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AI adoption is upending the job market for entry-level workers
In a call with investors last month, Open Text Corp. OTEX-T CEO Mark J. Barrenechea outlined a sweeping corporate realignment that will eliminate hundreds of jobs and redefine the roles the Canadian tech company is willing to fill.
The software company is fully committed to an 'AI-first strategy' that will change staffing, spending and product development, Mr. Barrenechea said. Roles that can be handled by artificial intelligence will no longer be backfilled, and future hires will be required to bring AI fluency to the table.
'Our digital worker approach is, let AI and machines do the work. This is a low-cost and limited workforce that will benefit all organizations in all industries,' he said. 'We can take human tasks that require dozens of screens and days of work and reduce that down to a dialogue box in minutes.'
The move follows a similar announcement in April from Shopify Inc. SHOP-T chief executive officer CEO Tobi Lütke. In a memo to employees, he said using AI effectively 'is now a fundamental expectation of everyone at Shopify,' and it should be the first consideration before turning to new hires.
'Before asking for more Headcount and resources, teams must demonstrate why they cannot get what they want done using AI,' he wrote. 'What would this area look like if autonomous AI agents were already part of the team? This question can lead to really fun discussions and projects.'
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The two tech companies, which did not respond to requests for comment about their AI strategies, represent the most high-profile examples of Canadian firms scaling back junior hiring amid a broader corporate shift. Around the world, major employers are increasingly turning to artificial intelligence to perform a growing share of work – eliminating some positions while raising the bar for new recruits.
In Canada, the shift is adding pressure to one of the most challenging youth labour markets in decades. Statistics Canada recently reported that 14.6 per cent of people in their late twenties were not in employment, education or training in the 2023/24 academic year, an increase of 1.8 percentage points from the previous year that may signal 'higher risks of social disconnection and exclusion among youth.' And among postsecondary graduates under the age of 25, the unemployment rate was 11.2 per cent in the first quarter of 2025 – the worst start to a year since at least 2005, excluding the pandemic.
For recent graduates and early-career professionals, the spread of AI can mean fewer stepping-stone jobs and higher-level responsibilities, experts say.
Travis O'Rourke, president of recruitment firm Hays Canada, said the growing role of AI adds new complexity to a youth labour market being shaped by steep budget cuts and immigration-driven competition.
And amid a disruptive trade war with the United States, many employers are delaying hiring at all levels. Mr. O'Rourke said companies are focused on cutting repeatable or administrative roles while raising expectations for incoming workers. But that comes with long-term risks, he said.
'What happens when junior developers don't get trained? How do you become intermediate if you were never junior?'
Mr. O'Rourke said AI's effects on junior-level labour are prompting both recruiters and educators to reassess how young people gain experience and enter the work force.
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Fabian Braesemann, a researcher at the University of Oxford, said the loss of junior roles means losing the hands-on experience needed to build 'judgment and fluency.'
'Many entry-level workers are no longer asked to produce first drafts – they're asked to orchestrate the tools that do it,' said Dr. Braesemann, who studies the effects of generative AI on global labour markets. 'That may sound empowering, but it removes a key stage of learning.'
Skipping that foundational phase could leave workers without the mental rigour or domain knowledge needed to advance, he said. 'You might get good at judging outputs,' he said in an interview, 'but not at structured thinking.'
That could also hinder organizations if entire cohorts of workers rise through the ranks without ever building a baseline understanding of how things are done.
History is filled with examples of technologies rendering human labour obsolete or redundant, he said. But the speed with which AI is improving and spreading threatens workers' ability to withstand and thrive in a period of rapid disruption.
'Critically thinking about information you receive and being able to produce something that is of value – taking the latest technologies into consideration – I think it's a skill that needs to be put to the surface even more,' he said.
At the University of Waterloo, which places more than 25,000 co-op students annually, administrators have a clear view of how AI is reshaping entry-level work. The school's employer network spans startups to multinationals, offering a broad glimpse into evolving job expectations.
'We are seeing that there is a softening in the market for what might have been traditional entry-level jobs,' said Vivek Goel, the university's president. 'But the roles aren't vanishing – they're changing.'
Co-op students are being hired to review AI-generated content – a shift from producing work to verifying it. Dr. Goel said many employers now expect students to be comfortable with generative tools and able to intervene when the output isn't right.
'What we're really preparing students for now is working in teams that include both people and AI agents,' he said. 'And someone has to manage that.'
For universities, that means doubling down on the human skills AI can't easily replicate, such as critical thinking, context awareness, and the ability to work with ambiguity. 'I think it's less about adapting our programs and more about returning to what postsecondary education was always meant to do,' Dr. Goel said.
'Because you can't prepare graduates for specific roles – those are changing too fast. But you can prepare them to be ready for change.'
