In this article, IF researcher, Conor Nakkan, takes a closer look at the impacts artificial intelligence (AI) is having on the graduate job market in the UK.
Young people and the labour market
Those graduating from university in the UK this year face a difficult labour market. Youth unemployment, which has long been higher than the overall unemployment rate, has recently worsened. In mid-2025, for example, the unemployment rate for individuals aged 16–24 was 14.1 per cent. This is up from 10.2 per cent in late-2022.
Likewise, the number of young people not in education, employment or training (NEETs) has also risen. In 2021, 12.8 per cent of the population aged 18–24 were NEETs. By 2024, this figure had increased to 16.2 per cent.
Compounding these difficulties is the fact that more graduates are competing for fewer jobs. The total number of undergraduate degrees awarded in the UK reached around 560,000 in 2023-24, up from just under 493,000 in 2019-20.
At the same time, however, the number of graduate job listings has significantly declined. As recent reporting by the Financial Times highlighted, job postings for entry-level roles requiring a degree have dropped by almost two-thirds since 2022.
As a result, competition for graduate roles is fierce. In fact, figures from the Institute of Student employers suggest that in 2024, a typical graduate trainee role attracted 140 applicants, up from 88 the year before.
Faced with these pressures, more young people are turning to postgraduate study in an effort to stand out from their peers. The number of postgraduate degrees awarded rose from around 308,000 in 2019-20 to just over 497,000 in 2023-24.
Yet, for the most part, this has not translated into better employment outcomes for graduates. Instead, it risks creating a beggar-thy-neighbour dynamic, where young people feel compelled to invest even more time and money in further qualifications simply to avoid falling behind their peers.
Is AI to blame?
Younger people might reasonably wonder whether the growing prevalence of AI in the workplace is responsible for these trends. After all, it seems noteworthy that the precipitous decline in graduate job listings largely began in 2022, which was the very same year that ChatGPT was released.
Since then, warnings from AI experts, business leaders, and academics have become increasingly common. Many argue that AI will radically reduce demand for workers in so-called ‘AI-exposed’ industries. The CEO of AI company Anthropic, for instance, recently claimed that half of “administrative, managerial and tech jobs for people under 30” could disappear in the next five years.
But what should we make of these kinds of claims? More concretely, is there evidence to suggest that AI is already responsible for the sharp decline in graduate jobs in the UK?
To be sure, there is some indicative evidence on this point. Certain industries where the adoption of AI has been most rapid and widespread have tended to hire fewer graduates over the last few years. Analysis by the Financial Times, for example, found that in June 2025, graduate-level job advertisements in banking and finance were down 75 per cent compared with the same month in 2019. Software development postings had also fallen by 65 per cent, and accounting roles by 54 per cent.
Even so, there is not yet compelling evidence that AI is the primary driver of the overall decline. For one thing, graduate job listings in industries generally considered to be less exposed to AI, such as human resources and engineering, have also fallen since 2019. More importantly, however, there has also been a broader downturn in the UK labour market since 2022. This has largely been driven by factors such as geopolitical uncertainty, weak growth, and recent changes to employer National Insurance contributions.
Taking these considerations together, it seems reasonable to conclude (at least at this stage) that AI is having a modest and uneven impact on graduate demand, but that wider economic and structural pressures remain the bigger part of the story.
The AI hiring dilemma
Even if AI might not be the primary driver behind the declining number of graduate jobs, it has dramatically changed both how employers recruit, and how graduates try to secure work.
On the employer side, the use of AI in hiring processes has expanded rapidly. AI-driven recruitment software now writes job adverts, screens CVs for keywords, and even conducts first-round interviews using automated video analysis.
According to recent surveys, almost a third of UK employers report using AI at some stage of the recruitment process, with large firms in particular using these systems in an attempt to reduce costs and speed up hiring processes.
For employers, these AI tools promise efficiency gains. But for graduates, they often introduce a new set of frustrations. Candidates are often left with little idea of how their applications are assessed, or why they have been rejected.
Graduates, however, are not simply passive in this process. Many are now using AI tools themselves to generate CVs, tailor cover letters, and prepare for interviews. In fact, one recent survey found that around half of all graduates now use AI when applying for jobs.
This has made it possible to submit applications at unprecedented scale. Recent reports in the Times suggest that some young people are sending out hundreds (or even thousands) of applications before receiving an offer.
The result is what we could call the AI hiring dilemma: employers deploying AI to filter ever larger volumes of applications, and graduates relying on AI to churn them out. This creates a hiring process that is increasingly frustrating and impersonal for both sides. Employers complain of being overwhelmed by formulaic, AI-drafted applications, while graduates describe the process as alienating and exhausting.
AI and intergenerational fairness
Where does all this leave us for thinking about the implications of AI for intergenerational fairness? Broadly speaking, there seem to be two potential views.
The more optimistic view holds that AI will, on balance, be a net positive for younger generations. While the increasing prevalence of AI may eliminate some of the entry-level roles typically taken by graduates, these losses could be offset by wider productivity gains and the creation of new AI-augmented jobs.
Younger people may even be particularly well placed to seize these kinds of opportunities. Having grown up alongside digital technologies, many will have already used AI extensively throughout their education, giving them a degree of fluency and adaptability that older generations may lack. On this view, AI could help to boost living standards, support new industries, and enable more productive ways of working.
The more pessimistic view, however, is that AI will only exacerbate the structural challenges younger generations are already facing. On this view, AI could drastically reduce the number of graduate-level roles, leaving growing numbers of young people unable to find employment in their chosen fields. Indeed, some recent analysis by the Institute for Public Policy Research suggests that the widespread adoption and integration of AI in the UK could result in 4.4 million job losses.
In this scenario, many younger people would be burdened by high levels of student debt while being unable to access secure and well-paid professional careers. The result could be an entire generation scarred by prolonged unemployment or underemployment and heightened insecurity.
At this stage, it is still too early to say which of these views is more plausible or likely. But what is clear is that AI will continue to play an ever-larger role in a growing number of industries. Whether this benefits or burdens younger generations will depend not only on how the technology itself evolves, but also on the policy choices made by government. At the very least, policymakers should ensure that younger people can access affordable, high-quality education and retraining opportunities, so they are equipped to adapt to an increasingly AI-augmented world.
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Photo by Igor Omilaev on Unsplash.