This paper studies the relationship between competitiveness and higher education systems in Europe. It explores whether more competitive countries have developed more labour-market-oriented systems of higher education (HE) that thereby give their graduates greater short term employability potential. Based on and a large-scale survey among 45.000 higher education graduates five years after graduation in 19 European countries, five employability indicators are identified and analysed in combination with World Economic Forum Indicators. The paper finds evidence demonstrating that more competitive countries have developed HE systems with more practically oriented studies and a higher workload. The paper identifies five country clusters indicating a combination of country competitiveness and other characteristics of HE systems. This is the first empirical study to examine relation between "soft" dimensions of higher systems and competitiveness on country comparative basis. (Contains 1 table and 3 footnotes.)