A university degree, once a reliable path to employment and stability, now offers a more fragile link to career success as graduates face increasingly challenging job markets due to economic shifts and automation.
Talking points
- The value of a university degree as a guarantee for employment is declining due to weak job markets and increased automation.
- Entry-level job opportunities are shrinking across major economies, with some sectors experiencing significant drops in graduate postings.
- Work integrated learning and courses that are embedded in real-world experiences remain one of the more reliable pathways into the workforce.
“Universities and employers now face a crucial question: has the degree’s role in shaping career outcomes kept pace with the wider economy?”
For decades, a university degree has functioned as a fairly reliable signal of ability, ambition and upward potential. It implied employability and, for many, it delivered stability. However, that link now looks increasingly fragile. This year, graduates in major economies are entering some of the weakest early-career job markets in many years.
In the UK, graduate job postings have fallen by 33 percent year-on-year, reaching their lowest level in seven years, according to Indeed, the job search site. In the US, unemployment among college graduates aged 22 to 27 has risen higher than 5.8 percent between January and March this year, according to the Federal Reserve Bank of New York.
The most affected sectors are not only those in decline, but also those once viewed as professional steppingstones, such as media, marketing, human resources and project management.
Demand has cooled even where labour shortages persist. Employers cite economic uncertainty, rising wage costs and growing investment in automation as reasons for pulling back on hiring fresh graduates. “Many factors outside of their degree will influence a graduate’s immediate job prospects – the health of the economy being the most obvious,” says Vivienne Stern, CEO of Universities UK, the sector body in Britain.
In Canada, the situation is also challenging. Youth unemployment climbed to 11.2 percent in the first quarter of 2025, meaning that recent graduates are confronting what experts say could be the most difficult job market in over two decades, aside from the Covid pandemic years.
This is not a crisis of higher education, but rather a test. While a degree still holds value, it no longer guarantees a job. Universities and employers now face a crucial question: has the degree’s role in shaping career outcomes kept pace with the wider economy?
The equation is shifting. What is working? What is not? And what must evolve if the degree is to remain a bridge between education and opportunity?
The trend is clear: entry-level opportunities have tightened across sectors. Graduate job markets in the UK and US have entered a sustained slowdown, with early-career opportunities falling to their lowest levels in years. Employers are pulling back on hiring, keeping existing staff instead of adding new roles, and in some cases replacing junior jobs with automation.
“Graduates are still arriving, sometimes in greater numbers than ever. But the pathways once available to them are narrowing.”
In the UK, graduate job postings are down to a level that marks a far steeper decline than in the broader labour market, where total postings in mid-June were 5 percent below their March peak. The UK is now the only major economy where job openings have yet to return to their pre-Covid baseline.
In the US, the picture is similarly constrained. Figures from the Bureau of Labor Statistics show the hiring rate for entry-level positions dropped to 3.4 percent in the first quarter of 2025 — the slowest for that period since before 2010. The same graduates are applying to more roles, according to data from job platforms.
Indeed’s figures show the sharpest contractions in the UK are occurring in the professional sectors that once formed the backbone of graduate employment. Job postings in media and communications are down 48 percent from their pre-pandemic levels. Marketing is down 37 percent. Human resources and project management have both fallen by 27 percent.
Job market analysts and campus recruiters say many firms are retaining existing staff rather than onboarding new entrants. Other companies are delaying start dates. EY, the professional services firm and a top graduate employer, has postponed dates for graduates joining its US strategy and deal advisory division for a third consecutive year.
Even elite institutions are not immune. Reports from top US business schools indicate that offer rates have declined in recent recruitment cycles – even for some of the most highly qualified candidates.
According to experts, the graduate market is defined by slower hiring, reduced churn and more cautious recruitment. The volume of applications is up, but the flow of new positions is down. In the UK, applications per graduate role rose 286 percent last year compared with 2023, according to recruitment software firm Tribepad.
Some employers are simply holding back. Job listings on Handshake, a university-focused recruitment platform, have declined by 15 percent over the past year, even as application volumes have surged by 30 percent.
The result is a kind of economic bottleneck. Graduates are still arriving, sometimes in greater numbers than ever. But the pathways once available to them are narrowing. The promise of steady progression — from education into work, and from work into stability — has become harder to fulfil, even for those with strong credentials.
AI & internal hiring
Across sectors, some companies are automating tasks once taken by graduates: summarising reports, compiling research or formatting decks. These were the tasks that helped new hires learn how to write clearly, follow a brief and understand how decisions get made. Now they are increasingly being handled by generative AI tools.
Ravio, the workforce analytics firm, reports a 73 percent fall in entry-level hiring over the past year, directly attributing the decline to the growing adoption of AI. As companies automate not only administrative work but a broader range of junior tasks, early-career roles — particularly in the people, marketing and engineering functions — have seen hiring fall by up to 84 percent, Ravio says.
In a labour market reshaped by automation, universities are reassessing how best to equip students for long-term success in their careers. “The future workforce will depend heavily on the ability to leverage AI tools to address complex challenges,” says Sadia Cuthbert, director of careers at Cambridge Judge Business School.
“As job roles evolve and increasingly overlap, graduates must be equipped to handle ambiguity, demonstrate initiative and cultivate a comprehensive business perspective,” she tells QS Insights Magazine. “In this environment, clarity and strong communication skills become even more essential for success.”
In some cases, entry-level hiring is being deprioritised in favour of internal development or automation. The result is that what was once the first rung on the ladder is increasingly missing. Universities continue to prepare students for entry-level roles, yet many graduates find those roles no longer exist in the form they expected.
