Large employers are scaling back graduate recruitment for the first time since the pandemic, while expanding apprenticeship schemes to plug persistent skills gaps, according to new data.

An annual Institute of Student Employers (ISE) poll of 155 large companies ¨C which collectively recruited over 31,000 students from more than 1.8 million applications ¨C has found graduate recruitment fell 8 per cent year-on-year, while apprentice hiring grew 8 per cent.

Because of the smaller number of apprentices compared?with graduates, overall entry-level hiring declined by 5 per cent.

Among employers recruiting through both routes, firms hired 1.8 graduates for every apprentice, down from a ratio of 2.3 to 1 last year.

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This is forecast to drop further to 1.6 to 1 next year, as employers shift resources toward school- and college-leaver programmes.

The fall in graduate recruitment was the first annual drop since a 12 per cent slump seen during the pandemic in 2020.

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In contrast, apprenticeship recruitment has increased every year since the ISE began tracking data in 2015.

Graduate hiring may be down, but applications are not. Employers received an average of 140 applications per vacancy, the highest level in two decades and more than triple the 38 per vacancy recorded in 2002-03.

The most competitive fields ¨C retail, fast-moving consumer goods (FMCG) and tourism ¨C saw up to 290 applications per role.

Typical median starting salaries rose modestly to ?33,000 for graduates (up 2 per cent on last year) and ?24,000 for school- and college-leavers (up 3 per cent).

In real terms, however,?graduate pay has eroded over the past decade?while school-leaver pay has seen slight real-terms growth.

Three years after starting work, graduates¡¯ salaries rose by 37 per cent on average, compared with a 39 per cent increase for school- and college-leavers, the ISE found.

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The figures point to a labour market under pressure ¨C fewer roles, more applicants and pay increases that fail to keep pace with inflation. Experts have said the problems will increase pressure on universities, which have increasingly pushed an employability agenda in recent years.

Employers are also reassessing how they attract and assess candidates as technology reshapes recruitment, the ISE said.

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Many are reworking their processes as?students increasingly turn to generative?artificial intelligence?tools?when applying for jobs.

Nearly four in five (79 per cent) are reviewing or redesigning their recruitment processes in response to AI.

Only 15 per cent say they had never suspected or identified cheating during assessments, and 61 per cent reported instances of candidates using AI during interviews without disclosure or permission.

Despite these challenges, most employers say they were still able to find high-quality candidates, with 93 per cent saying they could ¡°almost always¡± or ¡°often¡± recruit graduates of the calibre they need.

Stephen Isherwood, joint chief executive of the ISE, said: ¡°The balance between graduate and apprentice hiring is shifting for a number of employers as they look to diversify how they get talent into the business to meet skills shortages.

¡°This means more opportunities for students to get into the UK¡¯s leading businesses. However, the market is complex. Graduates still outnumber apprentices, and they remain a core element of recruitment.¡±

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He added: ¡°This is a tough job market, but that doesn¡¯t mean there¡¯s no hiring at all. Our data shows that 92 per cent of graduate hiring continues as normal¡­Getting a job is a job in itself and firing out many ill-prepared applications is not the answer.¡±

tash.mosheim@timeshighereducation.com