Graduates aren’t the risk. Not hiring them might be.

By Adam Caplan, Director

The rise in National Insurance (NI) rates has fanned the flames of the Not in Education or Employment or Training (NEET) crisis that is troubling graduates across the UK.

For SMEs willing to invest in the next generation of talent, the crisis does not have to be a cost, but an opportunity.

So, let’s take a close look at talent acquisition and the difference in costs between experience and a passionate graduate.

How bad is the crisis?

According to the Institute of Student Employers, 1.2 million graduate applications were submitted for only 17 thousand jobs in the 2024 recruitment cycle.

High Fliers research has found that entry-level roles for those fresh from university have decreased by 14.6 percent in the same period – the steepest decline since the 2008 financial crash. This has resulted in nearly one in six young people out of work, as per ONS statistics.

With an increasingly competitive job market and rising NI costs against employment, already cautious employers stick to proven, experienced candidates to fill vacancies.

The risk-averse approach to hiring means managers typically aren’t willing to take a gamble with the vast pool of young talent available, but is this the right approach?

Why do graduates offer a high ROI?

We understand the sentiment that many employers feel, but an entry-level hire should not be seen as an overly risky move for businesses caught in an NI squeeze, but rather the smart, cost-effective option with additional upsides.

In terms of outright cost, graduates are significantly cheaper to hire than senior applicants.

Salary expectations for those with no experience are lower than those of people who want to be compensated for their established skills and industry expertise.

The median cost of onboarding for those fresh from university is significantly less than senior hires, at around £2,600 per head (ISE).

Specialist senior recruitment agencies can charge a high percentage-based fee of up to 30 percent of a candidate’s starting salary. These fees can run into the tens of thousands just to secure a single hire.

While they require training, investing in a graduate allows you to mould them to fit your organisation’s culture and way of working.

They can bring new ideas and a fresh perspective towards approaching tasks, and have yet to develop any ‘bad habits’ from previous roles.

Hiring a senior who does not fit the business can be an incredibly disruptive mistake, resulting in high wasted hiring costs and operational whiplash.

Are there any Government incentives?

A Youth Jobs Grant scheme was launched on 30 June 2026 to support employers to recruit and train young people.

Businesses who hire eligible young people (18-24, on Universal Credit, unemployed for six months) will be given £3,000 per job outcome.

By hiring individuals that match these credentials, employers can offset the average onboarding costs to make graduate hiring even more cost effective.

How do graduates fit in with Corporate Social Responsibility (CSR)?

By framing a graduate hire as a form of CSR that is addressing an ongoing crisis, decision makers can take institutional cover from their perceived hiring risk.

It is no longer one manager’s individual bet, but a business living up to a stated commitment.

Where there is an increased need for CSR for winning contracts, businesses are expected to show an evidenced social commitment. This can be in the form of taking on a graduate that many other employers would overlook.

Overall, there are real cost and reputational benefits for employers looking to use this crisis to demonstrate the value they place on CSR.

How risky are graduates?

Of course, there is risk associated with taking on an individual with no experience. By hiring a senior professional with no training required, businesses can benefit from an immediate benefit.

If you needed an individual that can work to pace on the first day with minimal mistakes and no management overheads, a graduate would be the wrong move.

Also, while cheaper on paper, the costs of training and learning the craft can be expensive and delay the ROI for a business.

The lack of commercial exposure can sometimes be a dealbreaker for employers, especially in SMEs that do not have the time or resources to invest.

What does this mean for you?

We believe that investing in future talent is the high ROI choice for businesses, even considering the rises to NI costs.

They can be cheaper, more adaptable and a part of an organisation’s wider commitment to CSR.

We have even seen this ourselves, through our recruitment of college leavers and graduates, who have gone on to have great success within our practice.

However, we understand that hiring choices are totally situational and graduates are not always the answer to staffing demands.

If you want to understand the cost implications of hiring a graduate vs. a more experienced hire and how this fits within your wider business strategy, please get in touch.