Graduate unemployment is a growing problem in eThekwini Metropolitan Municipality. The study’s main research question was on how policy capacity could transform this problem and reduce unemployment in eThekwini. The study used the rationale choices approach as its theoretical framework. The study used a convergent mixed methods approach consisting of a survey of 143 unemployed eThekwini Metropolitan Municipality graduates, three key informants from national and local government and document analysis. Purposive sampling was used to select participants and data were analysed using statistical analysis and inductive and deductive thematic analysis.
The findings show that lack of work experience, a poor economic climate, the past effects of COVID-19 and the form and type of institution one attended and skills versus job mismatches were the five major factors behind graduate unemployment. In terms of graduate employment programme effectiveness, the graduates showed mixed results but were more inclined towards believing that graduate employment programmes were not very effective in assisting them in meeting career-related benefits. Less than half were confident that existing graduate employment programmes and policies will solve their joblessness. EThekwini’s policy capacity in transforming graduate unemployment was weakened by bureaucratic systems and their effects on decision-making, policy centralisation at the national government, lack of stakeholder consultation and engagement and organisational systems and efficiency issues among the public sector entities it needed to coordinate with towards graduate unemployment resolution. The study proposed a framework that demands that policymakers look at the three levels or dimensions that affected graduate employment policies. These were the students, institutional (educational and industry) and macro environment and develop adequate capacities to manage these along the policy management cycle. Public policymakers were urged to coordinate more towards graduate policies.

KEYWORDS: Graduate unemployment, policy capacity, eThekwini, higher education