ISE’s 2026 student recruitment survey paints a picture of a graduate job market in flux
At the root of the reputational problems currently faced by universities is the perceived breakdown of the relationship between a degree and a career.
Nearly a decade of ministers actively promoting apprenticeships and vocational qualifications in the attempt to redress the perceived imbalance between academic and workplace routes has left a lingering sense that these other routes to a job are cheaper, more effective, and somehow purer.
Simultaneously, AI has – as AI does – lowered the hurdles that a proof-of-work suitability filter offers: mechanisms that support employers in choosing the right candidates are flooded by mechanically optimised CVs and covering notes. Nobody reads these (not even the candidates, in many cases); the first filtering stages of the assessment process (for 68 per cent and up of all employers) are generally now powered by the same tools.
Add a wavering economy – and a generous potion of geopolitical instability – and the cyclical dip in graduate recruitment has become an existential crisis.
But are things looking up for young people seeking employment? The Institute of Student Employers’ Student Recruitment Survey offers cautious optimism. The headline finding of this annual survey of 155 large employers (covering 31,577 hires and an astonishing 1.7m applications) is that graduate hiring has increased by four per cent in 2025-26.
This is a small rise – it looks like only a partial recovery when you consider last year’s eight per cent drop. And it is focused on a handful of very large employers restarting recruitment: remove these and growth is an anemic 0.8 per cent with a typical employer level stability compared to last year. The outlook is more promising, with graduate hiring forecast to increase by a further 7 per cent in 2026-27 – but again this is an uneven picture driven by employer strategic differences..
ISE argues that there is no clear overall trend – there is a “considerable variation across employers as growth remains uneven”. Some 45 per cent of graduate employers are increasing hiring, while 40 per cent are planning to decrease. With many employers planning to reduce their overall headcount, opinions clearly vary as to where this should mean a cut in entry-level and early-career hires. Among those still keen to invest in young employees, graduate hires remain at a significantly higher level than those coming directly from schools and colleges.
A mixed picture like this might improve headlines, but what might it mean to the recent graduates that submit all those applications? The way in which people apply to jobs is changing at speed, with employers moving to automated eligibility screening, limits to the number of roles an applicant can apply for at a single employer, and shorter application windows.
Further ahead, placements and internships as ways to build relationships and gauge potential are likely to lead to a conversion into employment. Despite the problems with the application process, employers are very happy with the quality of applicants – although with the amount of applications in the system this is very much an employers market if they are able to filter them.
The priority for employers is “not AI-driven recruitment, but AI-resilient recruitment.” What this means is a focus on guidance for appropriate use (few employers ban the use of large language models in applications, most want to set clear appropriateness boundaries). There is a focus on where candidates are cheating the system – 66 per cent of employers identified the unauthorised use of AI tools during interviews, while an alarming 92 per cent had seen suspected or identified cheating at some point during the process.
What is differentiating applicants is work experience while at university. There is an understandably huge demand for placements and internships from universities and students: employers report that they are struggling to meet demand. Internship applications increased by 27 per cent and undergraduate applications for placements grew by 15 per cent – all while opportunities declined by 8 per cent. While 94 per cent of employers believed internships and placements were valuable in developing skills and attitudes, this belief has not followed through to investment in providing these opportunities.
And this will not help them fill roles where they struggle to find the right candidates – almost half of employers have a persistent unmet demand for engineering, IT, and finance roles.
For a number of years, applications – as the first stage of the recruitment process – have worked as an initial sifting tool, allowing employers to focus the more involved interview and activity moments on people they are already pretty certain they would like to work for them. This sift generally involved matching elements of candidates application materials (the CV, the cover note, any written exercises) with the candidate specification as set out in the job description – initially via human resources staff work, and latterly via automated tools.
The tip that you’d give young applicants was to match their application as close as possible to the specification – using the same terms, and illustrating them with convincing examples. This kind of writing to a rubric is now trivial for anyone with a free Claude account, as anyone who regularly sets essay questions will tell you – and as assessed work has evolved to make it harder to prompt your way to a mark the application process will also need to evolve.
What remains constant is the old dependable route to a job – who you already know. The letter and the CV results in surprisingly few appointments compared to the time-honoured personal contact and prior experience. The trouble with that is that the opportunity to work for free in term time or over the summer, and the networks that can generate these opportunities, are more likely to be available to students from well-off backgrounds.