A dominant challenge for universities now is the expectation that they produce graduates who are immediately “job-ready”.

Governments, employers and policymakers frequently stress the need for universities to align courses with workforce demand, equipping students with skills that can be directly applied in professional settings. This has encouraged a rapid expansion of micro-credentials, industry-aligned courses and work-integrated learning opportunities. The language of employability now permeates university strategies, marketing and government policy frameworks.

While graduate employability is a legitimate concern, the emphasis on short-term vocational outcomes risks narrowing the broader educational role of universities. Traditional disciplines, particularly the humanities and pure sciences, have faced reduced support as resources are channelled towards fields with an apparent more immediate economic payoff. The effect is a constriction of students’ exposure to critical inquiry, creativity, and interdisciplinary perspectives. Ironically, these qualities underpin adaptability in a labour market that is itself in flux, where specific technical skills can quickly become obsolete.

Excessive attention to employability also risks undermining universities’ capacity to cultivate independent thinkers, informed citizens and innovators capable of addressing complex social, cultural and ethical challenges. A university education has always extended beyond immediate job preparation, providing the intellectual foundation for lifelong learning and civic contribution. Narrowing this mission to vocational training alone diminishes the very attributes that employers consistently identify as most valuable in the long term, covering resilience, communication, problem-solving and leadership.

Moreover, despite the rhetoric, both students and employers have expressed dissatisfaction with the outcomes of university employability initiatives. Many industry-aligned programs are considered too generic or poorly integrated into broader curricula. At the same time, a growing number of non-university higher education providers, private colleges and online platforms have moved aggressively into this space, offering targeted, flexible and employment-focused programs. Some of these providers resemble the former Colleges of Advanced Education, which were absorbed into the Unified National System in the late 1980s, a move widely regarded as a strategic error that blurred institutional missions.

Universities, policymakers and accounting-driven consultants may need to reconsider whether pursuing employability as a core competitive strategy is sustainable. A more viable approach could be to reaffirm their original missions — knowledge creation, intellectual development and civic contribution — while accounting separately for professional training activities. By clarifying the financial and strategic distinction between core and supporting missions, universities can better position themselves in an increasingly diversified higher education landscape.

A global phenomenon: How other countries have responded

The financialisation of universities is not unique to Australia. Over the last three decades, higher education systems across the world have grappled with similar pressures, but the responses have varied significantly.

In the UK, the introduction of tuition fees in the late 1990s, coupled with increasing reliance on commercial income, accelerated the adoption of market-oriented models. Frameworks such as the Research Excellence Framework and Teaching Excellence Framework institutionalised performance-based funding, embedding competitive metrics that privilege measurable outputs over broader academic freedoms.

In the US, financial pressures have long shaped higher education, particularly in private universities dependent on tuition and endowments. Public universities, once supported by substantial state investment, have also faced demands to demonstrate financial sustainability. The outcomes have included higher tuition, the widespread use of adjunct faculty and deep cuts to public funding. The dramatic rise in student debt exemplifies the consequences of shifting financial responsibility from governments and institutions to students and their families.

By contrast, European systems, such as those in Germany and Norway, have largely resisted commercialisation. German states have abolished most tuition fees, while Scandinavian countries continue to provide strong public funding. These models reflect a commitment to higher education as providing national benefits rather than as a market commodity.

Reclaiming the university’s public mission

Despite the spread of financialisation, there is growing recognition across the sector that current models are unsustainable. Universities must be allowed to reassert their core roles: advancing knowledge, nurturing critical thinking and contributing to the public good. Achieving this requires a fundamental rethinking of the financial frameworks that shape their operations.

One step forward is the adoption of a dual accounting framework that distinguishes between financial sustainability and the academic mission. Evaluation should extend beyond balance sheets to include contributions to research, teaching quality and societal impact. Governments must accept that universities are not businesses, and accountability mechanisms must reflect their educational and civic purposes.

A longer-term rebalancing will require new funding arrangements that prioritise public value. Options include reinstating block funding for research fields with limited commercial potential, supporting outreach and community programs, and embedding accountability measures that highlight educational quality and national benefit rather than short-term returns.

Conclusion

The financialisation of higher education is a global phenomenon, but its trajectory in Australia raises difficult questions. If the current path continues, universities risk becoming locked into market logics that prioritise financial viability over academic purpose. The likely consequences are further program closures, greater reliance on international student markets and a narrowing of research agendas to those areas with immediate commercial potential. Such a future would weaken universities’ broader contribution to national culture, democratic life, and long-term innovation.

An alternative is to embrace greater diversity within the sector. The German and US systems illustrate that higher education need not be uniform: different institutional types can co-exist, each with distinct roles and funding models. In Australia, this might mean recognising that not all universities should pursue the same mission and creating differentiated frameworks that support both research-intensive institutions and more teaching or professionally-oriented providers. Such diversification could restore balance, allowing universities to serve multiple public purposes without forcing them all into a single commercial mould.

Ultimately, the challenge for policymakers is to decide whether Australian universities are to remain public institutions with broad civic responsibilities or whether they will be reshaped into market-driven entities. The answer to that question will determine the capacity of the sector to contribute to Australia’s long-term economic, social, and cultural future.

Universities are not businesses, and faculties and schools are not business units. To see universities in this way works against the values of cross-disciplinarity and collaboration that we seek in driving new knowledge and innovation outcomes.

The views expressed in this article may or may not reflect those of Pearls and Irritations.