Australian Miserable Labour Productivity 2026
A few truths about Australian productivity.
We have productivity problems, with appalling government health, education, public administration, and private business investments, and productivity improving only slightly.
Australia’s labour productivity has only improved by 2.7% over 24 years, whereas the USA is 22.5% a big difference. When you consider agriculture by 300% and business and professional services by 175%, the rest of the economy is in a dismal state, led by construction, which has gone backwards by(6.8%)
How many business and government decisions have contributed to these appalling results?
In contrast to the poor productivity examples above, I can refer to a couple of my own actual case studies where margin improvements had led by sustainable, impressive, ongoing productivity improvement projects
Examples where an all-in-one rostering-to-payroll system with automated Award Interpretation delivers productivity and service improvements
In the Event Industry
In my career, I was part of a team that improved labour productivity in the catering services at the MCG over 24 years. The overall labour % of moved from 38% to 22% of total labour at the venue, driven by:
- improvements in revenue through the introduction of higher-value income from corporate suite introduction
- Increased revenue and lower labour cost % with the introduction of self-serve food kiosks
- Introduction of a multi-pour beverage system in the bars and kiosk, reducing labour costs.
Rostering with payroll in the Hospitality Industry
Another example was the creation of a unique food services system for the award-winning Colonial Tramcar Restaurant in Melbourne with the development of a unique platform for the delivery of a high-quality restaurant experience on a mobile tramcar
- A unique Regathermic food system designed to enable the highest quality food
- The roll on and off of a fully loaded kitchen to facilitate the quick turnaround of up to 3 meal sessions a day
In the services industries, integrated rostering to payroll delivers on productivity, costs and service quality
Moving on to back-office payroll systems designed for a large contingent workforce company, where pay processing efficiency reduced the number of payroll team members from 11FTEs to less than 2 FTEs for the 8,000-plus employees across over 250 sites in Australia and New Zealand, and an over 70% saving for a worldwide operating Australian company in payroll processing complexity and effort.
- Integration of an all-in-one rostering-to-payroll system integrated to their SEP system
- Patented comprehensive, compliant, fully automated Award Interpreter from the approved timesheet, removing over 70% of the time and effort in payroll
“ Here we are now with not only a better overall SAP/Inzenius system that is now delivering up to a 70% reduction in data duplication and entry across a number of systems in payroll processing time and effort, but we have also achieved additional improved functionality overall.”
Frequently Asked Questions
How does rostering to payroll deliver productivity improvements in service industries?
The two components of supported rostering to the demands of the business and the efficiency of automated award interpretation of the pays improves overall labour allocation to the demands whilst also reducing the time and effort in payroll process by up to 70% as presented in the case study
Are there cost savings in system implementation and operating costs with an all-in-one system?
Definitely, as articulated in the Australian Payroll Association’s own survey, as you are not paying for multiple systems
Is the rostering component easy for site supervisors to use?
Yes, if the system s]has a range of configurable user interfaces to suit each department supervisor’s needs
Do rostering and payroll systems have an employee self-service option?
As rostering processes for the service industry need to be published to each employee and require their acceptance of the rosters and timesheets, this is a must
Employees want easy communication and access to records, including rosters, leave applications, timesheets for acceptance, and payroll records.
How does rostering with payroll systems help with labour cost planning?
The system uses the payroll award interpreter for costing the roster in advance and post-period analysis to help better roster decision-making
Article on Miserable Australian Productivity
LinkedIn Article by Alex Joiner PhD (Econometrics)
https://www.linkedin.com/pulse/few-truths-australian-productivity-alex-joiner-mxskf/
Australia doesn’t have one productivity problem. It has several, moving in different directions — which is exactly why “productivity is weak” as a headline doesn’t tell you very much.
Start at the highest level. Split the economy into market and non-market sectors and the two tell noticeably different stories. The market sector has broadly held its ground, still tracking a modest upward trend even through the recent slowdown. Non-market activity — health, education, public administration — has been the weaker of the two, with output per hour worked flat to falling over the past decade. But that headline split hides as much as it reveals, particularly once you look inside the market sector itself.
Productivity in Australia
Within the market sector, the divergence is stark. At one end, business and professional services are quietly doing fine. Output per hour worked there (on national accounts and labour account data) has kept climbing at a healthy clip for three decades, largely undisturbed by the broader slowdown — and it’s notably surged again in the post-pandemic period. This is the part of the economy plausibly best placed to keep compounding gains as AI tools get adopted.
Worth a brief aside on the primary sectors too. Agriculture has been a standout, more than tripling in productivity terms since the mid-90s. Mining is the more interesting case: it remains by far the most productive sector in the economy in level terms, but productivity there has been gradually declining as mine life extends and ore grades deteriorate — and there’s little sign of the new investment needed to open the sector’s next growth phase, despite Australia’s clear comparative advantage in resources.
Productivity by sector
At the other end sits the cyclical and goods-producing side of the market sector, and this is where the real concern lies. Construction productivity is lower today than it was in 2002. Not slower-growing: lower. Manufacturing tells a similar story — consistent with the broader narrative that it’s become genuinely hard to build things in Australia, with high energy costs a meaningful part of that. Neither looks like a cyclical soft patch waiting for the upswing to fix it; both look structural, and both sit right at the centre of the economy’s current investment priorities around sovereign capability, energy transition, affordable housing and data centre build out. Household services, in between, have broadly kept pace with the economy without leading it.
Turn to the non-market sector and the picture needs a caveat. The official data show productivity flat to falling in health, education and public administration — but we’d treat that with some caution. Measurement in these sectors is genuinely hard, and a lot of the “weakness” coincides with non-market activity absorbing a much larger share of employment growth than its output share would suggest. That looks more like a sign of how the national accounts handle labour-intensive care and teaching work than an economy going backwards.
Step back further and the more important story is the decades-long deceleration: productivity growth has gone from a strong post-90s trend to something closer to a standstill over the past several years, with the pandemic-era bounce almost entirely given back.
This is where it becomes an inflation story rather than just a growth story. The RBA’s own framework treats sustainable wage growth as contingent on productivity growth — when the two decouple, the gap shows up in unit labour costs and, eventually, in prices. The sectors where the decoupling looks most entrenched — construction, manufacturing, non-tradeable services — are also the sectors doing the most work in domestically generated inflation. That’s a harder problem for policy than a story about goods disinflation or a soft trimmed mean print can capture on its own, and it’s part of why we think the case for an early pivot to easing is less complete than the consensus framing suggests.
The question isn’t whether Australia has a productivity problem. It’s whether the next source of improvement — AI, policy reform, capital deepening — can actually reach the sectors that need it most, rather than just widening the gap between the sectors already pulling ahead. Increasingly, that looks like a job for policymakers and regulators as much as for firms themselves: planning and approvals settings for construction and housing, energy policy for manufacturing, and service delivery models in health and education all sit closer to the policy lever than to any single firm’s balance sheet.