Three key trends in graduate recruitment this year

Claire Tyler, head of insights at the Institute of Student Employers (ISE), explores the impact of AI, high levels of competition for jobs, and levels of graduate vacancies

1. Graduate vacancies are under pressure

Despite a sluggish economy and frequent headlines warning of a squeeze on graduate jobs, ISE's Student Recruitment Survey 2025 shows a mix of patterns in the student labour market.1 Among our members, graduate hiring fell by 8% during the 2024/25 recruitment cycle, marking the weakest year for graduate hiring since 2021. However, this trend varies from sector to sector and employer to employer. While 42% of employers reduced graduate hiring, 25% of employers maintained their graduate hiring levels and 33% increased hiring volumes.

The ISE represents larger employers who recruit graduates onto formal training programmes and many graduates are hired into less structured roles. 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.2

Some larger employers also appear to be rebalancing early talent pipelines, increasing their emphasis on school and college leaver recruitment relative to graduates. The ratio of graduates to school-college leaver hiring (which is mostly apprenticeships) among ISE members is 1.8 graduates for every school/college leaver hire (down from 2.3 last year). However, graduates still outnumber school and college leavers, and they remain a core element of early talent strategies.

Our conclusion is that the graduate jobs market remains challening. However, no one is telling us that AI is replacing graduate jobs (yet).3

2. Competition for graduate jobs remains high

Competition for graduate jobs remains at a historic high. Two decades ago in 2002/3, employers received an average of 38 applications per graduate vacancy. By 2022/3, that figure had more than doubled to 86 per vacancy and for the last two years has been at 140 per vacancy - the highest recorded in the three decades since the ISE began collecting the data in 1991.4

Competition for internships and placements has also risen among undergraduates keen to enhance their CVs and secure permanent roles well in advance of graduation. In the search for a job, some graduates are also applying to school/college leaver roles in greater volumes - 40% of employers reported an increase.

But what is driving these record high application volumes? It is likely that the ever-increasing level of competition is driving anxious graduates to apply for more roles, and online technology has made it easier for students to make an initial application. The significant reduction in minimum academic requirements over time also means more students are eligible to apply for more roles. However, despite the pressures of managing these volumes, employers continue to report high satisfaction rates with graduate hires.

Looking ahead to 2025/26, we expect competition to remain high as employers forecast an overall 7% reduction in graduate hiring, driven by sharp declines for a small number of large employers. For the rest of our members, graduate hiring is forecast to grow by only 1%.

3. AI is having major implications for the graduate recruitment market

This year employers have faced AI-related challenges, from managing higher volumes of applications, to ensuring the authenticity of applications from the 'AI enabled candidate'.

Overall, half (49%) of employers have no problem with candidates using AI tools during the recruitment process, with their use largely restricted to drafting covering letters and CVs or completing online application questions. Only a small proportion of employers (10%) have banned the use of AI or introduced technical measures to prevent its use.

However, authenticity has emerged as a key concern and there is some evidence of an arms race underway: only 15% of employers said they never suspected or identified candidates cheating in assessments; and 79% of employers are redesigning or reviewing their recruitment processes in response to AI developments.

Employers themselves are also increasingly recognising AI's potential to help manage the growing volume of applications and reduce costs, but AI isn't yet widely adopted by employers to recruit students.

While over half of employers use automated systems to fully manage some aspects of testing, use of AI exclusively at any stage of recruitment is very rare. Employers are most likely to use AI exclusively in gamified assessments, but even here the adoption rate is only 15%.

However, AI adoption by employers is likely to increase, particularly as students continue to make greater use of technology in the application process. In the next five years, more than half of employers (62%) expect to use AI in their recruitment processes, and 70% anticipate increasing their use of automation.

Overall, the graduate recruitment market reflects the broader economic climate, and low growth in the economy makes employers cautious when it comes to hiring decisions. Our advice to students remains the same - the job market is always competitive, so treat your job search like a job while building skills alongside your academic studies.

Notes

1. Research, Institute of Student Employers (ISE).
2. Labour Market Tracker, Recruitment & Employment Confederation, 2025.
3. Have graduate jobs really nosedived?, ISE, 2025.
4. Record graduate job applications, ISE, 2024.

Written by

Claire Tyler

Head of insights

Institute of Student Employers