Following the post-pandemic labor market boom, advanced economies are now experiencing a synchronized economic downturn, one that is hitting recent graduates particularly hard. During the inflationary surge a few years ago, central banks hiked interest rates across the world from close to zero during the pandemic to well above 4%. Contractionary monetary policy has also weighed on economic growth and the labor market over the last couple of years. Additionally, extreme economic uncertainty due to the trade war, geopolitical conflicts and a global industrial slowdown have also affected the jobs market around the world.
While most advanced economies are still experiencing positive—albeit slow—job growth together with relatively low unemployment, labor demand has plummeted over the last two years. Vacancies and online job postings are at their lowest point since early 2021, and the weaker labor market is hitting the most vulnerable first. Workers who feel trapped in a bad job have trouble changing employment, and another large group, young graduates, is now suffering the brunt of the burden. Outside of a brief recession at the start of the pandemic, university students are now facing the weakest labor market in more than a decade:
We are now in a Global Graduate Recession!
Unemployment rates remain relatively low for now…
Following the post-pandemic labor market boom, the U.S. has entered a prolonged phase of labor market weakness. But you wouldn’t exactly know this from looking at the headline labor market data; while job growth has slowed across advanced economies since 2023, it has so far largely remained positive. The unemployment rate has also remained at low levels across major markets—Canada stands out as the only large country with an unemployment rate noticeably higher than in 2019.
The unemployment rate for younger workers has risen disproportionately
As the labor market has weakened, younger workers have taken on the brunt of the burden in this very static labor market. Graduates have been affected the most, because when companies reduce their hiring needs, entry-level positions are typically cut first.
While aggregate unemployment rate has remained relatively stable, the unemployment rate for younger workers has surged by several percentage points across most advanced economies since 2022.
Meanwhile, older and more experienced workers do not seem to face similarly challenging hiring conditions. Unemployment for older age groups has barely changed, and companies continue to seek out more experienced workers while freezing graduate hires.
A challenging macro outlook for Gen Z: High interest rates and the threat of AI
The Global Graduate Recession is driven by a potent mix of short-term headwinds and longer-term structural changes. On the cyclical side, the effects of high interest rates and a weakening macroeconomic outlook are weighing on graduate employment. Companies have responded by cutting recruitment budgets, delaying new projects, and freezing hiring—particularly for junior roles. Job postings have plummeted across most sectors, pointing to a broad-based slowdown rather than one confined to specific industries. Based on current labor market data and historical parallels, these macroeconomic headwinds likely account for the vast majority of the fall in graduate hiring.
However, the recession in graduate opportunities is more than just a cyclical downturn. A structural shift is also underway, and it is being accelerated by the rise of AI. Increasingly, companies—especially in white-collar industries like consulting, finance, law, and marketing—are automating away entry-level tasks that were once handled by recent graduates.
Consultancies and Wall Street are openly discussing plans to streamline junior roles with generative AI and workflow automation tools. While the measurable impact of AI on employment is still materializing, it’s reasonable to assume it accounts for some small share of the decline in junior-level hiring—and this trend could intensify in coming years. Even when the economy eventually improves, many of the entry-level roles lost to AI may not return in their previous form.
In sum, today’s graduates are facing a dual challenge: a historically weak labor market and a rapidly shifting employment landscape in which the bottom rungs of the career ladder are being quietly restructured or removed altogether as cost-saving efforts.
What does that mean for recruiters?
The Global Graduate Recession could be more than a temporary crisis. It could mark the beginning of a new normal for young professionals entering the workforce. Of course, all of this also begs the question: how will companies eventually grow their talent if they deprive themselves from young employees for years to come? Ultimately, we expect the labor market for young professionals to improve again as a rapidly aging workforce across advanced economies eventually invites a talent exodus of experienced workers.
For recruiters, the global graduate recession presents both a challenge and an opportunity. With many firms freezing or shrinking their entry-level hiring, the traditional graduate recruitment playbook—large-scale intakes, early career programs, and predictable pipelines from universities—is under pressure.
At the same time, automation is reshaping the kinds of skills companies seek in early talent, with greater emphasis on adaptability, digital fluency, and the ability to work alongside AI tools. In this environment, recruiters have an opportunity to take on a more strategic role: helping organizations design new kinds of junior roles, identifying high-potential candidates who can thrive in hybrid human-AI workflows, and advising on how to build long-term talent pipelines in a rapidly evolving labor market. As the entry point into the professional world is being redefined, recruiters will be central to ensuring that young talent isn’t left behind.
