Graduate vacancies at decade low

The UK's graduate job market has contracted sharply, with just 8,383 graduate vacancies advertised in July, a 45% year-on-year decline and the lowest level since recruitment firm Adzuna began tracking the data in 2016. The figure undercuts the previous low set in May and marks a continued deterioration from 2017, when more than 55,000 graduate roles were available.

Andrew Hunter, co-founder of Adzuna, said: "July's numbers are a step backwards, not a blip. The annual vacancy decline got worse for the first time since January, and (the number of) jobseekers per vacancy are now higher than they were a year ago."

Hunter added: "The graduate job market also keeps setting new lows, which tells us employers still haven't found a reason to open up hiring at that level."

The figures come as 262,820 people were preparing to go to university in September, a record high, according to Adzuna. About 1 million young people in the UK were not in education, employment or training (Neets) in the first quarter of this year, based on Office for National Statistics data.

Causes: employment costs and AI

Employers have reined in hiring in response to increases in employer national insurance contributions and the minimum wage, which have raised the cost of taking on staff. These policy changes were announced by former chancellor Rachel Reeves, according to reports.

At the same time, some companies are prioritising investment in automation and artificial intelligence tools over hiring for entry-level roles. Large City industries such as tech and consultancy have begun scrapping entry-level positions, handing administrative tasks to AI. The Big Four consultancy firms have led this trend, with KPMG trimming its 2023 graduate intake from 1,399 to 942.

A report by the Chartered Institute of Personnel and Development found that the UK's jobs market has "largely stopped moving", describing a "low hire, low fire" cycle. The report suggested that the cycle could be broken if employment costs were addressed.

Broader market: overall vacancies fall, salaries cool

The contraction extends beyond graduate roles. Non-graduate entry-level vacancies fell 8% to 192,864 in the year to July, reversing gains from earlier in the year. Overall, the number of jobs on offer in the UK fell by 9.6% to 791,490, the first drop in five months, according to Adzuna.

Competition for jobs has intensified, with 2.14 jobseekers per vacancy compared with 1.93 a year earlier. The average advertised salary has fallen 0.73% since May to £43,675 in July. Employers are also taking longer to fill positions, with the average time to hire rising to 36.5 days from 35.4 days in May.

Separate figures from the Office for National Statistics put total vacancies over the May-to-July period at 707,000, a five-year low. The ONS said small firms were citing labour and operating costs as reasons for scaling back hiring.

The political response has been contentious. In an interview on GB News, host Ellie Costello challenged Labour minister Luke Pollard over the impact of national insurance increases on young people, saying: "You are damaging the opportunities and therefore the futures of young people." Pollard responded that the government wants to see more young people in work, citing a £3,000 grant for employers who hire a young person unemployed for six months, tax breaks for hiring young people with wages under £50,000, and investment from a rising defence budget into British companies.

Sectors still hiring

Despite the overall decline, several industries are actively recruiting. Travel vacancies rose 348% year-on-year, while trade and construction roles increased by 8.3%. Manufacturing vacancies rose 2.2%. In May, travel, teaching, and trade and construction saw genuine increases in vacancies on an annual basis, with 192,366 vacancies in those sectors in July, up 11.9% year-on-year.

Sectors in decline include healthcare and nursing, which fell 30.6% year-on-year, logistics and warehouse roles, down 28.1%, and hospitality and catering, down 26.8%.

Salary trends

IT is the best-paid sector, with average advertised salaries reaching £67,771, an increase of 16.8% year-on-year. Salaries are also growing in HR and recruitment, up 9.8%, and consultancy, up 9.5%. In contrast, maintenance salaries fell 2% and teaching salaries dropped 1.1%.

Support for jobseekers

The government offers retraining schemes, including the Advanced Learner Loan, available to those over 19, with repayment required once earnings reach £21,000 or more. The Skills Bootcamp provides free courses to learn skills employers are looking for, completable in as little as 16 hours a week.

Perspectives

Labour government: Minister Luke Pollard defended the government's record, pointing to grants, tax breaks, and defence investment as measures to boost youth employment. He said: "I want to see more young people in work, and so does the government."

Employers and analysts: Adzuna's Andrew Hunter described the situation as "a step backwards, not a blip", while the CIPD called the jobs market "largely stopped moving". Employers have complained that national insurance and minimum wage increases have made hiring more expensive, and some are turning to automation and AI.