From skills shortages to AI: what's shaping the graduate labour market in 2025?

We’re excited to bring you the very first edition of our newsletter, tailored for our early careers recruiter audience. Each month, we’ll share the latest insights and actionable advice to help you navigate the ever-changing graduate labour market and recruit students and graduates. If you need any support with your early careers recruitment, get in touch here.?

To kick things off, we’re looking at 2025 and sharing what we expect to see in the graduate labour market this year.?

The graduate labour market is cooling down?

Over the last few years, the graduate labour market has been remarkably strong, outperforming the wider jobs market. However, 2024 marked a shift back to “normal” conditions and the economy is currently quite volatile.???

The air is slowly going out of the labour market and while opportunities will still exist, competition for jobs is likely to intensify, making job hunting tougher for graduates this summer.??

This may lead to graduates feeling increased pressure, resulting in a “quantity over quality” approach to applications, as graduates apply for as many roles as possible in a bid to secure employment. This could also mean more graduates considering further study to avoid entering a competitive jobs market.??

For employers, this likely means a more intensive recruitment season with a rise in applications. What can you do??

• Share positive messages about the availability of jobs to ease concerns,?
• Emphasise the importance of tailored applications over high-volume submissions,?
• Strengthen partnerships with university careers teams. Get involved in initiatives that help students to develop their employability skills.?

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AI is here to stay ?

Artificial intelligence continues to reshape recruitment and more students and graduates are turning to AI tools to assist with their applications. While some employers are embracing candidate use, others are banning it. We are also seeing a return to more face-to-face recruitment methods that can’t be gamified.???

It’s important to set clear guidelines around AI use in your recruitment process and to be as transparent as possible with what is acceptable. ?

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Cost of living continues to be a major driver?

Graduates entering the workforce are still feeling the pinch of the ongoing cost of living crisis. Salaries may have risen, but not enough to keep pace with inflation and rising costs, leaving many people struggling financially.?

To attract early careers talent consider:?

• Stating salaries on job ads (avoid vague terms like “competitive salary”),?

• Highlight additional perks and flexibility – make the full package clearly visible,??

• Avoid backtracking on promises. For example, if you’ve offered remote working, ensure those promises are upheld.?

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Graduate priorities: stability and security?

With the cost of living and economic uncertainty, this has shifted graduate priorities with more young people seeking job security and stability.? ?

Focusing on providing learning and development, being clear about progression opportunities, as well as support for mental health and job security can help you both attract and retain early talent.??

It can be advantageous to highlight these in job descriptions, and via your brand and workplace culture.?If you'd like support with refining your job descriptions, reach out to our team.

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Retain, retain, retain, in light of skills shortages?

Skills shortages remain a significant issue, in sectors like health and social care, engineering and education. Employers cannot rely on an abundance of candidates to fill these gaps.??

Because of this, avoid alienating staff with drastic changes, as this may lead to them seeking alternative options.??

You can keep staff engaged by:?

• Having regular conversations with employees about their career paths,?

• Offering programmes like mentoring, buddy schemes, as well as training and development opportunities,?

• Providing competitive pay and benefits to prevent staff from leaving.?

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One to watch: Trump impact?

As Donald Trump returns to presidency in the US, this has led to economic uncertainty. Any shifts in the US market, given its size and influence, can have a serious impact on our own economy, so it’s important to keep watch of this.??

For recruiters, stay ahead of potential challenges by having:?

• Flexible hiring strategies to manage potential economic shifts,?

• Retention strategies to safeguard your workforce during these uncertain times.?

What to do next??

Need help with these 2025 challenges? We can provide you with tailored support to help you understand the market and develop your recruitment strategies. Get in touch today.

Further insights?

For more expert advice and analysis, check out the following articles on Prospects Luminate, featuring insights from Charlie Ball (Head of Labour Market Intelligence at Jisc) and other leading industry voices:??

2025 and the graduate labour market

Navigating the future: key trends in graduate recruitment

5 predictions for graduate recruitment in 2025

We hope you enjoyed the first edition of our newsletter. If you have any feedback or thoughts for future editions, we’d love to hear from you. You can find out more about what we do and advertising your opportunities on our Prospects website.

See you next month with more insights to help you stay ahead!??