Graduate recruitment in the UK has fallen for a second consecutive year, with major employers cutting back entry-level programmes and adjusting their early-talent strategies in response to tougher market conditions
A recent survey by the Institute of Student Employers (ISE) shows that graduate hiring dropped by around eight per cent over the past academic year and is expected to fall by a further seven per cent in the year ahead. The report suggests that many organisations are continuing to reduce their intake as they manage costs and navigate slower business activity.
The outlook for students and new graduates remains challenging. On average, there are now more than 140 applicants for each graduate vacancy, compared with 86 the previous year. Employers cite budget restraint, delayed project starts, and uncertainty about the broader economy as reasons for limiting new recruitment.
Stephen Isherwood, joint chief executive of the ISE, said that “it is a tough market for students and young people in general. There is not much churn in the labour market, and young people are suffering.”
At the same time, employers are shifting their focus away from traditional graduate schemes towards internships, placement years and early career programmes that allow them to test candidates before offering permanent roles. Research shows that advertised graduate jobs are down by as much as 70 per cent compared with two years ago, while the average graduate is now applying to nearly 30 different schemes.
For recruiters and early-talent specialists, this marks a significant change in emphasis. Rather than managing large-scale graduate campaigns, agencies are concentrating on building talent pipelines, helping employers strengthen their brand visibility, and targeting high-potential students earlier in their academic journey. Many recruitment teams are also offering clients support with retention and progression planning to ensure graduates who do join are given clear pathways to develop.
The decline has been particularly sharp in technology, consulting and business administration, while engineering, manufacturing and sustainability-related roles have been more stable. Large employers, including professional services firms, are scaling back graduate intake and replacing some of those positions with apprenticeships or hybrid entry routes that combine work and study.
Geographically, the slowdown is visible across the country, but London and the South East have seen the steepest drop. Regional employers, especially in the North and Midlands, are still hiring but on a smaller scale and often later in the year. This shift is pushing graduate recruiters to adapt their calendars and to collaborate more closely with universities to identify talent earlier.
Recruitment agencies operating in this space face mixed fortunes. A reduced number of vacancies means greater competition for contracts and tighter margins, but the surge in candidate numbers creates new service opportunities — such as assessment management, candidate experience support, and data-led workforce planning. Firms that can provide insight rather than volume are likely to be in demand.
The trend also reflects a broader cultural change in how employers view early careers. Instead of hiring large cohorts of graduates and training them from scratch, businesses are prioritising candidates who can contribute quickly and flexibly. The rise of apprenticeships and early-entry schemes demonstrates a preference for long-term development pipelines that start before graduation.
Despite the contraction, there are signs that the market may stabilise in 2026 if business confidence improves. Analysts expect employers to continue experimenting with flexible pathways into graduate-level work, combining academic qualifications with practical experience.
For now, the message for recruiters is clear: the graduate market is smaller but more strategic. Agencies that can help employers engage earlier, attract the right skills, and retain talent will play a crucial role in shaping how the next generation enters the workforce.