AI and young graduates: some worrying patterns
The labour market for new graduates is undoubtedly tough - but it's not all down to AI
Various reports are starting to confirm in data what we have been hearing anecdotally for a while: graduate recruitment has declined considerably, applications per graduate vacancy have increased significantly, and many graduates are increasingly finding themselves in roles that do not require a degree.
In this post, I look at a complementary dataset: changes in the number of new online job ads — an indicator of labour demand — and how these vary by AI exposure and typical share of young graduate workers. The pattern is more worrying than I thought a year ago, but requires careful interpretation.
1. Job ads have declined most for roles typically held by young graduates
The biggest drops in the volume of job ads were in associate professional occupations in legal, media, sales and marketing, and science and research. Such roles are both relatively exposed to AI in their task content and more likely to be held by young graduates (see chart). This raises concerns about narrowing opportunities for graduates, for whom such jobs have traditionally been a first rung on the career ladder towards professional roles.
It also raises concerns about companies’ talent pipelines: with an ageing workforce, and likely continued demand for human labour, businesses will need to remain alert to their requirements for experienced talent in years to come.
2. However, part of the decline in young graduate job ads is driven by non-graduate level jobs
Nearly 30% of graduates aged 24 or less tend to work in low-skilled jobs—as sales assistants or retail cashiers, in bars, restaurants and coffee shops, in leisure and travel services, or as care workers. As the chart shows, some of the decline in job ads affecting young graduates has been driven by elementary sales and service occupations, customer service occupations, and leisure and travel services.
Some of these roles — such as call centre operators — are indeed exposed to AI. But many require physical presence, interpersonal interaction, or agility. For the latter types of jobs, weaker labour demand is more likely to reflect higher employment costs and subdued consumer confidence than AI.
3. For graduate-level jobs, the story is more complicated
As discussed in section 1 above, job ads for graduate-level roles with a large proportion of young people and high AI exposure do appear to have declined significantly in the last year. But this is not uniformly the case.
Demand for finance, engineering, ICT and health professionals remained more robust. For these roles, AI is likely augmenting human labour and, in line with the so called Jevons paradox, may even increase the number of jobs available.
The graduate labour market is clearly weakening — but the evidence so far does not support a simple story of “AI replacing graduates”.
