Aussie payroll sector struggling with skills shortages, lack of AI

New research has revealed the biggest pain points for the Australian payroll sector, with the skills shortage and lack of AI implementation topping the list.

ADP’s The Potential of Payroll in 2025 report revealed that a number of Australian businesses are being plagued by critical skill shortages, paired with the growing need yet lack of implementation of both automation and AI.

With compliance measures for payments growing and payroll becoming more strategic, organisations are searching for pathways that can improve efficiency. According to the findings in this report, there is an urgent need for investment in payroll talent, technology, and integration for Aussie businesses.

The report found that Australia is facing the most significant payroll skills shortage in the Asia-Pacific (APAC) region, with only 43 per cent of Aussie businesses having payroll processing professionals – the lowest across APAC.

Additionally, Australia has the fewest compliance experts (44.5 per cent) compared to Singapore (51 per cent), China (57 per cent), and Japan (64 per cent). Considering the recent changes to wage theft and payroll laws, it’s never been more important for businesses to ensure their payroll and other administrative processes meet the requisite standard.

In terms of the automation and AI challenges, the report claimed that 36 per cent of Aussie businesses cite a lack of automated processes as the primary cause of payroll inaccuracies, while 53 per cent of companies want to automate data entry to save time.

The rise in automation will no doubt reduce the manual workload, which is a key priority, with 40 per cent of Australian businesses seeking to decrease the time payroll teams spend on data entry tasks.

“Automation is transforming payroll, streamlining processes and reducing manual errors, but its true value lies in how it supports human expertise,” said Judy Barnett, operations director at ADP Australia.

“For example, AI-powered systems can flag potential compliance risks, but without human oversight, they might misinterpret complex award conditions or leave entitlements.”

Looking forward, the report findings seek to highlight the importance of organisations investing in automation, AI, and workforce development to assist with navigating an increasingly complex regulatory landscape in Australia.

“With Australia facing payroll skills shortages and a complex regulatory landscape, businesses must strike the right balance between AI-driven efficiency and human oversight to ensure compliance, fairness, and adaptability,” said Barnett.