Is the UK's graduate jobs market in crisis, as many recent media reports suggest? Charlie Ball, head of labour market intelligence at Jisc, returns with a mid-year assessment of what the evidence actually shows…
I've reinstated this regular article because there has been a significant upsurge in media reports on the graduate labour market of late, and some of them are giving what I would consider misleading pictures by focusing on eye-catching outlier stats or simple opinion, and it is getting into a self-reinforcing mode where articles are being written about faulty premises by referencing previous faulty premises as if they are established fact. The aim here is to give the basic data that you can use to draw your own picture.
As things stand, my line is that at present the UK labour market in general and the graduate labour market in particular are largely stuck (this is the Recruitment & Employment Confederation, REC's, description and I think it fits) in a holding pattern. Outside of a couple of bits of data that look to be outliers, there is little sign of a genuine significant downturn in the graduate labour market this summer, and there isn't actually that much real sign of widespread systematic replacement of entry level jobs with AI, for example (although that is one thing I do have genuine concerns about in the medium term).
Overall, it looks to me as if the UK graduate labour market is like the one we had pre-COVID: not particularly strong, but nor is it tipping over into crisis.
However, I think it's also clear that the graduate labour market is a little bit weaker than it was last summer and as things stand I think it more likely than not will continue to weaken slowly over 2025. There are no big fancy explanations for that - the UK economy as a whole is anaemic right now, and so the labour market is too. Overall, it looks to me as if the UK graduate labour market is like the one we had pre-COVID: not particularly strong, but nor is it tipping over into crisis.
It's significant to me that the years that bridge the gap between then and now were taken up by a pandemic and the hangover from that. UK occupational and skills shortages post-COVID took three to four years to unwind significantly, so it could well be that the labour market we're seeing now for graduates is a kind of general status quo absent any other intervening factors.
What does the data say about the UK labour market?
According to the Office for National Statistics (ONS), monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in May 2025, following an unrevised fall of 0.3% in April 2025 and growth of 0.4% in March 2025 (revised up from 0.2%).
Real GDP is estimated to have grown by 0.5% in the three months to May 2025, compared with the three months to February 2025, largely driven by growth in the services sector (where a lot of graduate work is situated) in this period. It's falls in production and construction that have led to an overall fall in GDP.
The most recent quarterly Bank of England Agent's Summary, released on 19 June, points to reduced employment intentions in the second half of 2025. The rise in employers' National Insurance contributions is the main factor weighing on employment decisions, compounded for consumer-facing businesses by further increases in National Living Wage rates and uncertainty. Some firms have instigated recruitment freezes, and allowing natural attrition to reduce headcount. Some larger firms are offshoring more, particularly in manufacturing and professional services (both areas where, in addition, it can be difficult to recruit UK workers). Churn - the instances of workers moving jobs voluntarily - is down and in some areas seems to be below normal levels, and most of the post-COVID worker shortages have now unwound and there is even sign of spare capacity.
One of the reasons I paused these updates was because the ONS had stopped publishing weekly vacancy updates, which although speedy estimates and so not exact figures to be quoted like gospel, were very useful for feeling the direction of travel in the labour market. Happily, they've now replaced them with slightly less frequent but better and more detailed data. The most recent is here. It isn't easy to get to grips with, so I'll go into a bit more detail in a future edition (and, spoilers, in my forthcoming commentary on the new Graduate Outcomes data), but what's it's showing is a bit of a flat recruitment market right now, much like all the other bits of data out there.
Skills England have been producing some key documents recently. Here are their skills needs assessments of ten priority sectors, nine of which are majority graduate recruiters and the 10th, construction, has many hard-to-fill graduate vacancies.
Key points include:
- Technological change is a major driver of changing skills needs across sectors, indicating a substantial and growing demand for digital and wider technology skills.
- Long-standing skills shortages in non-technical areas continue to affect multiple priority sectors and will continue to be a key driver of skills needs over coming years.
- There are areas of gender inequality in multiple priority sectors. These point to opportunities to fill skills gaps by building a more diverse workforce.
