1. The current crisis is as much economic as AI-led

A shifting graduate labour market is not unusual, said Kirsten Barnes, head of digital platform at Bright Network, which connects graduates and young professionals to employers.

“Any shifts in the graduate job market this year – which typically fluctuates by 10-15% – appear to be driven by a combination of factors, including wider economic conditions and the usual fluctuations in business demand, rather than a direct impact from AI alone. We’re not seeing a consistent trend across specific sectors,” she said.

Claire Tyler, head of insights at the Institute for Student Employers (ISE), which represents major graduate employers, said that among companies recruiting fewer graduates “none of them have said it’s down to AI”.

Some recruitment specialists cited the recent increase in employer national insurance contributions as a factor in slowing down entry-level recruitment.

Ed Steer, chief executive off Sphere Digital Recruitment, which hires for junior marketer and sales roles in tech and media, said graduate vacancies have fallen from 400 a year in 2021 to an expected 75 this year. He put the drop down to businesses wanting to hire more experienced applicants who can “deliver for their customers on day one”.

2. But AI is definitely a factor

However, Auria Heanley, co-founder of Oriel Partners, which recruits for personal assistant roles, has seen a 30% drop in entry-level roles this year. She said she had “no doubt” that “AI combined with wider economic uncertainty, is making it much tougher for graduates to find these roles”.

Felix Mitchell, co-chief executive at Instant Impact, which recruits for mid-sized businesses, said jobs related to Stem [science, technology, engineering and mathematics] were the most disrupted. “I do think that the evidence suggests that AI will likely be a net job creator, but the losses are happening faster than the gains.”

3. The revolution is only going to accelerate

Major tech companies such as Microsoft are trumpeting the impact of AI agents – systems that perform human-level cognitive tasks autonomously – as tools that can be competent assistants in the workplace, with early adopters including the consultancy McKinsey and the law firm Clifford Chance. Dario Amodei, the boss of AI the developer Anthropic, has warned that the technology could wipe out half of all entry-level office jobs in the next five years.

James Reed, chief executive of the employment agency Reed, said AI would transform the whole jobs market from now on: “This is the year of AI… lots of businesses are really doubling down on it, investing in it.

“This feels like the year that AI is really changing and getting embedded – for better or for worse.”

Sophie O’Brien, chief executive of Pollen Careers, which caters for early-career and entry-level roles, said AI had “accelerated” a decline in graduate recruitment that has been going on for a few years now: “The job market could look vastly different in even a year’s time.”

She added: “For a lot of professional, desk-based jobs where you are processing information on a laptop it’s entirely obvious that a huge number of those jobs over the next few years are going to be redundant. There’s a workforce crisis that is going to happen and I don’t know if we are ready for this.”

4. Learn AI skills now

David Bell, at the executive search firm Odgers, said law firms are demanding AI competence from graduates. “As part of the interview process for the graduate intake they are asking them about their understanding and usage of AI,” he said. “Anyone who has not been using ChatGPT or the equivalent will struggle to be taken on board.”

James Milligan, global head of Stem at recruitment multinational Hays, agreed. “If they do not have that second skill set around how to use AI then they are definitely going to be at a disadvantage,” he said. “Jobs don’t die, they evolve and change. I think we are in a process of evolutionary change at the moment.”

Chris Morrow, managing director at Digitalent, an agency that specialises in recruiting AI-related roles, said that rather than the technology taking jobs it was creating a new category of AI-adjacent positions: “It is opening windows to jobs that did not exist 12 months ago, like AI ethics and prompt engineering. New roles are being born.” 

With such demand for expertise, universities are being urged to adapt courses accordingly. Louise Ballard, a co-founder of Atheni.ai, which helps companies adopt AI technology, says there is a problem with “basic AI literacy skills” not being taught in higher education. 

“You people are not getting the training they need,” she said. “The skills required at being good at AI are not necessarily the academic skills you have acquired.”

The real risk, said Morrow, was not that AI takes jobs but that educational institutions and government policy fail to keep up. “Universities need to embed AI learning across all their subjects,” he said. 

5. Graduates are using AI to apply for jobs – but should take care

AI is an obvious aid for filling out CVs and forms as well as writing cover letters. Many of the organisations contacted by the Guardian reported a surge in applications now that filing one has become easier.

Bright Network said the number of graduates and undergraduates using AI for their applications has risen from 38% last year to 50%. Teach First, a major graduate employer, said it plans to accelerate use of vetting processes that don’t involve writing to reduce the impact of computer-drafted entries.

The ISE’s Tyler warned that excessive use of AI in applications could results in employers ending recruitment campaigns early and targeting specific groups with recruitment work. Ending such drives early could also affect under-represented groups, she said. 

Errors that were once seen as red flags might now be seen in a different way, says James Reed. “In the old days we used to screen out CVs that had spelling mistakes because we’d think the person isn’t paying attention to detail or is approaching things with a casual mindset. Now if you see someone’s CV with a spelling mistake you think: ‘Wow, that’s actually written by a person – it’s the real thing.’”

6. Consider applying to smaller businesses

Small-to-medium-sized enterprises, or businesses that employ fewer than 250 people, were also singled out as an opportunity for graduates.

Pollen’s O’Brien pointed out that SMEs are the biggest employers in the UK, at 60% of the workforce, and any lack of AI knowledge on their part could present an employment opportunity.

“A lot of these businesses don’t know how to use AI, they are scared of AI and there is a huge opportunity for young graduates to be bringing those skills into small companies that are still hiring,” she said. “If you bring these skills into a small business you could revolutionise that business.”

Dan Hawes, co-founder of the Graduate Recruitment Bureau, said there were thousands of “under the radar” employers below the level of big corporates who were “desperate for brainy individuals”.

“There is this huge, hidden market and it gets rarely reported,” he said.