Unemployment of the graduates is becoming a serious problem in Bangladesh. And the problem cannot be dismissed as a mere job-search Phenomenon. Analysis in this paper indicates that the phenomenon can be explained by the simultaneous operation of forces acting from both the demand and supply sides and a less than perfect operation of the labour market for graduates. Employability appears to be an important factor affecting the demand for graduates as there is support for the existence of a systematic relationship between the incidence of unemployment and the relevance of education for the jobs available. Thus a kind of structural imbalance does seem to exist in the labour market for graduates. The problem is further aggravated by the type of expectations that is generated amongst the graduates by the content of curricula, environment of the educational institutions, the incentive structure in the labour market and the whole system in general. The ultimate result is a mass production of graduates, a large number of whom are not wanted by the labour market.