Australia’s health system is facing a paradox. On one hand, headlines continue to highlight persistent healthcare workforce shortages. On the other, recent reporting in The Age shows that Victorian nursing graduates are struggling to secure jobs after graduating with government-subsidised qualifications.
This paradox of workforce shortages coexisting with unemployed nursing graduates is happening in Australia, partly because training is federally subsidised, but employment is state-funded, capped, and unevenly distributed. Without integrated workforce planning and adequate funding, this interesting paradox of hospitals reporting shortages while simultaneously being unable to employ new graduates, is created. So the system is currently producing both shortages and underemployment at the same time. It would almost be comical if it wasn’t so tragic.
In addition to this glaring disconnect, this issue is now becoming more of a problem due to a combination of structural, financial, and planning failures across our health system.
We do a quick deep-dive into the main reasons:
1. Mismatch between Training Numbers and Funded Jobs
Governments recently expanded subsidised university places to address the much talked-about looming workforce shortages, but the growth in training places hasn’t been matched by funded graduate positions in hospitals, aged care, and community care. In other words, more people are being trained than there are entry-level jobs available for them.
2. Funding Silos Between Education and Health Services
Education subsidies (Commonwealth-funded university places) and operational health budgets (state-funded health service staffing) sit in different portfolios. Universities can enrol more students, but state hospitals and aged care providers may not receive equivalent funding to employ them once they graduate. This disconnect then leaves graduates stranded.
3. Graduate Program Bottlenecks
Most new nurses and midwives enter the workforce through structured graduate transition programs. These are capped due to budget and supervisory capacities of the various services in the health, aged care and disability care sectors. If graduates miss out on getting into these programs, they then struggle to get entry-level experience, which effectively locks them out of the workforce, despite demand elsewhere.
4. Geographic and Sectoral Maldistribution
Workforce shortages are worst in rural, regional, aged care, and primary care settings. Many graduates want (or are only offered) metropolitan hospital roles, which are already oversubscribed. Meanwhile, hard-to-staff sectors remain under-resourced, because the roles at these settings and industries are less attractive, poorly supported, or underfunded.
5. Short-Term Budget Constraints
Health services across the country are currently under budget pressure from rising demand, inflation, and COVID-era debt. Hiring freezes or reductions in funded positions are being not infrequently implemented across many services, even when staff are desperately needed on the ground.
For healthcare leaders though, this is not just a story about disappointed graduates and a comedy of errors. It’s a signal of systemic inefficiency that threatens both health workforce sustainability and public trust.
The national Nursing Supply and Demand modelling also projects large shortfalls over coming years, which makes the mismatch between training and employment even more glaring if the pipeline cannot be reliably absorbed into practice.
The Workforce Mismatch Problem
When governments subsidise health qualifications, the intention is clear -remove barriers to entry and expand the workforce. But when thousands of students invest years of training with public funds supporting their education, only for employment opportunities to dry up, the outcome is troubling on several fronts. We see:
Wasted investment: Both healthcare students and taxpayers carry the cost when trained professionals cannot transition into the health workforce.
Workforce bottlenecks: Graduates remain under-employed while health services still report critical staffing gaps in hospitals, aged care and primary care.
Erosion of trust: Future students may hesitate to pursue nursing, medicine, or allied health careers if the promise of stable employment feels unreliable.
System fragility: Health workforce planning failures today translate to clinical service delivery risks tomorrow, especially as demand keeps accelerating owing to an ageing population.
This mismatch is not only about headcounts either. It’s also about the misalignment between where trained clinicians are needed (such as in aged care, rural health, primary care, particular specialties), versus where funded roles actually exist. Without this alignment, increasing the number of graduates risks increasing the system fragility rather than relieving it.
Why This Matters for Healthcare Leaders
Healthcare leaders sit at the intersection of workforce strategy, patient demand and financial stewardship. The training–employment disconnect creates risks that cut across governance, operations and reputation:
- Difficulty meeting care demand despite a visible pipeline of willing graduates.
- Heightened pressure and moral injury on existing staff when graduates cannot be onboarded and workload remains high.
- Reputational and political risk when public investment in training does not translate into service delivery.
- Disengagement from the next generation of clinicians, fuelling attrition and undermining future pipelines.
