AI boosts entry-level jobs but heightens workplace stress in Australia

Australian employers are reporting an uptick in entry-level hiring as artificial intelligence becomes embedded in workplaces, despite ongoing concerns about job displacement. Recent research found that 41 per cent of organisations have seen an increase in entry-level opportunities as a result of AI, compared to 19 per cent experiencing a decline.

AI reshaping hiring

The influence of AI is particularly pronounced in the public sector, where 58 per cent of organisations report growth in entry-level roles. In the private sector, 37 per cent note an increase. The findings contrast with previous discourse suggesting that AI could reduce opportunities for graduates and school-leavers.

The study surveyed more than 600 senior business decision-makers and HR professionals across private, public, and not-for-profit sectors. It provided insight into emerging employment trends, with many employers indicating a preference for job augmentation rather than replacement through AI.

"Despite recent talk about the negative impact of AI on the employment prospects of graduates and school-leavers, the survey data suggest that the future trajectory of the Australian jobs market is nuanced and uncertain. Our survey data suggests that while some employers are seeing a decrease in the number of entry-level roles due to AI, this is more than offset by the number who report an increase. This may be due to the growing recognition that professional roles will dominate the half a million jobs expected to be created over the next five years. HR professionals, in particular, will recognise that investing in career pathways for these roles is becoming more important for effective workforce planning, especially as Australia's working-age population continues to shrink," said Sarah McCann-Bartlett, CEO, Australian HR Institute.

Policy and governance

Ninety-three per cent of employers use AI in their operations, yet only 68 per cent have formal policies or guidelines for oversight. This gap is especially significant within small businesses, where just over half have instituted relevant policies, compared to 90 per cent of public-sector organisations.

Three-quarters of employers provide staff training on AI use, typically led by HR teams. Moreover, 82 per cent have consulted employees during AI adoption. Within HR functions themselves, adoption focuses on workforce analytics and learning, rather than automating recruitment decisions.

"Adopting AI without clear guardrails risks undermining employee and customer trust and organisational performance. Strong governance and training need to go hand in hand to ensure AI is introduced ethically and effectively in Australian workplaces," said McCann-Bartlett.

Rising workplace stress

Stress-related absences have risen, with 57 per cent of employers indicating this as a factor behind unscheduled leave, up from 42 per cent two years earlier. The average number of absence days for employees has held steady at six per year. The combination of recruitment, retention, reorganisation, reskilling, and redundancy-what the institute calls the '5Rs effect'-is cited as contributing to increased pressure.

Most employers agree that AI is raising work intensity, and separate research highlights job demands, workplace relationships, and remote work as major contributors to stress levels. The data suggests that while technology brings productivity improvements, it also creates psychosocial challenges during ongoing workplace transformation.

"HR has an opportunity to lead the adoption of AI and the related challenge of managing and minimising employee stress levels by promoting high-performance working practices that improve wellbeing and reduce pressure. Combining consultation, empowerment, and effective training can support healthy, high-performing workplaces," said McCann-Bartlett.

Labour market dynamics

Employment confidence remains robust, with recruitment intentions edging up as 71 per cent of employers plan to hire in the next quarter, compared to 69 per cent previously. At the same time, redundancy plans have also increased, with 30 per cent of organisations expecting to make cuts. However, the majority of those planning redundancies also intend to recruit for other positions, underscoring an ongoing reshaping of workforce structures.

Recruitment challenges persist, with 35 per cent of employers experiencing difficulties in finding suitable candidates, up from 33 per cent in the last quarter. Pay growth expectations have moderated, with employers forecasting an average of 2.7 per cent growth to October 2026, a slight decrease from earlier projections.

"While redundancies are trending upward, they are not rising sharply enough to indicate a downturn. Instead, they form part of the broader dynamic, where employers continue to recruit, reorganise and reskill in response to a rapidly changing environment. As AI continues to reshape how we work, all sectors, including the private, public, and not-for-profit, must strengthen their workforce planning, governance, and people management skills to ensure technology supports human capability," said McCann-Bartlett.