Implications for business from Productivity Commission research into university graduates

Australia needs an increasing supply of higher education graduates to meet the growth rates in high skilled labour over the coming decades. Pleasingly, new research from the Productivity Commission shows that domestic student numbers did increase from 2012 to 2017 under the ‘demand driven’ system: a system under which universities were able to determine domestic undergraduate student numbers and the number of offers made for each course.

However, issues underlie this increase that may have implications for business. Industry transformation is placing complex demands on the capabilities of graduates. A mixture of the right technical knowledge, advanced communication, adaptive and critical enquiry skills and digital literacy is required.

Ai Group’s own 2018 research found employers increased their satisfaction levels with higher education graduates between 2016 and 2018. Employer dissatisfaction, while relatively low, was highest with regard to self-management, planning and organising (13 per cent), basic literacy (9 per cent) and teamwork/communication (8 per cent).

It is of concern that the report found some evidence of skills mismatch with fewer graduates entering occupations that require their skills. It also found that many students are entering university ill-prepared and struggling academically. It suggests the school system is not preparing students to meet the growing demand in the Australian economy for complex and adaptable skills.

There is also a concern regarding the diversity of university graduates available to business. The ‘additional students’ drawn to higher education under the demand-driven system were from many backgrounds but typically had lower literacy and numeracy and a lower Australian Tertiary Admission Rank (ATAR). While many succeeded, those with lower literacy and numeracy and a lower ATAR dropped out at higher rates. And while university participation increased for some under-represented equity groups, participation gaps remain for Indigenous people and for people from regional or remote areas. Those young people from regional or remote areas continue to be much less likely to attend university.

While greater academic support can help more students succeed, the report points out that university may not be the best option for all. Ai Group has maintained a strong position on the need for more young people to consider and undertake suitable vocational education and training (VET) qualifications. Significant skills shortages exist for technicians, trades workers and some paraprofessionals. Australia equally needs a robust VET sector to meet both existing and future skills needs.

Are newly recruited university graduates equipped with the knowledge, skills and capabilities your business needs? Are you finding the graduates you need? Your comments will assist us to gather evidence and advocate changes needed in the education and training system. Please add your comments below.


  1. AvatarPaul Taliangis

    Anne, thank for this thought provoking piece. My firm is active across energy and resource sectors and we see clear mismatch between changing market needs vs broad ranging team competency and experience.

    Our view is that the most pronounced gap is where businesses and markets require new approaches to data, information and analysis, leveraging new generation technologies and work processes/practices – so called digital transformation.

    We are developing a not for profit organisation which is substantially funded by our commercial activities to address this market challenge.

    FYI our definition of energy & resource boundaries extends across renewable, oil, gas, coal, electricity, LNG, infrastructure and transport systems – nationally.

    My team is keen to explore whether there are synergies to be enjoyed in working together. Who can I contact to discuss?

    Kind regards, Paul

    Paul, Chairman & CEO
    Core Energy & Resources

    1. Anne YoungerAnne Younger (Post author)

      Hi Paul
      Thanks for your response. I’d be happy to have a chat about your initiative, with particular interest in skills mismatches caused by the transforming economy.
      If relevant, after our discussion I could refer you to my energy and resources sector colleagues.
      My contact details are:


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