TORONTO — University graduates have new competition in the job market: AI. Recruiters, business consultants and university representatives say tools like ChatGPT are increasingly occupying the first rung of the employment ladder, making it harder for graduates to get into the job market. As a result, many people graduating this summer are struggling to find jobs as AIs do the work typically given to interns and co-op students.

Chris Brulak, founder of Toronto-based tech recruitment firm DevTalent, said some of his clients have pared back the number of software developers on staff as they use AI tools to replace their work. “The mindset is, ‘We’ll hire one developer that’s comfortable with an AI tool, and they’ll be five to 10 times more productive,’” said Brulak. “That eats away at the entry-level software developer role.” 

The rise of AI may help companies save money on staffing in the short term, but the shift could effectively eliminate the training ground workers need to progress in their careers. And things are changing fast. A recent survey of 204 middle-market companies in Canada by consulting firm RSM found that 91 per cent are using AI in some capacity, up from 74 per cent a year earlier. That’s putting immense pressure on early-career workers. 

“It is obviously a concern that has been front and centre with a number of people coming out of college and university programs,” said David Brassor, who leads RSM’s technology consulting business in Canada. “Will the job market be impacted by AI? The answer is, unfortunately, invariably, yes.” 

AI’s potential impact on the labour market is enormous. Jobs involving marketing, customer service, data entry and document analysis are among those already being hit hard. AI may also replace coders, as Nvidia CEO Jensen Huang has suggested, by making programming more efficient and eventually automatable. 

The University of Waterloo is keenly aware of how AI is reshaping the entry-level labour market. Each semester, the school helps about 10,000 students land work placements—including at some of the world’s largest tech companies—through its globally renowned co-op program. Landing those work terms has become more challenging since the mass adoption of generative AI, said Shabnam Ivkovic, director of industry relations at the university’s co-op program. 

“​​There is an impact on those frontline jobs,” said Ivkovic. “You have an employer sometimes come forward and say, ‘We’ve changed this process—it’s no longer a human doing it.’” 

Statistics Canada job numbers underscore how inaccessible the labour market has become for young workers. The unemployment rate for students aged 15 to 24 was 20.1 per cent in May, up from a low of 11.4 per cent in May 2022 and 3.2 percentage points higher than a year earlier. Overall unemployment, meanwhile, increased 0.1 percentage points to 7 per cent last month. 

Tahsin Mehdi, a senior research economist at Statistics Canada, hesitates to draw a direct connection to the AI boom and the challenging job market for young workers. He pointed to a Statistics Canada report from last year that found nearly 70 per cent of businesses planning to use AI to produce goods and deliver services didn’t expect to change their employment levels, while 9.4 per cent anticipated a decrease. 

“You may find anecdotal evidence or specific firms which eliminated jobs because of AI, but empirically it is difficult to say with any degree of certainty if AI is replacing jobs on a wide scale,” said Medhdi. “For these types of analysis, we typically need to wait it out a bit and get more data.” 

The body of anecdotal evidence is growing fast. In April, Shopify CEO Tobi Lütke ordered teams to prove that AI cannot do a particular job before hiring a person for the position. Duolingo CEO Luis von Ahn announced a similar “AI-first” strategy around the same time and said—in remarks he later walked back—that the technology would eventually replace contract workers. Klarna CEO Sebastian Siemiatkowski said in May that the fintech had shrunk its workforce by 40 per cent, thanks in part to AI. 

Ivkovic said it’s enough to worry students and staff at the University of Waterloo. The school has managed to keep its co-op employment levels up, she said, but that’s taken more work and a careful understanding of how the labour market is shifting. Changes to the student advisory process have helped, said Ivkovic, with advisors now dedicated to a group of students within a specific faculty, and each student working with the same advisor for their entire co-op term. The change, she said, helps advisors better support students through a changing job market.

The Waterloo Experience Accelerate program is another initiative that helps students leap over the entry-level job void, said Ivkovic. The program matches groups of first-term co-op students with an industry partner to work on a specific project for that business. “They continue gaining skills so that they’re stronger in that next round of recruitment,” she said.

Most workers entering the job market, however, don’t have much industry experience, said Brulak. Historically, that gap has been filled by internships and entry-level jobs. Eliminating those roles in favour of AI means recent graduates aren’t learning the skills they need to move up in their careers, said Brulak. He also worries that an over-reliance on AI will erode the quality of the technology over time as training data becomes overwhelmed by AI slop. “Long term, that’s going to harm the industry,” he said. “It’s going to be a contracting cycle of talent development, and then eventually only a handful of people will actually be really good at the job.” 

Still, Brulak said he’s replaced workers with AI in his own business. He estimates AI tools save him between $20,000 and $30,000 a year on marketing and legal fees he would have previously paid to contract workers. 

Experts who spoke to The Logic all said that there’s ample opportunity for job seekers with strong AI skills. Data from LinkedIn shows that hiring for AI talent has increased 30 per cent globally compared to all other hiring from fall 2023 to 2024. 

“This shift in how we work is creating a new set of expectations for early-career professionals,” said Diana Luu, head of LinkedIn Canada. “They’re entering roles that demand higher-order thinking, adaptability and cross-functional collaboration from day one. That doesn’t mean early-career jobs are disappearing,” she said, “it means they’re evolving.” 

While early-career workers may be acutely vulnerable to the AI-adoption boom, Brassor said all workers need to be prepared for how the technology will impact their jobs. “Whether it’s somebody who’s five years into a role, or whether they’re 25 years-plus into a role,” he said, “we’re all having to fundamentally change how we work and how we leverage AI.”