For manufacturers across Australia and New Zealand, labour shortages have quietly shifted from a cyclical challenge to a structural one. Cost pressures, uneven demand and skills shortages are familiar issues — but what’s increasingly clear is that productivity gains can no longer rely on workforce growth alone.
An analysis from KPMG Australia in May 2025 reinforces this reality. While Australia’s overall workforce has grown by nearly 23% between 2014 and 2024, manufacturing sits at the bottom of the growth table, recording the lowest employment growth rate of all major industries.
In contrast, sectors such as aged care, health, technology and professional services continue to attract talent at pace. For manufacturers, this means the pool of available labour is not expanding at the same rate as operational complexity.
The hidden impact of manufacturing labour shortages and low workforce growth
Low employment growth doesn’t automatically translate to lower output — but it does change how work gets done. As volumes fluctuate and product, pricing and customer requirements become more complex, existing teams are being asked to absorb more variation with the same or fewer people.
In practice, this often shows up as an increase in administrative load. Manual data entry, rekeying orders, correcting errors, and moving information between documents and systems become part of “normal work”. None of it typically appears on a productivity report, yet it consumes hours each day across sales, customer service, finance and operations teams.
KPMG’s research highlights that many administrative and manufacturing adjacent roles are in decline. The risk for manufacturers is that while these roles shrink, the work itself doesn’t disappear. It simply gets redistributed across already constrained teams.
Automation as a capacity release, not a cost exercise
That’s why the conversation is beginning to shift. Instead of asking how do we find more people?, many manufacturers are asking how do we free our people to focus on the work that matters most?
This is a subtle but important change in thinking. It reframes productivity away from headcount and towards capacity — specifically, how much time and attention teams have available for value add activity such as customer engagement, supplier collaboration, exception handling, and decision making.
When repetitive data handling is reduced, teams don’t suddenly become idle. Instead, time is redirected toward higher value activity: managing exceptions proactively, improving customer responsiveness, tightening coordination with suppliers, and addressing issues before they escalate. In a tight labour market, this reallocation of effort can be the difference between reacting to problems and staying ahead of them.
A more realistic path forward
The uncomfortable truth is that manufacturing labour shortages are unlikely to ease significantly in the near term. Low employment growth in the sector is part of a long term structural shift, not a short term anomaly. Businesses that wait for conditions to normalise may find themselves permanently operating at capacity.
The more sustainable path forward is pragmatic rather than transformational. It starts with identifying where time is being lost to manual handling and administrative rework, then systematically removing that friction so people can focus on the work only they can do.
In an environment where people are scarce, time becomes the true competitive advantage. Manufacturers that recognise this — and act on it — will be better positioned to operate efficiently, respond quickly, and create value even under continued labour pressure.