The first job paradox

Across many advanced economies, an uncomfortable labour-market contradiction is increasingly disrupting the world of work. In Britain, it is especially stark, as employers continue to report persistent skills shortages, while growing numbers of young people are struggling to gain any meaningful foothold in work. The data is sobering: the Open University’s 2026 Business Barometer reported that 57% of employers are experiencing a skills shortage, yet 43% have recruited fewer people over the past year. Similarly, almost one in five have reduced recruitment into early-career roles, with many linking that decline to the growing use of AI and automation.

The consequences of this tension are widely acknowledged by employers and policymakers alike. As illustrated in the UK government’s recent Young People and Work report (commonly referred to as the ‘Milburn report’), nearly one million people aged 16 to 24 are now classed as NEET (Not in Education, Employment or Training), equivalent to around one in eight young people. Almost 60% are economically inactive, while six in ten have never held a job, up from four in ten in 2005.

Behind these figures lies a structural weakening of the transition into work. Traditional youth-employment sectors have contracted, apprenticeships have become less accessible to younger entrants, entry-level roles increasingly demand previous experience, and recruitment has become more remote and automated. At the same time, employers want young recruits who can communicate confidently, navigate workplace expectations, exercise judgement and contribute with limited supervision. Yet these capabilities are usually developed through exposure, feedback, observation and gradually increasing responsibility. As entry routes narrow, young people lose access to the opportunities through which the qualities employers seek are formed.

The consequences extend well beyond youth employment. In an ageing labour market, as AI reshapes junior tasks and traditional career pathways, the decline of entry-level work raises fundamental questions about how organisations will develop skills, transfer knowledge and prepare future leaders. Addressing these risks requires employers to recognise that the first job serves two closely connected purposes: for young people, it is where work-readiness begins to take shape; for organisations, it is an investment in future capability, judgement and succession.

A generational problem, or a transition under strain?

Much of the discussion around younger workers begins with generational difference. Gen Z employees are regularly described as digitally confident, purpose-driven and willing to challenge workplace conventions. At the same time, however, they are also accused of being undisciplined, demanding, disloyal, anxious or insufficiently resilient.

Generations inevitably enter working life under different conditions, and these experiences can shape attitudes towards employment. Many members of Gen Z had their education disrupted by the pandemic before entering a labour market characterised by high living costs, housing insecurity, geopolitical instability and rapid technological change. These conditions have affected the practical choices available to them as much as their more abstract expectations of work.

Deloitte’s 2026 Gen Z and Millennial Survey provides important context. Nearly half of respondents report living from pay cheque to pay cheque. Housing availability and affordability equally influence career decisions for 69% of Gen Z respondents and 64% of millennials, while 55% and 52% respectively have delayed major life decisions because of financial pressure.

These pressures are also reshaping how younger workers understand career progression: only 6% of Gen Z and millennial respondents identify achieving a leadership position as their primary career goal. Yet 76% of Gen Z respondents and 67% of millennials remain interested in pursuing senior or executive leadership during their careers. Most prefer steady progress to rapid promotion, with stress, excessive responsibility and work-life balance among the principal factors reducing the immediate appeal of leadership.

This hints at a conditional or resequenced form of ambition: younger workers continue to want development, influence and meaningful contribution, while assessing more carefully the personal and financial trade-offs attached to traditional career paths.

There is also reason to be cautious about attributing workplace attitudes too readily to generational identity: recent research by the Work Foundation concluded that generational differences are frequently overstated, with many apparent divides better explained by age, life stage, working conditions or individual circumstances. Its findings also suggested that workers across generations share many underlying needs, even where the relative emphasis changes.

Randstad’s Employer Brand Research 2026 reached a similar conclusion: work-life balance, pay, security, equal opportunities and progression are widely valued across the workforce, but younger talent places greater emphasis on development, with around 78% supporting career-development benefits, compared with 66% of Generation X and 54% of Baby Boomers. This is a difference of degree within a shared set of expectations, rather than evidence that younger workers want an entirely different employment relationship.

The more useful question for employers is therefore less about what makes Gen Z uniquely difficult or different, and more about what has changed in the journey through which young people learn how to work.

The first rung has thinned

According to the CIPD, the transition into employment has become more formalised, demanding and uncertain, while traditional youth-employment sectors have contracted or changed the nature of the work they offer. Saturday jobs and other early encounters with paid work have declined, apprenticeships have shifted towards older workers, existing employees and higher-level qualifications, and supposedly entry-level jobs increasingly ask applicants to demonstrate previous experience.