Effective leadership must therefore move beyond counting the number of graduates, to actively shaping the pathways that translate education into employment.
International Comparisons: What Other OECD Systems Are Doing (and what Australia can learn)
Several OECD countries have faced similar tensions and have taken distinct, pragmatic steps to reduce this training–employment gap. These examples offer important lessons for Australian health leaders.
Systematic workforce planning and integrated funding
The OECD emphasises that workforce planning must connect supply (training places), demand (service needs) and funding cycles, so that training investment is matched by funded posts and placements. Countries that use integrated planning frameworks are better able to forecast shortages, shape training intakes, and advocate for operating budgets that support hiring. Australian leaders should press for the same kind of linked planning and budgetary alignment at state and federal levels.
Return-to-practice and re-entry programs (UK)
The NHS and Health Education England run national return-to-practice programs to re-activate experienced clinicians and create flexible re-entry pathways. These programs expand workforce capacity quickly and provide a predictable pathway for people who trained previously but left clinical practice, easing pressure on entry-level hiring while bolstering retention. Australian systems could scale similar national re-entry and refresher pathways, targeted at regional and aged-care settings, to absorb graduates into mixed teams while utilising experienced returners as mentors.
Structured transition programs for graduates (Canada)
Canada has invested in formal graduate nurse residency and transition-to-practice programs (with mentorship, protected learning time and competency progression). Evidence shows these programs improve employment outcomes and retention for new graduates by smoothing the jump from student to clinician. Adopting and funding more consistent, guaranteed graduate programs across Australian public and private providers would reduce the “trained but unemployed” problem, and improve early-career retention.
Regionalised workforce planning and role redesign (Netherlands)
The Netherlands integrates workforce planning with role redesign (advanced practice roles, nurse practitioners, physician assistants) and targets training places to regional service needs. This lets them shift clinical responsibilities to the most appropriate profession and open new employment pathways for graduates in community, primary care and aged care. Australian leaders should explore expanded skill-mix models and targeted training places tied to rural and aged-care contracts.
Taken together, these international approaches share three practical principles:
(1) link education numbers to funded roles,
(2) fund and standardise transition pathways, and
(3) reshape roles and incentives so that service need determines training priorities, not the other way round.
Strategic Responses Health Leaders Should Consider
Addressing this mismatch requires executive leadership, cross-sector collaboration and system thinking. Practical priorities for healthcare executives include:
- Strengthening the training: employment alignment: negotiate with universities, TAFEs and funders to match subsidised training places with guaranteed funded roles (public, private and community).
- Demanding better data: insist on transparent reporting of graduate employment outcomes, vacancy fill rates by region and discipline, retention at 6–12–24 months. Data has the power to change the conversations with funders and ministers.
- Funding transition pathways: create and resource graduate/residency programs, bridging roles and protected preceptorship time, because these reduce attrition and accelerate safe independent practice. (The evidence base for transition programs shows improved retention and clinical readiness.)
- Securing funding certainty: campaign for integrated budgets that link education subsidies to operational hiring budgets so training investment results in actual staffed services.
- Leading system and role redesign: implement team-based models, advanced practice roles, and digitally enabled roles that create diversified, sustainable entry points for graduates.
- Targeting regional and aged-care placements: use incentives and bonded placements to direct newly trained clinicians into high-need settings with guaranteed employment pathways.
Communicating transparently: with students, staff and the public. Explain the pathway from funded training to funded roles, and where gaps may still remain.
Turning a Challenge into an Opportunity
Training more clinicians will only ease shortages if those clinicians have predictable, supported pathways into actual employment. Australia’s projected nursing shortfalls make it especially urgent to close the loop between supply and employment, so that public investment delivers patient-facing care rather than idle qualifications. The international evidence shows a combination of planning, funded transition programs, return-to-practice initiatives and role redesign can narrow the mismatch if healthcare leaders drive these levers with data and political clarity.
Healthcare leaders have an obligation not just to manage today’s pressures, but to safeguard tomorrow’s healthcare workforce. Getting the balance right between training supply, employment demand and service delivery, is one of the most pressing strategic issues facing the Australian health system today. If we align the pipeline with real roles, we won’t just be creating jobs —we’ll be building the workforce our health system desperately needs.
