500% among students as noted in various reports. This trend highlights the growing recognition of continuous learning as a critical component for career longevity in the age of AI.

  • Addressing the Skill-Gap: From Classrooms to Corporate Upskilling

  • Despite the rise in educational programs focused on AI, there remains a significant skill gap in the workforce. A report from Indeed indicated that one in five workers in Singapore feels overwhelmed by digital transformation, indicating a disparity between the adoption of AI tools and the training provided to employees. This gap underscores the importance of comprehensive upskilling initiatives in corporate environments.Companies are recognizing the urgency of fostering a culture of continuous learning, as highlighted by Indeed’s findings that organizations must not only change existing training programs but also create continuous learning pathways that align with real-world tasks.

  • Many employers are now prioritizing upskilling their existing workforce to mitigate skill gaps caused by technological advancements. According to the World Economic Forum, 85% of employers globally plan to address these gaps by investing in employee training initiatives. The focus on continuous and situational training can facilitate smoother transitions for current employees into new roles as the nature of work evolves due to AI, ensuring their skills remain relevant and valuable in a competitive job market.

AI-Driven Recruitment: Efficiency and Bias Risks

  • Automation in résumé screening and interview processes

  • The adoption of AI technologies in recruitment processes has revolutionized how companies manage résumés and conduct interviews. Organizations now employ AI-driven systems to efficiently analyze vast numbers of résumés, helping HR departments identify suitable candidates faster than traditional methods would allow. This automation streamlines the initial screening phase, significantly reducing costs and time associated with recruitment. According to various studies, AI can process large volumes of applications in a matter of seconds, enabling hiring teams to focus on fewer, more qualified candidates.

  • Nevertheless, while automation introduces efficiency and uniformity in the selection process, it also raises concerns about the inherent biases present in AI algorithms. As previously highlighted, these systems learn from historical hiring data, which may include patterns of discrimination that can reflect societal biases. Such biases might disadvantage certain demographic groups inadvertently by filtering out qualified candidates who do not fit previously established norms.

  • Emerging concerns over AI hiring bias

  • Despite the efficiency gains from AI in recruitment, emerging evidence has raised alarms regarding the persistent biases embedded within these systems. It has been observed that AI hiring tools can replicate and even exacerbate biases found in historical hiring practices. For instance, research indicates that an AI hiring tool used by Amazon was discontinued after it was found to prefer male candidates due to the male-dominated data it was trained on, highlighting a crucial flaw in the algorithm’s design.

  • Furthermore, an analysis of LinkedIn's job recommendation system revealed a troubling trend where male users were consistently directed toward higher-paying job opportunities compared to their female counterparts. These findings demonstrate not only the potential for algorithmic discrimination but also the implications for workplace diversity and equity. Organizations are increasingly aware that unchecked AI bias can undermine their efforts to promote diversity, forcing a reassessment of how these technologies are implemented in hiring practices.

  • Best practices to ensure fair and transparent recruitment

  • Addressing the risks associated with AI hiring bias requires a multi-faceted approach. Best practices include training AI systems on diverse datasets that accurately represent different demographic groups. This foundational measure can help mitigate the perpetuation of historical inequalities within recruitment processes. Regular audits and ongoing assessments of AI decision-making frameworks are also crucial to identify and correct biases as they emerge.

  • Incorporating human oversight into the AI-driven recruitment process is essential to maintain a balance between technological efficiency and nuanced human judgment. HR professionals should be actively involved in reviewing AI-generated recommendations to ensure fairness and consistency in hiring decisions. Furthermore, enhancing transparency in AI operations can build trust in the recruitment process, as candidates would be more inclined to accept decisions based on clear, understandable criteria rather than opaque algorithms.

Global Perspectives: Regional Variations in Hiring Trends

  • Singapore: digital transformation pressures on workers

  • According to a report by Indeed published on July 26, 2025, approximately one in five workers in Singapore feels overwhelmed by the demands of digital transformation. The data revealed that while 36% of employees are currently utilizing generative AI tools, a concerning 33% reported receiving no formal training in these technologies. This presents a significant gap between technological advancement and workforce preparedness, emphasizing the critical need for structured training programs tailored to new digital realities. Furthermore, the report highlighted factors that hinder employees from becoming AI-ready, including a lack of training (39%), difficulties in keeping pace with rapid change (39%), and insufficient early exposure to tech tools (28%). To successfully navigate these challenges, workers would benefit from user-friendly AI tools accompanied by clear guidance (42%), structured training workshops (38%), and opportunities for experimentation in supportive environments (35%). Callam Pickering, Indeed's APAC Senior Economist, suggested that employers are encouraged to reassess and update existing training programs to ensure they meet contemporary workplace demands.

  • United States: generative AI and the future of work

  • Generative AI continues to play a transformative role in the landscape of employment in the United States. As discussed in Codewave Insights' recent report, the potential for automation of up to 30% of work hours by 2030 has raised critical questions about the impact of AI on job structures across various sectors, particularly health care and finance. Despite concerns over job displacement, the report also underscores the emergence of new opportunities within green industries and technology sectors. Historically, technology has altered job markets, leading to both job losses and new employment avenues. AI, especially in low-wage positions, is projected to reshape the fundamentals of how businesses operate and, in the process, alter the types of roles that will be in demand. Current trends indicate that while some jobs face reduction due to automation, there are simultaneous increases in demand for skilled roles in AI development, data management, and tech support, particularly for small to medium enterprises (SMEs) poised to leverage AI for competitive advantage.

