Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
As they trade the campus for the job market, fresh-faced graduates are quickly turning glum. From North America to Europe, university leavers are struggling to find suitable work. The unemployment rate for recent college graduates in the US has for the first time been consistently above the national level since the Covid-19 pandemic. In the EU, the employment rate of 15- to 25-year-olds has fallen over the past two years. Even the crème de la crème are struggling. The percentage of MBA students from Harvard Business School and MIT Sloan without a job offer three months after graduation has risen sharply since 2021.
The rise of artificial intelligence is a factor. In the US, entry-level tech jobs are coming under pressure as coding tasks are automated. The unemployment rate for computer engineering graduates is 7.5 per cent; the national rate is 4.1 per cent. In Britain, the Big Four accountancy firms have cut back on early-career hires in recent years. Economists and recruiters reckon higher costs are encouraging UK professional services firms to experiment with AI in more administrative tasks usually conducted by juniors.
But the plight of graduates predates the emergence of large language models in the workplace. Other structural developments are at play. As more young people around the world are choosing to go to university, competition for jobs has picked up. In Canada, a popular destination for young graduates, the unemployment rate for those under 25 with post-secondary education was 11.2 per cent in the first quarter. Last year in the UK there were an average of 140 applications per graduate job — the highest in three decades, according to the Institute of Student Employers.
As the supply of learned graduates has risen, demand has come under pressure. Research by Indeed, a job search site, finds that the share of US job postings requiring at least a bachelor’s degree has fallen over the past five years. As for the public sector, civil services are being squeezed across cash-strapped advanced economies. Multinationals with big graduate programmes have also been developing global capability centres in low-cost hubs such as India, where they are outsourcing more skilled roles such as data analytics, rather than just back-office functions.
The recent economic cycle has not been kind to recent graduates either. Many professional services and tech firms overhired in the post-pandemic years, assuming activity would bounce back faster than it did. Recruitment rounds have been subdued since. Demand for investment banking analysts and newly qualified lawyers has also been stunted by subdued global mergers and acquisitions activity. Global economic uncertainty makes it difficult for businesses to plan investments and hiring cycles.
Even if the economic environment improves, graduates will still be contending with the rise of AI in the workplace and competition for entry-level jobs. Ensuring students have a better understanding of post-graduation prospects would help them make wiser course choices. Universities and the private sector will need to collaborate more closely if courses are to evolve with the changing demands of work. Even so, businesses and governments will need to raise support for adult training and life-long learning; three-year degrees can quickly become obsolete. The travails of university graduates should also encourage more investment in non-degree vocational training and apprenticeship opportunities, as businesses have long been calling for.
A surfeit of underemployed elites is bad for society and the economy. To ensure it does not become a feature, education must evolve from being a ticket to a job to a toolkit of skills for a changing world.
Jamie Dimon is unequivocal about the impact of remote working on training new bankers. “It doesn’t work in our business,” the chief executive of JPMorgan Chase told Stanford’s Graduate School of Business this year. “Younger people [are] left behind.”
He has previously spoken of the importance of “the apprenticeship model . . . which is almost impossible to replicate in the Zoom world”.
In many workplaces, that apprenticeship model is as simple as sitting near a more experienced colleague or joining a client meeting to watch how it is done, while also learning the ropes by taking on often more repetitive and basic tasks.
But on-the-job learning is now facing the double threat of hybrid working, which means junior staff spend less time observing and listening to more senior colleagues, and generative AI, which is making obsolete many of the routine tasks that have long been building blocks of professional knowledge.
The effect has been noted across professional industries, from auditors and law firms to the big investment banks. Last year, the Public Company Accounting Oversight Board reported that the pandemic and remote and hybrid work had affected audit firms’ “apprenticeship model for on-the-job training, dissemination of culture, and professional scepticism”.
Others see the format as ripe for reform, anticipating that greater changes will come from generative AI.
Employers are investing heavily in AI to assist with working practices. Tools such as those rolled out by law firm A&O Shearman to deal with antitrust and contracts or Goldman Sachs to summarise complex documents and analyse data, are designed to enhance productivity. AI start-up Rogo aims to automate some of the laborious tasks done by junior investment bankers. However, some argue that by eliminating repetitive tasks, junior recruits will fail to develop muscle memory, which is essential for critical analysis, as well as the ability to identify mistakes in AI.
