Despite frequent headlines warning of large declines in graduate jobs, the Institute of Student Employers (ISE) Student Recruitment Survey 2025 shows a less severe and more nuanced reality of the entry-level recruitment market.
Our survey captures recruitment trends from 155 ISE employer members who received over 1.8m job applications for over 31,000 early careers roles. For these employers, graduate hiring has fallen by eight per cent this year, marking the weakest year for graduate hiring since the 12 per cent decline during the pandemic in 2020.
Although the ISE represents larger employers who recruit graduates onto formal training programmes, broader labour market data also shows reduced hiring which may impact students who take jobs that may not be part of a formal training programme. For example, data from the Recruitment and Employment Confederation shows a 13 per cent drop in all job adverts from July 2024 to July 2025.
However, this trend varies from sector to sector and employer to employer. ISE’s survey found that while 42 per cent of employers reduced graduate hiring levels, 25 per cent of employers maintained hiring levels – and 33 per cent reported an increase.
Looking ahead to 2025–26, we expect graduate recruitment to remain challenging as employers forecast an overall seven per cent reduction in graduate hiring, driven by sharp declines for a small number of large employers.
Rebalancing early talent programmes
Graduate programmes aren’t the only route into the UK’s top employers and investment in apprenticeships has been growing since the levy was introduced. ISE found employers are rebalancing early careers programmes with more focus on apprenticeships to meet skills demands.
While graduate hiring declined this year, school and college leaver hiring increased by eight per cent. Graduates still outnumber apprentices and therefore the overall entry-level job market is down five per cent.
This increase reflects the role of large levy-paying employers with greater resources to develop and manage apprenticeship schemes, bucking the wider market trend. Government data reports only a 0.6 per cent rise in apprenticeship starts among 19- to 24-year-olds over the past year.
The ratio of graduates to school or college leaver hiring (which is mostly apprenticeships) among ISE members who recruit students onto both pathways is 1.8 graduates for every school/college leaver hire, down from 2.3 last year. This trend looks set to continue into 2025–26 with the ratio is forecast to decline further to 1.6:1.
Despite this rebalancing, graduate hires still outnumber school and college leaver hires, and although the jobs market remains challenging, graduates remain a core element of early talent strategies.
AI impact
AI is undoubtedly reshaping the early careers recruitment sector. However, no one is telling us that AI is replacing entry level jobs (yet).
As students increasingly use AI to craft job applications, they also submit a greater number of applications, driving up competition for each role. The application to vacancy ratio remains at a historic high of 140 applications per vacancy.
The authenticity of applications from “AI-enabled candidates” has also emerged as a key employer concern. In fact, an arms race appears to be underway: only 15 per cent of employers said they never suspected or identified candidates cheating in assessments, and 79 per cent of employers are redesigning or reviewing their recruitment processes in response to AI developments.
Currently around half of employers allow candidates to use AI tools during the recruitment process, primarily for drafting covering letters and CVs and completing online application questions. Only a small proportion of employers (10 per cent) have banned the use of AI or introduced technical measures to prevent its use.
Our data also shows that 45 per cent of employers had not provided applicants with any guidance on when it was or was not appropriate to use AI. This guidance may support students in navigating their transition into a graduate role and help employers manage their application volumes.
But while students are embracing AI in their job search, the use of AI by recruiters is currently limited, but likely to grow. While over half of employers use automated systems to fully manage some aspects of testing, AI use is very rare. Employers are most likely to use AI in gamified assessments, but even here the adoption rate is only 15 per cent. Looking ahead to the next five years, more than half of employers expect to use AI in their recruitment processes, and 70 per cent anticipate increasing their use of automation.
Getting ahead
The graduate job market is challenging, reflecting the broader economic climate – but it is not without opportunity.
Students looking to get ahead should remain cautious about their prospects in their chosen career, but the graduate job market is always competitive. A job search should be treated just like a job. Applications should be authentic, considered and tailored, with a focus on quality not quantity. And work experience remains key, with employers reporting former interns better equipped with the skills that they need.
For universities, these findings highlight the importance of preparing students for a more complex and competitive graduate market through close collaboration with employers.
As employers rebalance early talent programmes and adapt to the rise of AI, institutions have a key role to play in equipping students with practical experience, adaptability, and digital literacy.
Strengthening partnerships with employers, embedding employability across the curriculum, and helping students navigate responsible AI use will be critical to ensuring graduates continue to thrive in a shifting recruitment market.
