World

Mon Apr 20

As entry-level jobs dry up in NZ, how can we help young people find their way into work?

Written by: Rod McNaughton, Professor of Entrepreneurship, University of Auckland, Waipapa Taumata Rau

Getting a first foothold on the career ladder has never been easy for young workers.

But in the past, that path was more visible, with advanced economies such as New Zealand’s relying on entry-level roles to bring in new talent and sustain the workforce over time.

A glance at recent job statistics ^[1] suggests today’s young people face a different reality. The unemployment rate among New Zealand’s 15- to 24-year-olds is around 15% – higher than in recent years and roughly triple that of the wider working-age population.

Many of the roles through which young people have entered the workforce – especially junior office and administrative jobs – have been shrinking ^[2].

With this shift has come the erosion of a function of the labour market that is arguably just as important as output. These on-ramps to the workforce have also taught tomorrow’s leaders how organisations work, how judgment develops and how capability is built through practice.

Take them away, and the problem facing the economy becomes much more serious than unemployment.

How much is AI to blame?

There has been no shortage of dramatic news headlines ^[3] about the impact of artificial intelligence (AI) on jobs. However, rather than eliminating entire occupations, AI has so far been automating many of the traditional tasks within them.

In a global survey of 5,500 organisations ^[4] last year by US-based market analysts International Data Corporation (IDC), 91% reported that AI had already changed or displaced job roles.

Among the New Zealand-based employers surveyed, more than half reported AI was driving significant job displacement and that they were now slowing or stopping entry-level hiring. Nearly nine in ten also expected to see a slowdown in these roles within three years.

There are clear reasons for these trends. Many of the tasks most exposed to AI disruption overlap with the type of work – predictable, repetitive or data-based – that has long been carried out by entry-level workers.

As these tasks have become automated, roles have been redesigned. Firms need fewer people to handle routine work and more who can operate in complex, less structured environments from day one.

Recent US evidence points in the same direction. One report ^[5] from AI firm Anthropic found little sign of widespread job losses among highly exposed occupations, but it did indicate that hiring has slowed for younger workers trying to enter them.

Why entry-level jobs matter

AI may be worsening the pressure on young workers, but it is not the only force at play.

In New Zealand and many similar economies, more young people are completing higher education, increasing the number entering the labour market ^[6] at the same time. That means more people are competing for jobs, so both employment levels and the unemployment rate can be high at the same time.

This also helps explain why qualifications alone are no longer enough to stand out. Employers are increasingly looking for practical skills and real-world experience, rather than just degrees.

But it also creates an obvious chicken-and-egg problem: if entry-level roles are shrinking, how are people supposed to gain that experience in the first place?

Employers are now well aware of this dilemma. In the IDC survey, more than three-quarters of New Zealand respondents singled out fewer opportunities for on-the-job learning as a major concern. A similar share cited low awareness of AI-related roles as a key hiring challenge.

These trends underscore that, far from facing a simple skills gap, labour markets are confronting a much deeper issue: how to keep open the pathways through which people enter work and learn on the job.

If firms are doing less of the practical work of developing early-career talent, universities will need to do more.

Expanding work-integrated learning and entrepreneurship education are two ways students can build the practical capabilities, judgement and adaptability that are becoming harder to acquire through traditional entry-level roles.

Even so, universities cannot solve this problem on their own. The deeper problem is not just whether young people can find jobs. It is whether the labour market still offers them a way in.