  • United Kingdom: graduate employment outlook amid automation

  • The job market for recent graduates in the United Kingdom has been notably challenging, with reports indicating a dramatic decline in entry-level opportunities—32% fewer positions since 2022. This contraction has been linked to various factors, including corporate hesitance to increase staffing costs through the Labour Government's national insurance adjustments, and more critically, the pervasive influence of AI. Data from Adzuna highlighted that the introduction of AI technologies, especially ChatGPT and similar innovations since late 2022, has precipitated a shift in hiring patterns, with employers prioritizing experienced hires over fresh graduates. Specifically, roles historically filled by recent graduates — including junior positions in HR and accounting, which saw decreases of 62% and 44% respectively — are increasingly being automated. The consequences of this trend have resulted in what has been termed an 'AI-driven apocalypse' in the graduate job market, where applicants must not only compete with their peers but also with sophisticated AI technologies capable of performing entry-level tasks traditionally reserved for human workers. This evolving landscape has created an environment fraught with uncertainty for new graduates, where the prospects of securing employment appear to diminish as AI tools continue to integrate into the workplace.

Wrap Up

  • In conclusion, our analysis paints a portrait of a bifurcating labor market heavily influenced by AI's predilections: while experienced professionals increasingly command higher demand—especially in non-tech roles that witness wage growth—entry-level candidates find themselves grappling with diminishing opportunities. The strategic adoption of AI by employers to refine and expedite hiring processes can inadvertently lead to the introduction of algorithmic biases if not managed with adequate oversight. As organizations navigate this profound shift, it becomes imperative for all stakeholders, including employers, educators, and policymakers, to foster adaptive learning initiatives that equip emerging workers with relevant skills for the future labor landscape.

  • The imperative for transparency in AI recruitment practices cannot be overstated; organizations must ensure that their systems are not only efficient but also fair and inclusive. The future of work hinges on the proactive collaboration between industry players and regulators to establish safeguards that protect early-career entrants from being sidelined in an increasingly automated world. In light of these revelations, ongoing research and dialogue among all relevant sectors will be essential to cultivate a dynamic workforce capable of not just surviving but thriving in the face of continual technological advancement.

  • As we move forward, it is vital to anticipate further developments within this arena, particularly as educational institutions ramp up their efforts to align curricula with AI and digital literacy needs. Industry leaders must also be prepared to pivot as new roles emerge and existing positions evolve, which could redefine the very fabric of job structures across sectors. The confluence of AI and labor presents unparalleled opportunities for innovation while simultaneously posing challenges that require vigilant and strategic responses.

Glossary

  • AI (Artificial Intelligence): AI refers to the simulation of human intelligence processes by machines, especially computer systems. These processes include learning, reasoning, and self-correction. By July 2025, AI has become pivotal in reshaping labor market dynamics, driving automation that often displaces entry-level roles while increasing demand for skilled professionals capable of leveraging AI technologies.
  • Labor Market: The labor market encompasses the supply and demand for labor in jobs, both skilled and unskilled. The current labor market as of July 2025 shows a shift away from entry-level positions and a preference for experienced candidates, largely influenced by automation and AI advancements, creating significant challenges for new graduates.
  • Layoffs: Layoffs refer to the termination of employment for a group or individual, often for economic reasons such as company restructuring or changing market demands. As of July 2025, significant layoffs are reported, particularly in the tech sector, driven by the integration of AI and a strategic shift toward automation.
  • Upskilling: Upskilling involves training current employees in new skills to enhance their ability to perform jobs, especially in response to technological changes. In 2025, upskilling is increasingly critical as workers adapt to an AI-centric workplace, with many employers prioritizing this to mitigate skill gaps.
  • Entry-Level: Entry-level positions are typically the first jobs for new graduates or individuals entering the workforce. The decline in entry-level opportunities as of July 2025 presents major challenges for recent graduates, as many roles traditionally filled by them are being automated.
  • Mid-Career: Mid-career professionals are individuals who have several years of experience and are often viewed as more desirable by employers in the current market. As of July 2025, hiring trends indicate a shift towards these seasoned professionals, as they are perceived to bring proven skills amidst increased competition for jobs.
  • Hiring Bias: Hiring bias refers to the prejudiced decisions made during the recruitment process based on non-job-related characteristics. Emerging AI tools, while intended to streamline hiring, are raising concerns regarding algorithmic biases that can lead to discrimination against certain demographic groups.
  • Salary: Salary is the compensation paid to employees for their work, usually expressed as an annual amount. As of July 2025, there is a notable contrast in salary trends, with non-tech roles requiring AI skills seeing significant increases, while entry-level positions face pay stagnation and fewer opportunities.
  • TCS (Tata Consultancy Services): Tata Consultancy Services (TCS) is a multinational information technology services and consulting company based in India. As of July 2025, TCS plans to reduce 12, 000 jobs, approximately 2% of its workforce, as part of its strategy to enhance automation, reflecting broader trends in the tech sector.
  • Singapore: Singapore is a Southeast Asian city-state known for its robust economy and advanced technological infrastructure. As reported in July 2025, Singapore faces challenges like a significant number of workers feeling overwhelmed by digital transformation, highlighting gaps in training and AI readiness among employees.
  • Gen Z: Generation Z refers to individuals born roughly between the mid-1990s and early 2010s. As of July 2025, Gen Z is particularly affected by the labor market dynamics, facing heightened competition for jobs usually targeted at entry-level positions, further complicated by the integration of AI in hiring practices.

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