Right, here are four reasons the UK’s graduate job market feels so broken right now

UK graduates are facing the worst job market since 2018, with an average of 140 applicants per vacancy.

Recent data from Indeed shows that the number of graduate job posts is down by 33 per cent compared with 2024. The Big Four have also recently announced they’re shrinking the size of their grad schemes. 

Meanwhile, the Institute for Employers’ data shows that competition for graduates is at a record high, and students are coming forward with their struggles in navigating the job market. One Birmingham grad says she applied to 1,200 jobs over 18 months before finding employment, and other grads are citing similar issues nationwide.

So, why is the graduate job market so dire right now?

Whilst a number of factors are at play, these are the four most likely to be impacting your job hunt.

The impacts of AI

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Firms are increasingly using tools like ChatGPT to perform administrative tasks such as form-filling and basic data entry. Graduates are seen as particularly vulnerable to job losses from this shift, as these roles would normally be assigned to those in junior positions.

Whilst the evidence doesn’t prove AI is causing fewer job posts, a strong enough correlation is emerging for experts to suggest it’s having an impact.

Recruiting specialist Auria Heanley has seen a 30 per cent drop in entry-level roles this year, and told The Guardian she had “no doubt” that “AI combined with wider economic uncertainty is making it much tougher for graduates”.

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Another recruiter explained that jobs related to STEM [science, technology, engineering and mathematics] were the most disrupted: “I do think that the evidence suggests that AI will likely be a net job creator, but the losses are happening faster than the gains.”

The UK’s over-qualification crisis

According to an Organisation of Economically Developed Countries [OECD] survey, people in England are more likely to be overqualified for their jobs compared to those in countries outside the UK.

The number of people going to university has been rising for several decades, with a particularly significant increase in the UK over the past 25 years. In the 1970s and 80s, only a small fraction of young British adults (between eight and 19 percent) went to university.

In 2017, however, over 50 per cent of young people attended university for the first time.

However, without the roles to accompany this rise, graduates are increasingly having to take jobs in sectors unrelated to their degree subjects or that don’t require a degree at all. This points to a structural problem in the country, where growth in higher education does not appear to be matched by growth in high-skilled jobs.

The Covid-19 pandemic

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In the 90s and 2000s, the UK’s graduate job market expanded due to a rise in structured grad schemes. For example, between 2004 and 2021, the number of graduates in the UK working in graduate-level jobs increased by 4.75 million.

In 2020, this steady increase was massively disrupted by the pandemic. Many companies were forced to cancel or delay their graduate schemes, or stop hiring altogether.

As a result, there became a backlog of graduates spanning multiple years, who were all competing for the same jobs once the pandemic ended. After the initial surge in hiring, the job market cooled, with less jobs and increasing competition.

Even though this is happening across the sector, data shows it’s more prevalent in graduate roles, with grad vacancies falling at a faster rate than overall vacancies.

The broader economic situation 

Ongoing effects of the pandemic, which caused significant economic disruption, mean businesses face higher costs and increased pressure to keep their workforces smaller.

The cost of living crisis, along with an energy crisis, is also impacting companies. Many face pressure from staff to hike wages, in turn squeezing hiring budgets.

Employers then hold back on developing roles for new staff, especially the more strategic positions for incoming graduates, instead choosing to train and up-skill existing employees.

Some recruitment specialists have also cited the recent increase in employer national insurance contributions as a potential factor in declining graduate vacancies.

Essentially, if the economy isn’t growing, then the job market won’t be either.

Featured image via Canva