Young, Qualified and Struggling: The UK’s Graduate Jobs Crisis

How bad is the youth jobs crisis?

The latest ONS figures show unemployment among 16 to 24 year olds reached 16.1% in the final quarter of 2025. That rate now exceeds the EU average of 14.7%, the first time the UK has fallen behind on this measure since comparable records began. In absolute terms, 957,000 young people were not in education, employment or training between October and December 2025, approaching the one million threshold last breached after the 2008 financial crisis.

Charlie, a 22 year old Philosophy, Politics and Economics graduate from the University of Leeds, has applied for more than 50 jobs since finishing his degree last summer. Speaking to Big Issue, he described the experience in blunt terms: “I’m running into a brick wall.”

The picture for recent graduates is only marginally better. The Department for Education’s 2024 graduate labour market data shows employment rates for young graduates aged 21 to 30 fell during the year, while the Institute of Student Employers estimates that 1.2 million applications were submitted for just 17,000 graduate vacancies. PwC’s Youth Employment Index found that the share of recent graduates entering graduate-level jobs has dropped to its lowest since 2014. The UK now ranks 27th out of 38 OECD economies on youth employment, having fallen four places.

Louise Murphy, senior economist at the Resolution Foundation, warned via Business Matters that the country is “perilously close” to a full-blown youth unemployment crisis. She added that young people face “real and complex barriers to finding a good job.”

What role is AI playing in hiring?

Against this backdrop, a new report from MyPerfectCV examines how AI is transforming both sides of the recruitment process. The study found that 46% of UK jobseekers now use AI tools to draft and optimise applications. Meanwhile, employer screening has become more sophisticated. Modern applicant tracking systems perform semantic searches, evaluating what candidates have achieved, how they delivered results and what impact they had, rather than simply matching keywords.

This creates what the report calls a paradox. Candidates are increasingly expected to use AI to stay competitive, yet up to 80% of hiring managers say they reject CVs that appear to have been generated by a machine. The report concludes that the single most important strategy for candidates today is to “use AI as a tool, not a voice.”

For graduates entering a market where competition for each vacancy has never been fiercer, this adds a layer of complexity. Over-reliance on AI-generated text risks producing language that recruiters identify as flat, generic or overly formal. The MyPerfectCV research suggests AI works best when used to tighten sentences, correct grammar and align applications with job descriptions, not to replace the candidate’s own thinking.

Specialist roles have also grown by 67% year on year while generalist positions stagnate, making targeted, sector-specific CVs far more effective than broad applications. At the same time, over 90% of employers say they reject candidates who lack interpersonal qualities such as resilience, communication and adaptability, skills that AI cannot demonstrate on a candidate’s behalf.

Why are young people bearing the brunt?

Several structural factors explain why the UK’s youth labour market is deteriorating faster than in comparable economies. Germany, where youth unemployment sits at 6.8%, channels roughly half its young people into integrated vocational training. Denmark combines flexible hiring with generous activation support and keeps its NEET rate well below the UK’s 12.8%. Even France, which has long struggled with youth joblessness, has expanded its apprenticeship system to record levels.

The UK has moved in the opposite direction. Apprenticeship starts have fallen by 30% since 2016. The number of university graduates entering the market continues to rise, with 2024 the first year in which more than one million students graduated. The result is an oversaturated market where degree holders compete with previous cohorts who have not yet found suitable work.

The Work Foundation at Lancaster University has argued that the challenge is “less cyclical and more structural” than what followed the financial crisis. In 2025, around three fifths of young people not in work or education were economically inactive, a higher proportion than during the 2008 to 2013 period. Research from the Resolution Foundation shows that over a quarter of young NEETs were inactive due to sickness or disability, with mental health conditions the leading cause.

Alan Milburn, the former Health Secretary now leading the government’s independent review into youth inactivity, told The British Eye that the problem reflects a deeper generational anxiety. Parents and grandparents, he said, increasingly fear “that their kids are not going to do as well as we’ve done.” He described this as a sentiment without precedent in the past century.

What is the government doing?

Ministers have committed £1.5 billion to tackling youth unemployment, including a Youth Guarantee offering paid work placements for 18 to 21 year olds out of work and free apprenticeship training for under-25s at small and medium-sized businesses. Milburn’s review is expected to deliver interim findings this spring with a final report due in the summer.

Alun Francis, chair of the Social Mobility Commission, said the rising NEET figures should not distract from the fact that “this is a long-standing problem which has not been getting sufficient attention from policymakers.”

Barry Fletcher, chief executive of the Youth Futures Foundation, has called for the UK to match the Netherlands, which maintains a NEET rate of just 3.6%. Achieving this, his organisation estimates, could add £86 billion in long-term economic gains and bring 567,000 more young people into work or education.

Whether current measures will prove sufficient remains an open question. Young people face a labour market that demands ever more sophisticated applications, penalises those who lean too heavily on the AI tools they are told to adopt, and offers fewer entry points than at any time in the past decade.

The challenge is not simply economic. It is generational.