Should Australian Universities Cap Courses Based on Graduate Employment Rates?

The Current State of Graduate Employment in Australia

Australia's higher education sector produces hundreds of thousands of graduates annually, but recent data reveals a mixed picture when it comes to employment outcomes. The Quality Indicators for Learning and Teaching (QILT) Graduate Outcomes Survey (GOS) for 2024, which tracks domestic graduates four to six months after completion, shows the full-time employment rate for undergraduates at 74 percent—a drop from 79 percent in 2023. While this remains above pre-pandemic levels, it signals easing labor market conditions and raises questions about whether universities are producing too many graduates in fields with limited job prospects.

Overall employment, including part-time work, stands at 86.9 percent for undergraduates, with a median full-time salary of $75,000, up 5.6 percent from the previous year. However, underemployment affects 17.7 percent of employed undergraduates, meaning many are in roles below their skill level or working fewer hours than desired. These figures highlight the need for alignment between course offerings and workforce demands, sparking debate on whether Australian universities should cap enrolments in low-employment fields.

Employment Rates Vary Widely by Field of Study

Employment success isn't uniform across disciplines. Vocational fields consistently outperform generalist ones. For instance, rehabilitation graduates boast a 94.9 percent full-time employment rate, followed by dentistry at 85.6 percent, medicine at 90.4 percent, pharmacy at 91.4 percent, nursing at 85.5 percent, engineering at 85.5 percent, and teacher education at 86.8 percent. These areas align closely with specific occupational needs, leading to high demand and salaries—dentistry tops at $103,300 median, engineering at $80,000.

In contrast, creative arts lags at 48.4 percent full-time employment, communications at 58.3 percent, science and mathematics at 63.6 percent, psychology at 65.5 percent, architecture and built environment at 66.6 percent, and humanities, culture, and social sciences at 66.7 percent. Salaries here are lower too, with creative arts at $62,600 and communications at $65,200. Declines were sharp in some, like architecture dropping 12.1 percentage points from 2023.

These disparities fuel arguments for intervention. Fields like creative arts produce graduates who often enter entry-level jobs, with 47.6 percent reporting skills underutilization, compared to just 4.6 percent in rehabilitation.

Historical Attempts to Steer Enrolments: The Job-Ready Graduates Policy

The Australian government has previously tried influencing course choices without hard caps. The 2021 Job-Ready Graduates policy subsidized priority areas like nursing, teaching, and STEM while doubling fees for humanities, law, and business—up to $17,000 annually. The aim was to boost supply in high-demand fields amid skills shortages.

Impact was limited: Enrolments in high-fee areas dropped slightly (e.g., 10 percent fewer low-SES law students by 2024), but overall shifts were minimal—only 1.5 percent of decisions affected, per University of Melbourne analysis. Critics argue it deterred equity groups without resolving underemployment. Grattan Institute's Andrew Norton notes markets self-adjust, with universities responding to demand signals like low employment rates by tweaking offerings.

Today, no policy mandates caps based on employment, but international student caps (270,000 in 2025) indirectly force cuts to low-enrollment courses.

Arguments in Favor of Capping Low-Employment Courses

Proponents, including some policymakers and economists, argue caps would optimize taxpayer investment and student outcomes. With $10 billion in annual Commonwealth funding, why subsidize fields where graduates face 50 percent unemployment risk, like creative arts?

• Labor Market Alignment: Direct supply to shortages in engineering (projected 100,000 jobs by 2030) over oversupplied humanities.
• Reduce Underemployment: 17.7 percent undergrads underemployed; caps prevent mismatched graduates.
• Fiscal Efficiency: Grattan reports show graduate spillovers create jobs, but low-prospect fields dilute benefits.
• Student Protection: Avoid debt for degrees with poor ROI; median arts salary $62k vs. $80k engineering.

The 2017 Grattan report Universities and the Evolving Graduate Labour Market highlights self-adjustment but suggests targeted incentives if markets fail.

Arguments Against Capping: Risks to Innovation and Choice

Universities Australia opposes rigid caps, warning they stifle autonomy and future innovation. Andrew Norton argues enrolments naturally decline in low-prospect fields—creative arts down 5.1 percentage points in 2024.

• Student Freedom: Caps limit choice; not all seek high-pay jobs—some pursue passion or research.
• Uncertain Futures: AI disrupts all fields; humanities grads excel in adaptability (e.g., policy, media).
• Research Pipeline: Low-enrollment fields fuel breakthroughs; capping risks brain drain.
• Equity Issues: Job-Ready hurt low-SES; caps could exacerbate.

International examples like UK's targeted funding show mixed results, with oversupply in business despite steering.

Photo by Eriksson Luo on Unsplash

Stakeholder Perspectives: A Divided Landscape

Government views vary: Labor's Accord eyes employability; Coalition pushes visa caps. Universities prioritize revenue—international fees fund 30 percent operations—fearing domestic caps worsen deficits amid 2025 cuts (3,500 jobs lost).

Students: NUS surveys show 70 percent prioritize passion over jobs; underemployment frustrates but alternatives like TAFE appeal (95 percent employment in trades).

Employers: Ai Group calls for skills match; low arts employment burdens economy ($1.5b lost productivity).

Experts: Norton (Grattan) favors market signals; others like Glyn Davis warn caps echo failed 1990s rationing.

Case Studies: Successes and Struggles in Key Fields

Engineering Success: 85.5 percent employed, $80k salary; universities expanded post-Job-Ready, meeting demand.

Creative Arts Challenge: 48.4 percent employed; grads pivot to marketing (underutilization 47.6 percent), but contribute culturally.

Nursing Boom: Subsidies boosted supply; 85.5 percent employed despite shortages.

These illustrate natural adjustment but persistent gaps.

International Comparisons and Lessons

UK's fee-driven system sees arts decline voluntarily; US community colleges cap low-demand via funding. Netherlands ties places to labor forecasts. Australia could adopt soft caps like Job-Ready 2.0.

Potential Impacts of Implementing Course Caps

Caps could raise average employment to 85 percent but reduce access (e.g., 20 percent fewer humanities places). Revenue loss: $500m annually; job cuts 5,000+. Innovation risk: Fewer PhDs in low-enrollment fields.

Alternatives to Hard Caps: Smarter Approaches

• Enhanced career services: Mandatory work-integrated learning.
• Data transparency: QILT dashboards for prospects.
• Fee incentives refined.
• TAFE pathways: 95 percent trades employment.
• Skills forecasting: Jobs and Skills Australia integration.

Jobs and Skills Australia reports predict 2030 needs for targeted growth.

Photo by Eriksson Luo on Unsplash

Future Outlook: Balancing Access, Quality, and Employability

With AI reshaping jobs, flexibility trumps caps. Accord recommends $1.2b career support. Universities must adapt offerings; students research prospects via QILT.

Explore opportunities at AcademicJobs.com higher ed jobs.