Employers value human skills as AI reshapes early careers

AI is reshaping, rather than replacing, entry-level roles - and students are expected to demonstrate adaptability on entering the workforce, writes Claire Tyler, head of insights at Institute of Student Employers

Artificial intelligence is no longer on the horizon as graduates take their first steps into the workforce. It is already reshaping the roles students will enter and the skills they will need to succeed. Students are therefore navigating a labour market that is evolving in real time.

New findings from the Institute of Student Employers (ISE) Student Development Survey 2026 underline the scale of this shift.

Nearly nine in ten employers (87%) expect AI to reshape entry-level roles in some way within the next three years. However, crucially this is not a story of widespread job loss. Instead, it is one of evolution, as tasks, skills and expectations are reshaped.

Evolution, not elimination

Despite persistent headlines about automation-driven job losses, our employer evidence is more measured.

Four in ten organisations do not expect AI to replace any entry-level roles in the next three years, and a further 42% anticipate only limited displacement (1-10% of jobs). Just 18% foresee more significant replacement.

Instead, employer data reveals a gradual but meaningful evolution of work. While 58% expect minor adjustments to tasks and responsibilities, almost a third (29%) anticipate more substantial change.

Importantly, this transformation is already underway: 43% report that entry level roles have informally adapted to AI, even where formal redesign has not yet occurred.

For educators and career professionals, this distinction matters. Large graduate employers are telling us that students are not entering a labour market with significantly fewer opportunities overall, but one in which the content of roles is shifting.

The task-level transformation of work

The clearest signal from our research is that AI is changing what early career hires do, rather than whether they are hired.

Routine activities - administrative tasks, basic data processing, early-stage research and drafting - are declining in importance. These are areas where generative AI tools are most effective. As a result, entry-level roles are being rebalanced away from repetitive execution and towards higher-value contributions.

Meanwhile, 'human' skills are becoming more important. Employers consistently highlight critical thinking, communication, adaptability and judgement as skills that will grow in significance. The ability to evaluate and apply AI-generated outputs is fast becoming a baseline expectation.

For students, this reinforces a long-standing message: technical capability alone is not enough. The differentiating factor for graduates will be increasingly how they think, interpret and apply knowledge in AI-augmented environments.

AI literacy: developed, not just recruited

One of the more striking findings from the ISE Development Survey is that employers are not primarily seeking fully formed AI experts at the point of hire. Instead, they are building these capabilities internally.

Employers are almost twice as likely to develop digital and AI literacy during their early career development programmes (70%) as to recruit for it (37%). Practical use of AI tools, alongside broader data and digital capabilities, is now widely embedded in early career development programmes. Students are therefore increasingly expected to enter the workforce with the mindset and capacity for continuous upskilling.

In this context, adaptability becomes a core graduate attribute. Yet, employers report that this is an area where new hires often fall short, with around a third (35%) suggesting that new graduates struggle to adapt to changing workplace demands.

Student perceptions: anxiety and opportunity

While employers emphasise evolution, student perceptions tell a more complex story. Our recent collaboration with Prospects explored the impact of AI on the career plans of over 700 students and early career professionals. The results reveal that 13% have already changed their career plans due to AI, with a further third considering doing so.

Emotionally, responses are mixed. Curiosity (34%) and anxiety (27%) dominate, reflecting both the opportunities and uncertainties associated with AI. Among those who have changed direction, fear of job replacement is the primary driver (69%). However, many are also motivated by new career opportunities (29%), learning new AI skills (36%) or pursuing emerging roles or targeting higher-paying, AI-related careers (32%).

This divergence between perception and reality therefore presents a key challenge when supporting students. Misinformation or incomplete evidence could lead students to make premature or unnecessary changes to their plans. Clear, evidence-based guidance from employers and educators will be essential to support students in their transition into sustainable careers.

Recruitment challenges in the age of AI

AI is not only reshaping jobs; it is also transforming recruitment. The ISE Development Survey highlights growing concern among employers about how candidates are using AI during selection.

Two-thirds (67%) of employers are now concerned that graduates might be using AI to misrepresent their skills, a notable increase on last year (52%). This raises questions about authenticity of applications and whether new hires may be less well aligned with their roles, with potential impacts on employee development, performance and wellbeing.

This creates a delicate balance. Students being equipped to use AI tools effectively and ethically, must also appreciate the importance of demonstrating genuine capability during recruitment processes.

Wellbeing and the human impact of AI

The influence of AI extends beyond skills and roles into the broader experience of entering the workforce. Over half of employers (54%) report increased anxiety among new hires, alongside rising concerns about career uncertainty (33%) and burnout (18%).

This likely reflects the wider context in which students are making career decisions. Uncertainty about the future of work can exacerbate existing pressures, particularly for those who feel less prepared.

Employers are responding by increasing investment in mental health and wellbeing support, but gaps remain between provision and perceived effectiveness.

Supporting young people to build confidence, resilience and a sense of agency to navigate uncertainties is therefore increasingly important.

Overall, our employer evidence suggests that AI is reshaping entry-level roles rather than replacing them, shifting the focus away from routine tasks towards human-centric skills. In a labour market shaped by continuous technological change, the ability to learn and evolve may be the most valuable skill of all.

Written by

Claire Tyler

Head of insights

Institute of Student Employers