Data cited by the Milburn report, in this sense, showed that the proportion of students aged 16 and 17 doing any paid work has fallen from 35% in 2006 to 19% today. It also recorded a 17% increase over the past two decades in the proportion of young people who have never held a paid job. More young people are therefore reaching adulthood without employer references, familiarity with workplace norms or the confidence that can come from having worked before.

Apprenticeships have also moved away from their traditional entry function. In England, starts among 16 to 24-year-olds have fallen by 35% since the Apprenticeship Levy was introduced. Level 2 starts for young people have declined by 68%, while Level 3 starts are down by around 20%. Only 4% of apprentices were previously outside education, employment or training.

Recruitment processes can create further barriers. A young person who might once have walked into a workplace, spoken to a manager and been given an opportunity may now face an application portal, automated screening, psychometric testing and a recorded interview before encountering another person. Lengthy processes and limited feedback make it harder for applicants to understand why they have been unsuccessful or how they might improve.

In this context, skills-first recruitment offers one possible response by shifting attention away from conventional signals such as degrees, job titles and linear career histories. The OECD found that this can expand access to employment and help employers recognise capabilities developed through alternative routes. However, the same report also concluded that these opportunities are not equally accessible. Candidates with higher levels of education are often better able to present and evidence their skills online, while employers may be uncertain about how much weight to give alternative qualifications or digital credentials. As we discussed elsewhere, there is also a risk that poorly designed assessments or automated recruitment tools create new barriers or reproduce existing bias.

These limitations point to a deeper problem: even a well-designed recruitment process can only recognise capabilities that applicants have had some opportunity to acquire and demonstrate. For younger candidates with little or no employment history, that opportunity is often precisely what is missing.

The first job, in this sense, performs several functions at once: it provides income, social connection and a route towards independence; but it also teaches people how to manage time, communicate with colleagues, receive feedback, deal with customers, resolve disagreement and recover from mistakes. It also allows them to observe how experienced people apply knowledge, make decisions and navigate situations for which there is no simple rule.

Employers often group these qualities together as ‘soft skills’. This language, however, risks presenting them as personal attributes that candidates either possess or lack. Many are better understood as work-developed capabilities: confidence grows through participation, communication improves through practice, and judgement emerges through observation, feedback and increasing responsibility.

A labour market that offers fewer opportunities to develop these capabilities should therefore expect a wider readiness gap.

The readiness trap

There is no denying that employers’ concerns about work-readiness reflect genuine operational pressures. The Milburn report, for instance, highlights organisations describing a growing need for induction, confidence-building, wellbeing support and pastoral care. It similarly points out that, while larger employers may be able to absorb these demands through established early-career programmes, smaller businesses often have limited management time or specialist support.

In consequence, a circular dynamic emerges when organisations respond by concentrating recruitment on people who can contribute immediately: young applicants have less experience and are therefore treated as higher-risk hires, so employers select experienced candidates instead. Younger workers then lose the opportunity to develop the track record required for the next vacancy.

The Open University’s 2026 Business Barometer illustrates the gap between employers’ intentions and their actions: four in five say they are prepared to train young people entering the workforce, and 75% would consider working with colleges and universities to create more opportunities. Yet only 47% are currently prioritising young people in recruitment, and only 34% offer recruitment, retention or training initiatives specifically for workers under 25. Half believe that young people entering the workforce are unprepared for working life, while 82% say they need more training in interpersonal skills such as communication and management.

Young people’s own responses present a different picture from assumptions about passivity or limited commitment. Among the Open University’s respondents who were outside employment and education, 68% would train or upskill if it helped them secure work or progress, and only 6% expected to remain outside work, education or training in two years.

Employers’ concern that trained entry-level staff may leave is also understandable, particularly where budgets and management capacity are constrained. This was cited by 24% as a barrier to investment. Yet 78% of the young people surveyed said that training, support and development beyond their immediate role would make them more likely to remain with an employer over the long term.

The wider workforce evidence reinforces the value of development. In 2025, ADP found that only 24% of workers felt confident that they possessed the skills required to advance to the next level, with on-the-job learning associated with greater productivity and lower turnover.

Work-readiness should therefore be understood as both an input into employment and an outcome of employment. Education and training provide essential foundations, while confidence, judgement and organisational fluency are developed most effectively through participation in work itself.

