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When they trade campus for the job market, fresh graduates are quickly groaned. From North America to Europe, university dropouts have a hard time finding the right job. The recent unemployment rate among US college graduates has consistently surpassed the national level since the Covid-19 pandemic. In the EU, employment rates between 15 and 25 years have fallen over the past two years. Even Cream de la Cream struggles. The proportion of MBA students at Harvard Business School and MIT Sloan has been rising significantly since 2021, three months after graduation.
The rise of artificial intelligence is the factor. In the US, entry-level high-tech jobs are under pressure as coding tasks are automated. The unemployment rate among computer engineering graduates is 7.5%. The national rate is 4.1%. In the UK, Big 4 accounting firms have been reducing early career recruitment in recent years. Economists and recruiters believe that higher costs encourage professional services companies in the UK to experiment with AI with more administrative tasks than juniors typically perform.
However, the alumni’s light form predates the emergence of large-scale language models in the workplace. Other structural developments are working. With more young people around the world choosing to go to university, the competition for work has come back. In Canada, a popular destination for young graduates, the unemployment rate for people under the age of 25 who received a post-secondary education was 11.2% in the first quarter. According to the Institute for Student Employers, last year there was an average of 140 applications per graduate job in the UK.
As supply of learned graduates increases, demand is under pressure. In fact, a survey by job hunting sites found that the proportion of job openings in the US that require at least a bachelor’s degree has declined over the past five years. As for the public sector, civil servants are under pressure across a cash-bound, developed economy. Multinational companies with large graduate programs are developing global capacity centres in low-cost hubs such as India that outsource more skilled roles such as data analytics rather than back-office functions.
The recent economic cycle has not been kind to recent graduates either. Many professional services and tech companies were over-operating the entire process, assuming that their activities would bounce back faster than that. Since then, recruitment rounds have been suppressed. The demand for investment bank analysts and newly qualified lawyers is also being hampered by modest global mergers and acquisition activities. Global economic uncertainty makes it difficult for businesses to plan investments and hire cycles.
Even if the economic environment improves, graduates will compete with the rise of AI in the workplace and the competition for entry-level work. Ensuring students have a better understanding of their outlook after graduation will help them make wise course choices. Universities and the private sector need to work closer together when courses evolve with changing demands of work. Still, businesses and governments need to raise support for adult training and lifelong learning. A 3rd year degree can quickly become obsolete. The plight of university graduates should encourage more investment in non-degree vocational training and apprenticeship opportunities, as companies have long sought.
The dissatisfaction of employed elites is bad for society and the economy. To prevent it from becoming a function, education must evolve from a ticket to work to a toolkit of skills in a changing world.