The changes may mean employers have to be more structured and deliberate in the training opportunities they offer junior staff, while working out how to get the best out of generative AI to free up time for their employees to do more valuable work.
Yolanda Seals-Coffield, chief people and inclusion officer at PwC’s US division, says hybrid working means that there needs to be a much more proactive approach to on-the-job training
Navid Mahmoodzadegan, the newly appointed chief executive of boutique investment bank Moelis & Co, says he hopes junior bankers will be rewarded with more “intellectually stimulating” work. Patrick Curtis, chief executive and founder of Wall Street Oasis, an online community catering to the financial services industry, predicts “this shifting more dramatically in the next 24 months as these [junior] roles start leveraging AI more, with some getting displaced outright”.
To maintain the apprenticeship model, leaders at some companies have followed Dimon in mandating five days of office attendance a week. Others, including Citigroup, are continuing with various hybrid working arrangements. Clare Francis, a partner at Pinsent Masons, a law firm that does not mandate days, says that while “junior lawyers benefit from office attendance,” some work, such as research, can be more effectively done at home. She adds that “everyone learns in different ways” and the reality is that many meetings are held on Teams so juniors “can see how they work” just as easily outside the office.
Yolanda Seals-Coffield, chief people and inclusion officer at PwC’s US division, believes hybrid working means “we have lost a little bit of that” tacit knowledge. She sees the solution in junior and senior staff being “far more intentional” about mentoring and debriefing. “We have to be [in] a world post-Covid where people are hybrid, you’re no longer sitting next to someone in an office or on a client side or at a meeting.” Staff, including trainees, at PwC US are required to be on-site half of the time. The arrangement means new recruits need to be clear about saying, “I want to actually shadow this particular behaviour”, she says. This might mean a junior associate sits in on a virtual client meeting or reviews a recorded walk-through of a technical process, followed by structured debriefs to reinforce the learning.
Rather than “a passive experience”, says Seals-Coffield, it requires bosses to think about modelling behaviour such as through guided questioning and peer feedback. AI could start to help with this by, for example, flagging to a team leader that a scheduled interview might provide a shadowing opportunity for a graduate employee who has indicated they are looking for this skill.
I’m optimistic that the tools will enable juniors to think about the material critically
Staff still need to be able to provide critical judgment to evaluate the work that AI might be producing
New graduates might also be more fluent in AI than their supervisors, potentially opening up new responsibilities for them to take on. Patrick Grant, project director of legal tech and innovation at the University of Law, says they have developed courses to encourage students to use tools such as ChatGPT critically and ethically in assisting with research, organisation and editing, and to spot “errors or hallucinated references”. They encourage students, for example, to compare drafts of clauses with AI outputs to understand the tools’ lack of nuance.
Francis points out that junior lawyers using generative AI for research is not that different from past generations switching from books to the internet. “Today, the workflow of junior lawyers is not yet fundamentally different [from] how it was before AI was a tool at the disposal of legal teams. Lawyers at the outset of their training continue to learn by verifying results.” The role will “adapt and evolve” alongside AI.
Some argue that by eliminating repetitive tasks, juniors can progress more quickly by taking on more sophisticated and creative work earlier. Francisco Morales Barrón, a partner at Vinson & Elkins law firm in New York, is sceptical about the traditional model. “A lot of older generations will say you learn so much from reviewing thousands of contracts . . . somehow magically you learn through the process of repeating it hundreds of times. I’m optimistic that the tools will enable juniors to think about the material critically.” Francis agrees: “How much do you learn from a monotonous task?”
Seals-Coffield says employers need to get to grips with the desired outcomes of graduate training by separating the task from the skill: “If they’re not [going to] have the opportunity to do that task 50 times, they still need to be able to evaluate it, they still need to be able to provide the critical judgment and independent thinking that is important to evaluate the work that AI might be producing.”
This could include simulations in training, says Francis, “to develop, test and challenge the lawyer both on legal expertise as well as on soft skills such as communication and negotiation”.
Others suggest that any freed-up time will not be spent on more creative tasks, but on additional grunt work — or cutting the number of junior jobs.
According to Oxford Economics, a consultancy, “there are signs that entry-level positions are being displaced by artificial intelligence at higher rates”.