AI and the disappearing training ground

AI could intensify the readiness trap by changing how entry-level work is allocated and performed.

The current evidence points to a period of transition rather than a uniform collapse in junior hiring. The Open University’s Business Barometer found that 51% of employers report AI affecting recruitment or hiring processes, rising to 59% among larger organisations. Furthermore, 19% have reduced early-career recruitment, while 42% of that group attribute the decline to AI taking on more entry-level tasks. Among young people outside work and education, 42% believe AI threatens their job prospects and 49% feel wary about its impact on their future work.

The deeper organisational challenge concerns the wider learning architecture that sits behind junior work. Routine tasks have historically provided both useful output and a relatively low-risk environment in which employees could acquire a practical understanding of how the organisation works: preparing first drafts, reviewing documents, carrying out basic research, organising information and observing meetings enabled junior workers to learn how an organisation operated before taking on more consequential responsibilities.

Removing repetitive and low-value work can improve jobs, but a real risk arises whenever organisations automate a task without identifying the developmental function it previously performed: as the basic work disappears, the route from novice to experienced practitioner can become less visible.

It is widely accepted that AI can create the appearance of capability before the underlying judgement has developed. In this sense, Deloitte’s 2026 Human Capital Trends report warns that experienced workers may use AI to extend their expertise, while less-skilled workers can produce superficially plausible outputs that conceal weak reasoning. 42% of executives are already concerned that employees may become overly dependent on AI for essential cognitive tasks.

At the same time, younger workers may be essential to successful AI adoption. Deloitte found that 74% of both Gen Z and millennial respondents already use AI in their day-to-day work, up from 57% and 56% respectively in the previous year. Around one-third, however, believe that their employer provides insufficient training on AI’s capabilities, benefits and value, while around 30% think their organisation is unprepared for the changes it will bring.

This creates both an opportunity and a responsibility. Younger workers may bring confidence in experimenting with emerging tools, while experienced colleagues contribute domain knowledge, context and professional judgement. Organisations will need to design the interaction deliberately: digital familiarity provides a useful foundation, but responsible and effective use depends largely on the ability to test outputs, recognise uncertainty and understand when human intervention is required.

The strategic question is therefore wider than how much junior work AI can perform: employers also need to ask how people will learn once the traditional training ground of junior work has changed. Which tasks continue to provide essential exposure? Where will employees practise judgement before exercising it independently? How will they learn to challenge an AI-generated answer that appears convincing? Who will provide the human feedback and organisational context that technology cannot reliably supply?

A pipeline problem disguised as an efficiency gain

Reducing early-career recruitment may appear commercially rational when organisations face economic uncertainty, higher employment costs and an increasingly complex regulatory environment. Against this backdrop, experienced hires may seem less risky and require less induction, while AI can allow smaller teams to maintain or increase output. The immediate business case can therefore seem compelling.

The longer-term consequences, however, are harder to see. As Stephen Isherwood, Chief Executive of the Institute of Student Employers, recently told us, protecting early-career pipelines through downturns is essential to avoiding future capability and leadership gaps. Organisations may find themselves with narrower internal skills pipelines, weaker succession planning, greater dependence on expensive external recruitment and fewer employees equipped to move into specialist or leadership roles. This reflects a wider pattern identified in our Future@Work 2026 report, showing that confidence in preparedness and significant technology investment often coexist with limited investment in the human capabilities required to sustain transformation.

The wider demographic context makes this especially relevant. As experienced employees approach retirement, organisations need sufficient overlap between generations to transfer knowledge and develop successors. Deloitte’s 2026 Gen Z and Millennial Survey, in this sense, found that only around half of Gen Z and millennial respondents believe their teams could maintain performance if a key expert left suddenly, with limited time, high turnover and weak incentives obstructing knowledge sharing.

Yet multigenerational learning often remains underdeveloped. The Work Foundation found that seven in ten senior leaders believe their organisation benefits from the perspectives of a multigenerational workforce. However, only 21% provide management training designed specifically for multigenerational workplaces, while only 28% have mentoring schemes.

A similar point emerged in our conversation with Dr Grace Lordan, who highlighted poor knowledge transfer between generations as a barrier to productivity and stressed the importance of widening access to opportunity for people from lower socioeconomic backgrounds.

