Australia’s productivity problem isn’t down to a lack of shiny new tech. It’s people, or more specifically, the shortage of skilled staff and low engagement, that are the real culprits, according to a study from Small Business Loans Australia (SBLA).

Surveying 226 Aussie business owners and decision-makers, SBLA found that almost one in three businesses can’t find the staff they need, a quarter are battling disengaged employees, and one in five can’t afford the tech that would actually make work easier.

Alon Rajic, founder of SBLA, said the simple solution to Australia’s productivity issues is the right staff.

“Our research shows that people are key to Australia’s productivity problem. They’re working harder with fewer resources, while businesses struggle to source the people, stock and technology to grow.”

Skills shortages everywhere

The skill shortage is being felt Australia-wide. Businesses across the country are struggling, whether it’s the skills gaps in the ACT, supply chain headaches in Queensland, or getting bogged down in red tape in South Australia.

“Businesses will do their part to lift productivity, but they need industry and Government to make it easier, not harder. Running a business is becoming increasingly challenging, and businesses are telling us they need the right regulatory environment and access to skilled talent and affordable technology to remain competitive,” Rajic said.

For micro-business owners, even one vacant role can cause big headaches, while medium and larger businesses are juggling disengaged teams and inefficient processes. Rajic says basically everyone’s feeling stretched.

Tech and training alone won’t fix it

When asked what would help lift productivity, businesses had a definitive response: affordable tech and smarter incentives are key. Over a third said cheaper access to new technology would help most, and 36 per cent called for cutting red tape and introducing stronger productivity incentives.

Almost 30 per cent believe training in AI and digital tools would make a real difference, and one in four flagged easier access to finance or a bigger pool of skilled workers.

“Businesses can do their part, but they need support to make that investment,” Rajic said. “Without the right people, supplies and healthy sales, many businesses simply can’t afford the tools that would increase efficiency.”

While chatbots and software get the headlines, it’s really human factors such as staff, training and motivation, that are holding Aussie businesses back.

The ground-level struggle

It’s hard to get ahead when you don’t have enough hands on deck or the resources to do the job properly. The study shows this lack of resources is a daily struggle for businesses. Staff turnover, absenteeism and overworked teams are slowing down day-to-day operations. Furthermore, supply delays and dips in customer demand are impacting output, while financial pressures prevent businesses from investing in tools that could increase their efficiency.

Is it any wonder Australia’s productivity growth is at a 20-year low?  In 2024 productivity growth averaged just 0.8 per cent compared with 1.8 per cent in 2003–04. This slowdown in productivity affects wages, living standards, inflation and overall economic growth.

“Affordable technology, better training and sensible government support could make a huge difference,” Rajic said. “Businesses are telling us clearly what they need to lift productivity—they just need the opportunity to get it.”

Read the full Small Business Loans Australia FY26 productivity study here.

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