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The prevalent knowledge economy discourse has direct implications for higher education policies and practices. It is expected that the higher education sector supports national economic competitiveness mainly through promoting scientific research, supporting technological transfer and innovation, and producing 'knowledge workers' such as higher degree by research graduates. However in the context of changing work requirements and fast paced technological progress, the 'skills gap' between the labour market needs and the actual attributes of graduates has emerged as a tangible concern. This paper explores the issue of research graduate employability in Australia. Drawing on critical frame analysis, the paper particularly problematises the way research graduate employability has been framed in relevant policy texts, and shows what issues are excluded from the policy agenda and why. By way of demonstrating exclusions from the current debate on doctoral graduates' skills and employability, we briefly report on new data on the level of industry-engagement of research students at one large Australian university to argue that assumptions about the need to 'fix' the skills deficit of graduates have excluded from view high levels of industry engagement. [ABSTRACT FROM AUTHOR]