The contraction of entry-level opportunity also has unequal effects: young people with family support, professional networks, previous work experience and the financial ability to endure lengthy recruitment processes remain better placed to compete. As generational historian Eliza Filby, a previous guest on our In Conversation podcast, has argued in her work on the emerging ‘inheritocracy’, family wealth and parental support are playing an increasingly important role in shaping younger people’s opportunities and their ability to absorb financial risk. Meanwhile, those affected by poor health, low educational attainment, caring responsibilities, poverty or discrimination have fewer resources with which to absorb setbacks.

PwC’s analysis of young women outside education and work shows how these factors compound. 25% of young women without formal qualifications are NEET, compared with 19% of young men. A young woman with both poor GCSE attainment and a health condition is around four times more likely to be NEET than the average young woman. The report also warns that occupational segregation can concentrate women in lower-paid and automation-exposed work, while women remain less likely to report using generative AI at work.

Entry-level contraction is therefore also a question of workforce composition: where access increasingly depends on prior experience, confidence, networks or financial support, existing inequalities are likely to be carried forward through the pipeline, shaping who eventually progresses into specialist, management and leadership roles.

Rebuilding the first rung

Employers cannot resolve youth inactivity, poor health, educational inequality or fragmented public services on their own. Their decisions nevertheless shape how accessible the transition into work becomes and whether early employment develops sustainable capability.

1. Understand entry-level work as a developmental system

Before automating or removing junior tasks, organisations should identify which activities build knowledge, judgement, relationships and professional confidence. Where AI absorbs routine work, its developmental function may need to be recreated through supervised projects, simulations, rotations, shadowing and staged responsibility. The objective is to design stronger early-career roles for an AI-enabled workplace.

2. Recognise potential alongside proof in recruitment

Employers should ask whether requirements for prior experience or formal qualifications are genuinely necessary, and whether selection methods assess the capabilities the role actually requires. Skills-first approaches can help widen access, provided assessments are proportionate, transparent and fairly applied. For people entering the labour market for the first time, recruitment should also retain a meaningful human dimension, with clear expectations, accessible processes and constructive feedback.

3. Treat onboarding and management as part of capability-building

Young employees may benefit from greater structure, more regular feedback and clearer explanations of how progression works. This requires managers with sufficient time and confidence to support development while maintaining appropriate expectations. O.C. Tanner’s 2026 Global Culture report finds that cultures combining high expectations with strong support achieve better outcomes for performance, retention and mental health than environments offering either challenge or support in isolation.

4. Create more deliberate systems for multigenerational learning

Mentoring, reverse mentoring, shadowing, mixed-experience project teams and structured knowledge-transfer plans can connect younger workers’ emerging technical capabilities with the contextual knowledge of experienced colleagues. Knowledge sharing needs to be recognised within workloads, objectives and reward, rather than relying on individual goodwill.

5. Consistently measure the health of the pipeline

Entry-level recruitment figures reveal only part of the picture: organisations should examine retention, progression, access to training, apprenticeship completion, conversion from placements into permanent work and representation within future management pools. They should also assess how AI-related redesign is affecting the number and quality of junior roles, and whether development opportunities are distributed consistently across gender, disability, socio-economic background and working pattern.

6. Make early-career strategy a cross-functional responsibility

Early-career strategy increasingly raises questions that extend beyond recruitment or HR. Automated recruitment can engage equality, data protection and transparency requirements; assumptions about age or perceived resilience can influence recruitment and performance decisions; disabled applicants and employees may require reasonable adjustments; and unequal access to development, high-value work and progression can reinforce existing pay and representation gaps. Early-career strategy should therefore not sit with HR or recruitment teams alone. Decisions about AI adoption, job design, skills, workforce planning and organisational risk increasingly shape one another, requiring closer coordination across HR, Legal, Technology and business leadership. This reflects a wider recommendation from our Future@Work 2026 report, which called for more joined-up, cross-functional governance of workforce transformation. Applying the same principle to early-career work can help organisations consider these interconnected risks and longer-term workforce consequences together.

The first job as a strategic investment

The difficulties young people face in entering work are produced by a complex interaction between education, health, welfare, technology, labour-market demand and employer behaviour. Any durable solution will require action across that wider system.

Employers, however, still have an important choice: they can treat entry-level work primarily as a cost to be reduced, or as the infrastructure through which future capability is built. The former may offer short-term efficiency, but only the latter supports skills development, knowledge continuity, workforce diversity and leadership succession.

The future workforce will not arrive fully formed. Employers will have to help build it.