Published on the 28/05/2026 | Written by Heather Wright

Is AI killing grad jobs?…

A growing mismatch between university graduate capabilities and employer requirements in an AI-enabled economy and concerns about the impact of AI on graduate job opportunities are emerging as central themes in submissions to a federal parliamentary inquiry into graduate employment.

The Senate Education and Employment References Committee is examining the rise in the number of Australian university graduates struggling to find work, including whether graduates are being taught the skills employers are looking for and the state of the entry-level job market.

“Many graduates are not job-ready, with gaps in practical capability, digital and AI fluency, communication and professional judgement,”

The inquiry into Australian university graduates, launched in March, is considering a broad set of issues affecting graduate employability, including the quality of university education and alignment between graduate capabilities and workforce needs.

Early submissions indicate AI is influencing both how grads develop skills and how businesses structure entry-level roles.

Submissions note that AI is being used to automate entry-level work traditionally performed by university graduates, raising concerns about fewer job opportunities and weaker early-career training pathways.

One submitter told the inquiry that automation of routine tasks is reducing the number of roles available to graduates. In a written submission, ICT engineering graduate Nassar Zaytouni says AI is contributing to a ‘graduate employment crisis’ with businesses increasingly using AI to perform work previously undertaken by junior staff.

Zaytouni says when AI replaces lower-value tasks, new grads may lose the opportunity to develop practical skills in the workplace. “When universities fail to teach critical thinking and complex problem-solving, and AI automates the ‘low-value’ tasks… the window for on-the-job training vanishes,” he says.

The dilution of course content has ‘stripped’ graduates of their ‘competitive advantage’ – the rigor and diligence enabling them to contribute and offer insight as well as perform lower value tasks, he says.

The submission states that the removal of routine workplace tasks limits opportunities for graduates to develop practical experience, which has historically been part of early-career roles. It also raises concerns about the impact of AI on academic standards and graduate preparedness, with Zaytouni describing what he calls ‘the systemic dilution of academic standards and the resulting vulnerability of Australian graduates in an increasingly AI-driven economy.”

He’s called for changes to prioritise ‘high-order’ skills that are less likely to be replicated by AI systems, such as critical thinking and complex problem-solving.

Other submissions to the inquiry raise related concerns about the use of AI in university study and its potential impact on skills development.

One, from a postgraduate student, argues that the use of generative AI tools in coursework can have a ‘real, detrimental impact on learning and cognitive ability’ with implications for graduate preparedness in the workforce. It calls for restrictions on the use of AI technologies in academic work, stating that ‘AI usage should not be tolerated’ in coursework.

A submission from the Future Skills Organisation highlights a parallel issue, pointing to a gap between the skills universities are delivering and those sought by employers, particularly in technology-driven roles.

It says there is a ‘clear and growing mismatch between university outcomes, employer expectations and graduate capability’ across finance, technology and business occupations.

It says demand for skills in these sectors in increasing, particularly in technology-related roles, driven in part by the uptake of AI.

“The critical issue is not simply the volume of graduates but whether they are equipped with the skills employers actually need,” it says in a submission.

“Employers report that many graduates are not job-ready, with gaps in practical capability, digital and AI fluency, communication and professional judgement,” the FSO says. “As a result, employers are bearing the cost of developing workforce readiness post-hire.”

AI is accelerating the challenge, the FSO says, with baseline expectations now including the ability to use AI tools, assess outputs and apply judgement in digital environments. It notes too, a lack of consistent development of transferable, generalist skills such as communication, teamwork and adaptability.

The FSO is calling for AI literacy to be a core graduate capability across all university programs, with digital fluency, problem-solving, communication and teamwork included in generalist workplace skills. Aligning course design more closely to labour-market demand, expanding earn-while-you learn models and improving collaboration between universities, employers, vocational education and training providers and government to ensure more consistent, transferable, practical graduate skills are also recommended.

Independent senator Fatima Payman, who is leading the inquiry, has also made a submission which includes the recommendation that the Australian government introduce a standalone act governing AI, particularly with regard to its use in the workplace.

Submissions to the inquiry close in June.