- Demand for degree level training and above, particular in STEM and related subjects, will continue to dominate some priority sectors.
- All training routes will need to meet the need for cross-cutting, essential skills for employment and facilitate required upskilling/reskilling throughout workers careers.
- Excellent careers advice, linked to education and training choices, will be vital for both younger people and those in work to match individuals to opportunities.
Meanwhile, here is the Industrial Strategy, covering 8 key Industrial Strategy sectors:
- Advanced Manufacturing
- Creative Industries
- Clean Energy Industries
- Digital and Technologies
- Professional and Business Services
- Life Sciences
- Financial Services
- Defence
All of these sectors are strong graduate recruiters, and in many of them the majority of employees have and need degrees or postgraduate qualifications, and so a sustained, strong supply of graduates will be absolutely necessary for the government to enact its plans here.
Of course, DEI work in the US has come under significant political pressure but the ISE have found it's had little knock-on effect here in the UK.
REC, the body for recruitment agencies, produce some of the best and most useful labour market data out there. Agencies are a great way to get wind of market movements before they hit the wider jobs market. Their most recent data shows a relatively flat jobs market, but a downturn in London which is dragging the overall picture down (it's a bit less gloomy in the north of England, for example). We're hearing increasing stories of NHS recruitment freezes and falls and this data, showing significant falls in agency healthcare workers getting places, adds a key data point to reinforce that, so we'll be keeping a close eye on that data over the rest of the summer.
Another very important piece of work is the Chambers of Commerce's Quarterly Economic Survey. The most recent, from 2 July, shows weak business confidence, pretty much unchanged from Q1 and reductions in investment amongst the local and small businesses that are Chamber's bread and butter. This points to a sector that is likely to be recruiting cautiously, if at all, over the next few months.
Meanwhile BDO also report a flat labour market that looks to have contracted in May but with business optimism - pretty weak in the first half of the year - starting to tick up. This report seems a bit gloomier than some of the others, although it's essentially an amalgamation of several other data points. That said, I wonder if they're actually being optimistic about increasing activity in the second half of 2025.
I'm not the only person in the graduate labour market area who has reacted to recent reports by trying to set a more grounded interpretation of current data. The Institute of Student Employers (ISE), along with GTI, have talked to employers, and found new graduate vacancies down about 7% on last year, whilst Group GTI found a slight increase (8%) on postings on university jobs boards this year over last.
As Stephen Isherwood says in his blog, 'no-one is telling us that AI is replacing student jobs - although that's not to say employers aren't reviewing the situation', and I think that is the measured stance to take at this point in the cycle. Another useful finding from the ISE is their pulse survey from the 9 July, looking at EDI initiatives in the UK. Of course, DEI work in the US has come under significant political pressure but the ISE have found it's had little knock-on effect here in the UK, with 90% of employers surveyed indicating that they remain committed to EDI initiatives.
Elsewhere, here's the most recent data from Indeed about the UK and Irish labour markets.
As of 13 June, overall UK job postings were down 5% from their level at the end of Q1. They now sit 21% below their 1 February 2020, pre-pandemic baseline. The UK remains an outlier among peer economies in Europe and the US, where job postings remain above the baseline. The UK labour market has loosened further as vacancies have continued to fall and unemployment has risen modestly. The ratio of unemployed people for each vacancy has increased from 1 in 2022 to 2.2 as of April 2025, but remains below its historical average of 2.8. Notably, Indeed, like other data sources, suggest a particular fall in hiring in health.
In Ireland job postings continue to gradually retreat from peaks, though remained 8% above their pre-pandemic baseline as of 6 June. Postings stabilised and grew 1.5% over the month following signs of an accelerated dip in April. That suggests hiring demand remains somewhat resilient. Some of the weakening sectors in Ireland seem to be graduate level - arts & entertainment, marketing, IT operation & helpdesk and mathematics. But like all vacancy aggregators, Indeed's data becomes a bit less reliable at more granular levels, so it's best to monitor that situation and see if it matches other data rather than take it as read.
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