Why the graduate crisis is a warning we can’t ignore
As graduates face the challenge of finding meaningful work in a job market with shrinking opportunities, current policy responses are failing to engage with the root causes of the problem, even as it becomes clear that this issue will continue to grow.
According to a new Stanford University study, employment for graduates in AI-exposed fields has consistently fallen since 2022 while the number of roles available for more senior staff in the same fields has been largely unaffected.
Entry level positions in industries as diverse as law, software engineering and finance are increasingly scarce as tasks often done by entry level staff like summarising, basic coding and testing are now increasingly automated. Institute of Student Employers (ISE) data shows that in the 2024-2025 cycle, graduate hiring fell by 8%, while from 2022 to 2025 the number of average applications per vacancy doubled. Meanwhile, over the same period, hiring of cheaper school leavers has increased by 8%. Clearly, the bottom rung of the ladder is increasingly hard to access for graduates as employers are increasingly unwilling to pay a premium to hire them.
Entry level jobs are often the first roles to be affected by cyclical shocks like the 2008 Financial Crisis and the Covid-19 pandemic.
Similarly, highly AI exposed sectors are seeing a decline in positions available as a symptom of a structural change that could look like the mass unemployment seen in the UK as a consequence of deindustrialisation in the 1980s. Given that the government has spent the last 40 years trying to address the aftermath of this, it is clear that much more has to be done to prevent a similar crisis from emerging.
Ultimately, the skills that graduates offer at an entry level are being automated without a chance to develop a higher level offering.
This could have disastrous consequences for the future of firms. While there are potential cost savings for businesses, graduate jobs are a crucial training ground for employees to gain skills and rise to more senior positions.
Traditional destinations like the Big Four have all decreased hiring, with KPMG leading the pack by cutting 29% of new graduate roles in 2025. These firms now look to go from a pyramid shaped structure where a large base of junior staff form the majority of employees, to a more diamond-shaped structure with a smaller number of entry level roles, a large number of mid-level or senior staff and then a small number of partners. While this may allow them to cut costs in the short term, in reality this could cause a potential crisis of succession in the future.
So where does this leave graduates?
Given the challenges of today's job market, young people looking for work are faced with a number of unappealing choices. Unpaid internships, accumulating more debt through expensive and unsubsidised further study, or minimum wage work where they will deskill, are all increasingly common outcomes after university.
Meanwhile, policy responses so far have failed to offer any solutions. Economist Dr. Bouke Klein Teeselink at King’s College London has argued that the UK economy will face a 5-10 year period in which AI takes jobs without new roles being created. Despite this, Universal Credit rules punish graduates who are looking to retrain by only allowing a maximum of 12 hours of study a week.
Alongside this, the government and local authorities are still providing funding for outdated skills. ISE data shows entry level roles for junior software developers are down 46%, yet the government and local authorities continue to subsidise basic coding bootcamps, promising employable skills for a role that demand has collapsed for. Worse still, the flagship 'Youth Guarantee' treats the graduate like a delinquent. Because the policy targets the 18-to-21-year-old bracket, it captures graduates the moment they leave university, threatening them with benefit sanctions if they do not take low-skilled placements in retail or hospitality.
As it is increasingly clear that AI is here to stay, stakeholders need to radically rethink what graduates can offer. For universities and students, gaining applicable skills and experiences becomes all the more crucial through internships, placement years and network building. For employers, a real rethinking of the value that graduates provide is needed.
The government must commit to building a coordinated response which supports upskilling or else face a crisis far more widespread than what graduates are currently facing. A potential response is subsiding employers for hiring and training graduates. More radical solutions such as Universal Basic Income or a tax on AI have also been proposed. Regardless, it is clear that the current policy response is completely failing to address the severity of the issue at hand.
Francisco is a University of Bristol History graduate and strategic communicator, specialising in translating complex policy into accessible narratives.