In the UK, 42 percent of recent degree-holders outside London are now working in non-graduate jobs — up from 31 percent in 1993, according to the Institute for Fiscal Studies.
Internships and work-integrated learning
Meanwhile, even internships — once a fallback or stopgap — are becoming unreliable. In the UK, 40 percent of unpaid interns rely on parental support, a sharp increase from 26 percent in 2018. Only one in 10 internships is secured through a publicly advertised opportunity, reports the Sutton Trust.
“In England the biggest blindspot is regional inequality in graduate outcomes,” says Andrew Westwood, professor of public policy, government and business at the University of Manchester. “Research from Anna Stanbury suggests that for most courses, the graduate premium is falling in most regions outside London and the South East,” he says. “In one sense this isn’t surprising, given the high levels of spatial inequality and the comparative underperformance of our big, second-tier cities. But it shows that the wage returns do depend significantly on the part of the country you work in.”
The graduate job market is not uniformly challenged. In some corners, it is holding up — not because conditions are easy, but because systems are better aligned. Where education is tied more directly to work, graduates are still finding footholds.
Work-integrated learning remains one of the more durable pathways. In Germany and the Netherlands, dual-study programmes and co-operative degrees have long embedded students in firms during their studies.
In the UK, some universities have rebuilt their programmes around employer partnerships. Manchester Metropolitan and Aston have expanded degree apprenticeships — paid jobs that include part-time university study, leading to a full degree. Exeter has tied business courses to coding and data analytics, adjusting what it teaches to reflect how roles are changing.
Others have leaned into industry placements, in the creative sectors and social care, as well in the STEM (science, technology, engineering and maths) fields.
Work-integrated learning continues to prove its value. For example, 94 percent of degree and higher apprentices in England were still in “positive destinations” 15 months after completion in 2021-22, official figures show.
These examples point to one clear pattern: where degrees are embedded in real-world experience, graduates are better placed. Where they are abstracted from labour demand, outcomes tend to weaken.
In some markets, there are more graduates than ever before, yet fewer graduate jobs. In the UK, over half of young people now enter higher education. But many are in roles that do not require a degree.
Universities are not set up to fix this alone. Many are incentivised to expand access. In England, most university funding still flows through enrolment-based formulas. Graduate outcomes are tracked, but they have little bearing on how institutions are resourced.
In the US, most public university funding is still tied to enrollment and degree completion. A few states factor in graduate employment rates, but these incentives remain limited and unevenly applied.
There are other issues at play. The public sector, long a key employer of graduates, is showing signs of contraction. In the UK, hiring freezes across the National Health Service and local councils have delayed recruitment. In the US, a federal hiring freeze issued in early 2025 — combined with politically driven restructuring — has slowed intake in several departments.
Rising living costs have made unpaid internships and relocation harder to justify, hitting graduate mobility. A Prince’s Trust survey found that 5 percent of young people in the UK turned down jobs due to basic costs like travel and clothing.
Despite all this, a degree still matters. In the UK, research finds that graduates earn approximately £100,000 more over a lifetime than non-graduates, according to the Institute for Fiscal Studies. In the US, bachelor’s degree holders aged 25-to-34 earn about 59 percent more than those with only a high school diploma, with master’s degree holders making 20 percent more on top of that.
“The evidence shows that a degree not only still provides graduates with a leg-up in their career, but equips them with the skills to be resilient in a fast-changing labour market,” says Stern at Universities UK .
“If you learn more you tend to earn more — on average, graduates earn over a third more by the time they are in their thirties than those who chose not to attend university at 18.”
She adds that the value of a degree goes beyond earnings; data also shows graduates are healthier, more likely to volunteer in their local community and less likely to be unemployed. “While crucial, it’s simply wrong to judge a degree or university based purely on the salary someone earns soon after graduation,” Stern says in an interview with QS Insights Magazine.
That degree still matters, but it now gets most graduates to the starting line, not straight to the finish. The pathway is still there, but it is sometimes less direct and more competitive than it once was.
There is no silver bullet for fixing the graduate employment gap. But some adjustments are well within reach.
“Universities are committed to innovating in how they deliver education and training so that graduates are equipped for the future workforce,” Stern says. “Many universities offer careers guidance, even after graduation, and equip students for enterprising careers setting up their own businesses.”
As graduates face a more competitive and uncertain labour market in 2025, Bocconi University in Italy is among many boosting its efforts to bridge the gap between academia and employment. Bruno Mariani, Director of Employer Relations and Career Services, outlines a series of initiatives. From the first day of enrolment, students are offered access to career services designed to foster direct ties with employers both in Italy and internationally. In-company training programmes — 55 in 2024, including 32 abroad — are key to this approach, allowing students to gain exposure to real-world working environments.
Career fairs tailored to specific sectors and regions have also expanded, with more than 2,500 students attending sector-specific recruiting events. Yet there is room for improvement. Employers continue to highlight a shortfall in soft skills such as critical thinking and adaptability, Mariani says.
In response, Bocconi is developing targeted workshops in collaboration with recruiters and faculty, while also integrating guidance around AI-powered hiring processes and tech-driven roles.
These efforts are part of a broader push amid a downturn in many labour markets. StilDil, a degree remains valuable, as a signal to employers, a filter in recruitment systems and a formal requirement for access to many professions.
But for a growing number of graduates, particularly those entering a labour market undergoing rapid structural change, there is a clear and widening gap between education and employment.
