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Posted: Fri 28th Aug 2026
15 min read
Graduate job vacancies in the UK have dropped by almost 50% in a single year, down from 15,397 in July 2025 to just 8,383 in July 2026.
This is the lowest figure since records began in 2016, according to Adzuna data reported by BBC News. There are now 2.14 jobseekers chasing every graduate vacancy, up from 1.93 a year earlier.
That's the headline that stopped us mid-scroll. But headlines rarely tell you what's actually happening inside a business when a hiring decision gets made, or doesn't.
So we asked Enterprise Nation members directly what's really stopping them from hiring a graduate or junior team member – and whether young people are actually equipped for work.
Our members confirmed it from the inside.
Catriona Robson-Scarborough, Your Man With A Van, says:
"The challenge we have as SMEs is that the costs are climbing for us, so something has to give.
"Ultimately this often comes down to efficiencies, which can be seen in staff count. Add to this the opportunities that come with AI or AI-supported systemisation and platforms, the problem becomes tenfold."
For some, it's not a general squeeze but a specific, recent shock. Samit Biswas, who runs the small start-up CareSafe, described how new employment legislation is playing out in practice.
Samit notes:
"The new employment law has significantly affected us.
"We have seen several employees take sick leave for mental health reasons within a few weeks, and we are currently addressing this issue. As a small start-up, this situation is not only painful but also a huge financial drain."
This isn't just a handful of frustrated business owners. The Institute of Student Employers found that 42% of employers reduced graduate hiring this year, against 33% who increased it, with a further 7% decline forecast for 2025/26.
The squeeze our members are describing shows up in the national numbers too.
Here's where it gets more interesting. Not everyone agrees cost is the root cause; some think it's the story businesses tell because it's simpler than the alternative.
Edward Klinger, Scale Up Gym, points out:
"Most SMEs don't have a documented way of working, so a junior hire becomes another unstructured variable, and the founder ends up carrying the onboarding, QA, and day-to-day management themselves.
"Time they don't have to spare. Founders who've actually systemised their business tend to hire juniors more easily. It's less a cost problem than a systems and time one."
That reframes the support conversation entirely. If Edward's right, wage subsidies alone won't move the needle for a lot of small businesses – what they need first is help building the structure a junior hire can actually step into.
This is the question everyone was really asking, underneath all the others – and our members didn't shy away from it, even when it's an uncomfortable one to say out loud.
Jo Swann, Chocolate PR, admits:
"In all honesty, from my own experience, I would say because the majority of them are not 'job ready ', many of the graduates we have had as interns have not been able to handle the capacity or pace of our work.
"They have also struggled working independently and remotely. I am not speaking for all, and we have also had a couple of brilliant people.
"My concern is also that much of the training at uni doesn't relate to real-world PR; often they are taught how to PR huge brands like Coca Cola rather than how to PR real people like the founders we support."
Catriona raised a version of the same concern from a different angle – not the graduates themselves, but the system feeding them into work.
"Are our young people of today actually given the skills to work effectively... within a business?" she questions.
"I worked on a project once as a consultant reviewing the skills employers were looking for, to then map them to the curriculum. This was funded by the DfE.
"Sadly, however, the whole financial budget, had to be spent and put into place long before the research was done.
"So ultimately, tools were purchased with an assumption of the research, not afterwards. This was a completely ridiculous scenario, and I'm sure one that is repeated daily."
Neither of these is an isolated impression. ISE's own Student Development Survey found 54% of graduates fell short of employer expectations on self-awareness, and 46% on resilience – both up sharply on the year before.
So, there's real signal underneath the anecdotes. Jo was careful to say she isn't speaking for every graduate, and the data doesn't say young people are unwilling or incapable.
It says something has broken in how they're being prepared to walk into a workplace like Catriona's or Jo's, at the pace and with the independence a five-person team requires.
There's a second, less obvious version of the skills mismatch – and it cuts the opposite way.
Sometimes the problem isn't that graduates lack the skills small businesses need. It's that small businesses need skills nobody's teaching yet.
Matthew Rushworth and Melanie Keenan, co-founders of ReelTrip, say:
"Some of the skills we need today barely existed as defined graduate career paths a few years ago.
"Content creation, short-form video, creator partnerships, community building, social commerce, AI, digital storytelling... The next generation of travel businesses will need people who understand hospitality AND creators, content, technology and digital consumer behaviour – not just someone with a marketing or English degree but one with real use-case technology examples.
"The problem for an early-stage business is finding them."
That's the same "are they equipped?" question Jo and Catriona were asking – just aimed at the curriculum rather than the candidate.
