Ahead of his session at ISE’s Recruitment Conference, labour market expert Charlie Ball from Prospects at Jisc delves into the data to explain what’s really happening with entry-level jobs.
Headlines over the last few months have asserted that the graduate jobs market is in a crisis and that AI is wrecking the entry-level jobs ecosystem. ISE and Jisc have been among the organisations taking a more measured view of the current situation.
The data we have shows a difficult labour market, but not insurmountably so. We have looked in vain for compelling evidence either from general data or from employers themselves that AI job substitution is common or widespread. The picture is one of evolution not elimination.
One of the crucial issues, however, is that students and graduates believe these pessimistic narratives. This year’s Prospects Early Careers Survey shows that 35% of respondents said they thought the development of AI had decreased their career opportunities.
With these pressures in play, Jisc released the latest HESA Graduate Outcomes data.
Official Graduate Outcomes data
The higher education sector has been producing early outcomes data for graduates since the last 1950s, and this is the latest iteration. It examines graduates who left university in the 2023/24 academic year and surveyed them 15 months after graduation, at the end of 2025.
This covers the time period of the real impact of AI recruitment apps on recruitment that hit the market in 2024, the labour market downturn that began then and the subsequent very modest jobs recovery at the end of 2025.
A lot of focus on the Graduate Outcomes data comes, for good reason, as a consequence of their use in sector metrics, but it is also excellent labour market information and that’s how we’ll examine it.
The main thing to point out is that outcomes are a little worse than last year. The chart shows that full time employment for UK domiciled first degree graduates are down a little and unemployment is up a touch – although the changes are similar to those from the previous year.
But this is not the data you’d expect to see in a recession, where a much higher unemployment rate of around 8% or higher would be likely. And it certainly doesn’t look like a collapse in employment – note that graduates ‘working and studying’ are all working full time and taking a course on top of that.
The most unexpected change is in further study, which has fallen. This is unusual as it has hitherto been a very reliable rule of thumb that further study increases if the jobs market worsens.
While there are some good theories around, it’s not clear why this is happening so needs further examination as it has implications if a new trend is developing.
Conflicting data
If you follow the Milburn Review you might spot that we report a much lower rate of unemployment for graduate NEETs.
This is because Milburn classed everyone as being either in work, in study, or NEET, whilst we have other categories.
Most significant is that Milburn counts graduates on a gap year or travelling as NEET, whilst we think they’re not engaged in the UK jobs market in that sense and class them as ‘Other’.
This ‘Other’ category also includes smaller numbers of people who are long-term sick, or have taken time out for family and/or caring responsibilities.
Professional-level work
About two thirds of respondents were in full time employment. This includes graduates taking exams for professional qualifications and chartership, who are an important part of the group.
Of course, it’s all very well saying that most graduates are working, but that doesn’t show the graduate labour market is holding up if they’re all in service roles.
Well, they aren’t.
The majority (70.9%) of employed graduates are in professional level roles. These are jobs that fall into ONS Standard Occupational Classifications 1 to 3, and are jobs for which a degree is considered the typical qualification or one of the expected and suitable qualifications. Graduate jobs in other words.
This year’s figure is a modest fall of 1 percentage point from 71.9% last year, but is a very far cry from the idea that there are no graduate jobs around.
Indeed, if we look back, last year saw a much larger fall in the proportion of graduates in professional level jobs, and some of the data this year suggests that some of the rhetoric might be a delayed reaction to the shock that hit the market in 2024 rather than anything new that happened in 2025.
AI impact
When we look at the detail, some patterns emerge, although it’s early to say exactly what is happening.
While some jobs potentially affected by AI saw falls in graduate recruitment, most notably coding and management consultant, other big drops were in teaching, housing and HR.
Some roles gained numbers, in medicine and nursing (despite reports of falling recruitment), but also in roles thought to be under threat from AI – indeed accountants and lawyers were two of the biggest gainers.
And if we look at the industries seeing the biggest falls in recruitment, two are way out ahead of the rest. They’re education and local/central government. The drop in the graduate labour market last year looks less like a story of AI replacement, and more like a story of reduced public sector recruitment.
In addition, when we look geographically, we see that the three labour markets showing the biggest gains in graduate recruitment this year as opposed to last were, in order, London, Birmingham and Manchester.
With a few exceptions (Glasgow, Oxford and Cardiff), the big fallers in graduate employment seem to be less urban labour markets, particularly in the north and Scotland.
So, rather than being a new tale of technology supplanting graduate jobs, it could well be that cuts in public sector recruitment have weakened non-urban labour markets that are more reliant on public sector employment.
This means that the already-urban graduate labour market is getting more concentrated in our bigger cities, whilst graduates outside those areas find it harder to find work from a diminishing pool of opportunities.
This might just be the real story.
Hear labour market insight from Charlie at ISE’s Student Recruitment Conference.