But in some organisations this could be a while off. “Analysts in my class are in a relatively favourable position in which we will have the aid of AI without it replacing us just yet,” reports one investment banking analyst.
Additional reporting by Anjli Raval and Sujeet Indap
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
More than three years since Apple’s film CODA won the best picture Oscar, the tech company has hit another Hollywood milestone: its first summer blockbuster.
F1, starring Brad Pitt and Damson Idris, has taken in more than $200mn at the global box office since it opened on June 27 and is expected to pass $300mn this weekend. “This is a movie that will run and run and run,” said Jeff Goldstein, distribution chief at Warner Bros, Apple’s partner on the film. “There’s a lot of gas left in the tank.”
It gave Pitt the best opening weekend in his 37-year acting career and is by far Apple’s best box office showing. By pairing Jerry Bruckheimer — the producer behind hits Top Gun and Beverly Hills Cop — and Joseph Kosinski, the director of Top Gun: Maverick, Apple showed it was serious about filling cinema seats this summer.
Apple is also nearing another potential milestone: making money from a big-budget movie. F1, co-produced by Pitt’s Plan B Entertainment (now controlled by French media group Mediawan) and Jerry Bruckheimer Films, had a production budget of more than $200mn, and distribution costs are estimated at more than $50mn.
The company’s decision to release the film as a premium on-demand video before it moves to the Apple TV+ streaming service should bring in additional revenue.
“With F1, they were looking for something very commercial,” said a person close to the studio. “This has proved that they can do theatrical [releases].”
Apple had a lot to prove on that point. In 2023, chief executive Tim Cook travelled to Cannes for the premiere of Martin Scorsese’s Killers of the Flower Moon before it was rolled out to more than 3,600 cinemas in the US and thousands more worldwide.
With a budget of more than $200mn, Killers seemed to be a statement of Apple’s intent in the movie business — but it generated only about $160mn in gross box office receipts worldwide. It was followed by two other big-budget releases, Argylle and Ridley Scott’s Napoleon. Both were considered commercial disappointments.
The performance of those films compounded questions in Hollywood about whether Apple could become a major producer of blockbuster films and streaming shows. Some wondered why it had not bought a Hollywood studio to build up the scale of Apple TV+. As with Amazon, it is viewed by Hollywood studios as something of an outsider, thanks to a corporate culture that remains firmly rooted in tech.
But with the release of F1, it has followed more Hollywood conventions than in the past. It made Cook and other executives available for a small number of pre-release interviews — the kind of publicity push that is typical for traditional studios but has not previously been employed by Apple. “I think this is a step forward for them in terms of how they want to live in this world,” said an executive at a traditional studio.
Apple also leaned heavily on its technology and platforms with F1, using iPhone camera tech in real race cars to film high-resolution footage. To encourage people to come and see the film, it offered ticket discounts through Apple Pay and there were special appearances by Cook and Pitt at its flagship retail store in New York.
Movie producers describe Apple as aiming for the “elevated mainstream” but dismiss the idea that it only has art house aspirations. The company also appears to be picking up the pace of releases. Spike Lee’s Highest 2 Lowest — a collaboration with indie film studio A24 — will be in cinemas from August 15 and on Apple TV+ from September 5.
Apple is also working on Matchbox, a live-action feature based on Mattel’s toy car brand and starring John Cena. Matchbox is the first of what is expected to be a number of films based on Mattel products following the massive success of Barbie for Warner Bros.
Kosinski and Bruckheimer are working together on another as-yet untitled project for Apple. And it is developing Mayday, an adventure film starring Ryan Reynolds and Kenneth Branagh.
F1 was clearly a step up in its ambitions to create a box office winner, but the movie did not have the easiest of starts: production ground to a halt after a few weeks because of Hollywood strikes in 2023. Restarting the film added extra costs: it was shot on location at racetracks in the UK, US and Abu Dhabi during F1 practice races.
Now, with the success of the film, Apple may have the potential for sequels and its first franchise, said a person close to the studio. Just as importantly, it is expected to increase subscriber numbers on the Apple streaming platform.
“[F1] really validates what Apple’s doing,” said Kevin Walsh, whose production company has made several films with Apple, including Napoleon and Echo Valley. “They’re in the business to stay and are ready to expand.”