Their answer isn't fewer opportunities for young people, but a rethink of how those opportunities are built: more practical experience, more apprenticeships, more chances to actually make content, work with customers, and demonstrate ability rather than just submit another CV.
That last point – "demonstrate ability rather than just submit another CV" – leads straight into a problem our members flagged that deserves its own spotlight:
AI isn't only reshaping which roles exist, it's reshaping how impossible it's become to fill the ones that do.
The scale is genuinely startling. ISE found the average employer received 140 applications per graduate vacancy in the most recent full year it measured – a 59% jump in a single year, and the highest figure since it started collecting data in 1991.
Across its surveyed employers, that added up to 1.2 million applications for roughly 17,000 graduate roles.
Apprenticeship and school-leaver vacancies saw an even steeper rise: 113 applications each, up 66%. Separate research from Prospects found one in five recent graduates have now applied for more than 100 jobs each – nearly double the rate of the year before.
AI is accelerating both sides of that equation at once. Among graduates submitting over 100 applications, 66% are using AI to write CVs and cover letters, compared with 40% of those applying more selectively.
On the employer side, ISE found 43% now use AI somewhere in their recruitment process, and – tellingly – 48% are actively concerned that candidates' use of AI is misrepresenting their real abilities (52% for school and college leavers).
Matthew and Melanie put the effect on a small business plainly:
"AI itself isn't the problem. We use it, and we're building a technology business. The problem is when an AI-written cover letter and perfectly rewritten CV make 100 candidates look remarkably similar...
"For a start-up, recruitment time is founder time. When someone has several years of relevant experience, it's much easier to identify evidence of what they've actually done.
"With an entry-level candidate, you're trying to find potential amongst an increasingly large volume of highly polished applications."
This is where small businesses get squeezed from a direction big employers don't feel the same way.
A large graduate scheme can afford AI screening software of its own, or a recruitment team to sift a thousand applications.
A five-person business can't – so the same AI-driven flood that's a logistics problem for a corporate graduate scheme becomes, for a founder, days of unpaid, unplanned work.
None of this is unsolvable, and some of the most useful answers came from members already doing something about it.
Enterprise Nation adviser, Jill Poet, says:
"Youth employment could be wiped out quite quickly if just one in five small businesses took on an employee.
"We have just had a young man start with us on the National Jobs Guarantee Scheme. It is a fully funded scheme for 25 hours per week for a young person who has been receiving Universal Credit...
"The good news is that the scheme does cover remote working, so [it's] perfect for the smallest businesses who can only offer WFH options.
"You don't have to commit to retaining the young person after the six-month period, but obviously [it's] a win-win if you can."
The scheme Jill describes is currently live in six regions – Birmingham and Solihull, the East Midlands, Hertfordshire and Essex, and Central and East Scotland, Southwest and Southeast Wales – and rolls out UK-wide in November.
It sits alongside a much larger initiative that's just been announced at the other end of the size spectrum.
Sainsbury's has pledged around 10,000 work experience placements from October, targeted at young people from disadvantaged backgrounds and areas with high NEET rates – a response to figures showing the number of 16- to 24-year-olds not in education, employment or training passed one million in early 2026.
Prime Minister Andy Burnham, who has made the issue a personal priority, used the announcement to call on more employers to follow suit:
"Access to opportunity and work experience shouldn't depend on who you know; it should be within reach for every young person wherever they live – and that's what I'm determined to deliver."
A retailer with 140,000 staff and a Prime Minister's backing can build a 10,000-place national scheme.
A five-person business can't – but a fully funded, WFH-friendly, no-obligation scheme like the one Jill used might be exactly the version that's built for small businesses.
The gap isn't ambition. It's making sure the small end of the market knows these schemes exist, and that more of them are designed with a five-person team in mind from the outset, not retrofitted for one afterwards.
Wrong question, or at least an incomplete one.
Our members' answers point to at least four different things happening at once: the cost and complexity of employing anyone junior has genuinely risen; the businesses that manage it best usually have structure a junior hire can step into, which is a foundertime problem as much as a wage problem; there's a real, measurable gap between what some graduates arrive with and what a stretched small team needs on day one; and, just as often, the gap runs the other way – into skills nobody's taught yet, buried under an AI-driven flood of applications that a small business has no way to filter at the same scale a big one can.
That's not a tidy story, and we didn't want to force one. But it does tell us where to point our energy next: not just at young people, and not just at business owners, but at the schemes, curricula and tools that sit between them.
We have launched the Next Generation Hub at Enterprise Nation to support our young entrepreneurs. Watch this space; competition coming soon!
