AI Adoption Squeezes Entry-Level Jobs, Fuels Skills Gap

A significant portion of employers in the UK are experiencing a shortage of skilled workers, with 57% reporting such a deficit and 42% anticipating it will worsen. Concurrently, 19% of UK employers have reduced hiring for entry-level positions, with 42% of those attributing this cutback directly to the adoption of artificial intelligence. This trend is reshaping recruitment, as 51% of managers indicate AI is already altering their hiring processes.

AI is automating tasks traditionally assigned to junior employees, such as data collection, initial research, and drafting documents. This shift is leading to organizational structures with a broader middle tier of experienced professionals and fewer new entrants. While this saves on initial salaries and training costs, it poses a long-term risk of a future leadership vacuum, as the current experienced workforce began in the roles now being eliminated.

In Israel's tech sector, the situation is particularly acute. By December 2025, there were 16,300 job seekers in the tech industry, a 126% increase since early 2022. The number of software developers seeking employment rose by 174% in three years, constituting about half of all unemployed in the sector, while positions for those with no experience decreased by approximately 5% annually.

Some companies are adapting by shifting their recruitment focus from specific degrees to broader skills like critical thinking and learning ability, placing graduates from diverse fields into tech roles. Others are retaining junior positions but modifying their function, with new hires reviewing and correcting AI-generated output under the guidance of senior staff. A survey of UK and Irish mid-sized companies found 45% use AI to enhance junior employees' work, and a quarter reported AI creating new roles and opportunities.

Younger generations are rapidly adopting AI tools but express concern that their daily use is preparing their own replacements. Meanwhile, a substantial percentage of unemployed and out-of-work youth are willing to undergo training to improve their job prospects, highlighting a disconnect with the reported employer skills shortage.