Stephen Isherwood, joint CEO at the Institute of Student Employers (ISE), looks to a challenging year ahead and emphasises the role careers teams must play for graduates to succeed
As much as we'd like to start the year radiating optimism about student opportunities, the evidence suggests 2026 will be another challenging year for students hunting an internship or a full-time graduate job.
We're not in recession, but the economy is stuck in a low growth pattern. The CBI forecasts UK GDP growth of 1.3% in 2026, just below the 1.4% predicted for 2025. This means that employers are under financial strain, with rising employment costs. Although the ISE recruitment survey shows 30% of employers are increasing student hiring, overall vacancies are projected to fall by 7% in 2026.
For students, this means more applications chasing fewer roles. And the wider labour market is no healthier: REC/KPMG data points to declining demand from employers and a growing pool of jobseekers. Unless the economy picks up significantly, the pressure on education and early careers will only intensify.
Universities will need to help students navigate a market where persistence and adaptability matter more than ever.
Will AI reshape the early career jobs market?
AI continues to generate noise and speculation but two clear impacts on our sector are emerging:
- On jobs: employers are experimenting with AI in role design, but hiring reductions are driven by the economy, not technology.
- On recruitment: AI tools are under development but also under scrutiny. A US class action against Workday alleges discriminatory AI sifting, which could slow adoption of such systems.
For careers teams, this means students will increasingly encounter technology‑driven assessments and will increasingly use AI tools themselves to gain an edge. We need to prepare them for both sides of this equation - how to engage ethically and effectively with tech, and how to demonstrate the human skills that machines can't replicate.
What does this mean for recruitment and careers teams?
Universities will need to help students navigate a market where persistence and adaptability matter more than ever. The challenge is not simply about employability skills, it's about guiding students toward realistic pathways.
Employers also have a role in helping students interpret shifting demand, and in supporting them to build resilience in the face of uncertainty.
Because of their unique position at the intersection of students, employers, and educators, careers teams can:
- gather and disseminate as much labour market intelligence from employers to interpret trends for students
- continue to advocate for students by ensuring recruitment processes are fair and transparent
- embed work experience and engagement opportunities into education and recruitment pathways
- prepare students for technology‑mediated recruitment by balancing digital literacy with human skills
- collaborate across the sector to address systemic challenges that no single employer or institution can solve alone.
If we fail to improve the student journey into work, our sector risks being seen as complicit in labour market failures. But if we galvanise our infrastructure, relationships, and expertise, we can help students navigate the challenges of 2026 and beyond.
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