Youth Unemployment in the Age of AI: Reality Check from Goldman Sachs

As artificial intelligence continues to infiltrate workplaces across industries—from finance and law to customer service and content creation—concerns are mounting over its potential to displace human workers, particularly young professionals. With automation tools becoming increasingly sophisticated, there’s growing anxiety that the next generation may face a shrinking job market. But what does the actual data say?

Goldman Sachs, one of the world’s leading investment banks, recently released a comprehensive analysis exploring how AI is influencing employment trends—especially youth unemployment—in major economies. The findings are revealing: while there are certainly risks of displacement, the story is far more complex than a simple narrative of machines replacing young workers.

AI Is Transforming Work—But Not Eliminating It

One of the key takeaways from the Goldman Sachs report is that AI is not killing jobs outright—it’s transforming them. According to the data, while certain entry-level and repetitive roles are being automated, new roles are simultaneously emerging in areas such as AI management, data analysis, and ethical technology governance.

However, this transformation requires new skills—and that’s where the challenge lies. Young workers, especially those entering the job market with traditional or outdated degrees, are increasingly being overlooked in favor of candidates who can demonstrate digital literacy, adaptability, and tech proficiency.

The mismatch between skills demanded by employers and the ones possessed by young applicants is a major driver of youth unemployment, more so than AI itself.

What the Numbers Say: Trends in Youth Unemployment

Goldman Sachs analyzed labor data from the U.S., EU, India, and emerging Asian economies and found the following trends:

• Youth unemployment (ages 16–24) in advanced economies hovers around 12–14%, with slightly higher rates in Southern Europe.

• In emerging economies like India, the youth unemployment rate is even more concerning, often exceeding 20%, particularly among urban graduates.

• Automation-prone industries—like retail, customer support, and clerical work—saw a marked decline in entry-level hiring, especially in the post-pandemic years.

• Conversely, sectors like healthcare, education, green energy, and technology have seen hiring growth, though these sectors demand higher qualifications and training.

While AI-driven automation contributed to job losses in administrative and low-skill service sectors, unemployment among youth was more correlated with lack of access to upskilling opportunities, rather than AI replacing human labor outright.

Entry-Level Jobs Are Changing, Not Disappearing

The fear that AI will make traditional entry-level roles obsolete isn't unfounded, but it's not entirely accurate either. Goldman Sachs’ data shows that entry-level roles still exist—but their nature has changed.

For instance:

• In banking, roles like data entry clerks and document processors have shrunk, but new openings for KYC analysts, cybersecurity interns, and AI tool assistants have emerged.

• In media and communications, content moderation, transcription, and social media scheduling are being automated, but demand has grown for digital campaign managers, prompt engineers, and AI content reviewers.

These examples highlight that while AI is displacing some functions, it’s simultaneously creating new points of entry—albeit ones that require more sophisticated technical and soft skills.

Impact Varies by Education and Socioeconomic Background

Goldman Sachs emphasizes that the AI disruption is not evenly distributed. Youth from underprivileged backgrounds are far more likely to face barriers in adapting to the new job landscape.

• Young workers without access to quality education, digital infrastructure, or industry networks are more vulnerable to joblessness.

• Many educational institutions still rely on outdated curricula that fail to prepare students for AI-centric roles.

• Internships and apprenticeships in AI-forward companies remain limited and highly competitive, making it difficult for average students to break in.

This disparity leads to what economists call "structural unemployment"—a situation where jobs are available, but candidates lack the qualifications to secure them.

AI Literacy: The Key to Unlocking Employment

Goldman Sachs advocates for a major policy pivot toward AI literacy and digital education, especially at the secondary and college levels. According to the report, countries that have integrated coding, machine learning basics, and data analysis into their public education systems—like Estonia, Singapore, and South Korea—are already seeing lower youth unemployment and higher digital job placements.

Public-private partnerships are also proving effective. For instance:

• In the U.S., companies like Google and IBM are partnering with community colleges to offer certifications in AI and cloud computing.

• In India, the “Skill India” initiative is collaborating with startups to provide AI bootcamps and mentorship programs targeting rural youth.

The report stresses that upskilling must become a national priority, and not just left to individual initiative.

Remote Work and Gig Economy: Mixed Blessings

The pandemic-fueled shift to remote work and the gig economy also plays a critical role in shaping youth employment in the AI era.

On one hand, these models offer young people flexible income sources, such as freelancing, online tutoring, or digital content creation. On the other, they often lack job security, benefits, and skill development, leading to a gig economy trap where youth cycle through short-term contracts without long-term career growth.

AI further complicates this by automating many gig-based jobs—like translation, design, or transcription—through tools like ChatGPT, Midjourney, or Synthesia. The result: fewer gigs with lower pay, especially for those without niche skills.

Gender Gaps and AI Employment

Goldman Sachs also warns of a growing gender gap in AI-era employment. Young women, especially in developing nations, face multiple hurdles: limited access to STEM education, societal pressures, and biases in hiring for tech-driven roles.

The data shows:

• Fewer than 25% of young women in low-income regions are enrolled in STEM or AI-relevant programs.

• Only a small fraction of AI-related job placements or internships go to women, despite many being equally qualified.

Closing this gender divide will be essential to ensuring inclusive growth in the AI economy.

What Can Governments and Institutions Do?

The report concludes with policy recommendations to combat AI-related youth unemployment:

1. Mandate AI and digital training in all public high schools and universities.

2. Offer tax incentives to companies that hire and train fresh graduates in AI-relevant roles.

3. Expand public digital infrastructure, including free access to online courses, certifications, and remote internship platforms.

4. Create job-matching platforms focused on youth, integrating AI assessments and career guidance tools.

5. Strengthen labor laws to ensure fair wages, benefits, and protections for gig workers and digital freelancers.

 AI Is Not the Enemy—Unpreparedness Is

The fear that AI is “stealing” jobs from young workers stems from a legitimate concern, but the root problem lies less in the technology and more in the lack of preparation, adaptation, and inclusion.

Goldman Sachs' data underscores a clear message: AI is a double-edged sword. It can be a catalyst for youth unemployment if nations remain passive, or a powerful engine of job creation if harnessed proactively through education, policy, and innovation.

Young workers don’t need to fear AI—they need to be equipped to work with it. The future belongs not to those who resist the tide of automation, but to those who learn to ride it.