'Gen Z is facing an AI jobs bloodbath'

AI robot working at computer monitors with financial data

(Image credit: Getty Images)

It has always been tough to get your first job. But this year, it is proving tougher than ever. According to jobs website Indeed, graduates are facing the worst labour market since 2018. In September, consultancy giant PWC, traditionally a major recruiter, said it was hiring 200 fewer university leavers this year. In the UK, it doesn’t help that the economy has stagnated. But even in the booming US, a similar story is unfolding. According to the research firm Cengage, just 30% of this year’s graduates have found a job in their field. There are different local factors in each economy, but right across the developed world, it is clear that something else is going on: entry-level graduate jobs are disappearing.

It is not hard to work out why that is. AI is accelerating at such a rapid pace that it is now replacing much of the work that was traditionally done by new graduates. Higher up the career ladder, where the major decisions are made, and genuine expertise and insight are usually required, most jobs are still reasonably safe, at least for now. The smart bots still can’t do that kind of work. But drafting documents at a law firm, or checking spreadsheets at an accounting firm, which used to be left to the trainees, can now be performed perfectly adequately by one of the highly developed AI systems. In effect, the bots have taken out the first rung of the career ladder, leaving many graduates struggling to find their way into employment.

That is going to pose a genuine challenge for policy makers. If graduates can’t find a first job, their skills will start to erode, the debts they have taken on to pay for their degrees will never be repaid and they will never have a chance to build a rewarding career, or to contribute to the wider economy. It will be a disaster.

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So what should be done? Plenty of people will argue for controls or regulations. They will say that AI systems should not be allowed to replace the work done by humans, or that companies have to stick to the same number of recruits as they were taking on five years ago. There might even be calls to ban AI completely. Such neo-Luddism won’t work. We don’t want to slow the development of AI, given the spectacular gains in productivity across the whole economy it could generate. Then again, we don’t want Gen Z to remain jobless, or for just one generation that just happened to have the misfortune to be born at the wrong time to suffer the entire brunt of the transition from one technology to another.

How to counter the AI jobs bloodbath

There is only one real fix for that: we should radically deregulate the jobs market for the under-30s. In the UK, the Labour government has chosen the worst possible time to give workers full employment rights from day one. It will take a bad situation for new graduates and make it a whole lot worse. It is hard to see why a company would take on someone leaving university this summer when AI might soon be able to do their job, and they will be stuck with them for years, or face a huge compensation payout if they decide to get rid of them. The government should carve out an exemption from that for anyone under the age of 30. It should also go further. Portugal recently offered the under-35s a 100% tax exemption for the first year of employment and 75% in the second year. The UK could easily copy that scheme and so could many other countries. Or else it could slash the national insurance charges for “first rung” graduate jobs, reversing the big increase that was imposed in the last Budget.

One point is surely clear – Gen Z is facing an AI jobs bloodbath. The entry-level work on which careers were built is being replaced by super-smart computer programs that are cheaper to run and easier to control. The only way to counter that is to create lots of new jobs to replace the ones that are being replaced by machines – and only a radical round of deregulation is going to achieve that.

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Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.