Why replacing junior staff with AI will backfire

As more companies brazenly declare AI-driven layoffs in 2025, the first jobs on the chopping block appear to be junior positions and entry-level jobs.

Graduate schemes and internships are at risk of becoming a thing of the past as major firms slash headcount in a push to deploy AI. Recently, Amazon laid off 14,000 corporate employees as it aims to invest in its “biggest bets” which includes generative AI.

Other companies that are leaning on AI and cutting jobs include Accenture, Salesforce, Lufthansa and Duolingo.

Now, concerns are mounting over whether AI can do the work of entry-level workers and graduates, thereby raising the barrier for entry.

In fact, 62% of U.K. employers expect that junior, clerical, managerial and administrative roles will most likely be lost to AI, according to a new survey of 2,019 senior HR professionals and decision makers by the Chartered Institute of Personnel and Development (CIPD.)

And further data shows that the number of graduate roles available has declined in the past year. In the U.S., postings for entry-level jobs have declined about 35% since January 2023, per data from labor research firm Revelio Labs.

In the U.K., the Institute for Student Employers found in its annual Student Recruitment Survey that just under 17,000 graduate vacancies in the U.K. had received 1.2 million applications highlighting the intense competition and the limited positions available to young people.

As companies cut back on hiring junior workers, Fabian Stephany, assistant professor of AI and work at Oxford Internet Institute, pointed out that recruiting entry-level workers is actually an “investment” in the future.

Although they tend to make mistakes and require hands-on training, experts told CNBC why replacing junior workers with AI will actually backfire on companies in the long-term.

Healthy organizations cultivate their own talent and it’s not feasible to hire for all positions externally, according to Chris Eldridge, UKI and North America CEO of tech recruitment firm Robert Walters

“If you remove too many junior roles, you can starve the internal talent pipeline,” Eldridge said.

“Entry-level, junior-level roles are the breeding ground for the leadership of the future. I think if you overcut that junior layer, you will have a talent bottleneck at some point in the business that leads invariably to an increase in hiring costs.”

If a company doesn’t have enough young talent, it will be forced to hire from the outside in the future and will create a “talent doom cycle” which will result in increased costs, salary inflation, and a dependency on the external talent market.

“I represent a talent consultancy, however, we would advise every organization to have several routes to talent in the market, and one of them is to create your own,” Eldridge said.

“Also talent retention is very important through the training development and opportunities you can give people… but you’re missing a significant aspect of growth if you shut down the pipeline on bringing junior or entry-level talent into an organization,” he added.

Companies that don’t nurture young talent will eventually lose touch with consumers and mainstream culture, according to Oxford Internet Institute’s Stephany.

“A firm is part of society, and if it doesn’t reflect society adequately, it’s very hard for me to imagine a business model or product that doesn’t need this generational bridge…and young people bring in fresh ideas that bring a new perspective,” Stephany said to CNBC Make It.

Firms that fail to adapt and hire junior employees will become “like an elderly homes company,” Stephany said. “It’s like a company of soon to be retired people because… they might not have the edge and the vibe that you need to bring in a new product to the market.”

Eldridge agreed noting that there’s a stereotype that all good ideas come from the top but “a very healthy percentage of great ideas in the company come from people within their first two or three years in an organization because they see it with fresh eyes.”

An additional bonus of having young people in an organization is the opportunity for reverse mentoring, particularly as young people bring a crucial knowledge of technology, and losing that would be a “genuine threat” to organizations.

“If anything erodes that opportunity for mentorship both ways and that knowledge transfer both ways, it will drive down institutional knowledge or create institutional gaps,” he said.

Matthew Prince, co-founder and CEO of Cloudflare, told CNBC’s “Worldwide Exchange” last week that the tech firm plans to hire 11,000 interns in the age of AI in order to upskill the next generation but also bring fresh new ideas.

“50-year-old CEOs like myself aren’t going to be the ones to teach companies how to take advantage of AI. We need to learn from the next generation,” Prince said.

“Tacit knowledge” is an important element to keeping an organization healthy, according to Stephany. It refers to the implicit and unspoken information about a company’s culture that colleagues’ share.

“There are so many things that make a company work that are nowhere to be written down,” he said. “They emerge from the network of people, those people that sit sometimes in the cafeteria that say ‘I’ve been with the company for 25 years, I can explain you what what’s going on, why X has a problem with Y.

“That’s the type of company wisdom of tacit knowledge that’s a lubricant for the economic wellbeing of the company,” he said.

Robert Walters’ Eldridge added that young people are sponges and “absorb the best of a business” including this type of tacit knowledge that can only be passed on through people.

“They’re the culture carriers of the future as well so if you’re not bringing that cohort in that what does that mean down the road in terms of culture?”

“I think businesses rely on that upwards pressure, where you bring in a cohort of inexperienced people, they are hungry, they want to learn. They ask an awful lot to organizations, which sometimes test them and keeps a company on its toes. if you don’t have that it could potentially end up being a detriment to the culture and to the performance of an organization,” Eldridge added.