Graduates of UK universities are facing an increasingly tricky job market, with falling starting salaries and artificial intelligence contributing to record competition, according to an annual survey.

The Institute of Student Employers’ (ISE) survey also found that many employers have been reporting problems hiring international students as a result of changes to visa rules.

Respondents to the annual Student Recruitment Survey received more than 1.2 million applications to just under 17,000 graduate vacancies in the last year – around 140 applications per job.

This is a 59 per cent increase on the year before and the highest number of applications per job recorded since the ISE first started collecting the data in 1991.

And the ISE says that, although graduate vacancies have grown by 4 per cent in the last year, employers are estimating a growth of just 1 per cent next year as a result of economic pressures.

“The current jobs market is tough for graduates, with a considerable jump in applications per vacancy,” said Stephen Isherwood, joint chief executive of ISE.

“While this marks a positive move from employers encouraging applications from a broader pool of candidates, the downside is that this amounts to millions of rejection messages to students in the last year.”

The digital and IT sector was found to be the most competitive of all, with 205 applications per vacancy, followed by the financial and professional services, which had 188 applications for every position.

Fewer than half of companies require graduates to have a 2:1 degree, which the ISE said was contributing to the increased competition.

It also warned that the use of artificial intelligence (AI) in job applications – half of employers said some candidates had used it – was also contributing to a “vicious circle” in recruitment.

“As AI makes it easier to apply for jobs, volumes are pushed up and quality down, creating more rejections,” said Mr Isherwood.

“AI can be useful to enhance applications, but they must be authentic, otherwise candidates may find themselves in the wrong job.”

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The ISE survey showed that the median salary reported was £32,000 for graduates. Though a 3 per cent rise on the year before, it was a significant drop in real terms from £35,993 in 2020-21.

And the company found that recent changes to visa regulations, which included raising the general salary threshold for skilled worker visas, had made the job market particularly tough for international students.

More than half of employers reported that the increased salary thresholds had affected their recruitment of international students.

Almost a third (30 per cent) noted a fall in the number of international students they hired, while 18 per cent had rescinded existing job offers.

Mr Isherwood told Times Higher Education that changes to the visa system had had a “significant impact” on some employers’ ability to recruit international students.

“Many graduate employers hire international students for the long-term, so the skilled worker visa is just as important to them as the graduate visa. Because the minimum salary threshold for the skilled-worker visa has increased significantly, some employers’ roles do not meet the new requirements, particularly for positions outside London.”

patrick.jack@timeshighereducation.com