Australian businesses face acute payroll skills shortage

New research conducted by ADP indicates that Australian businesses are encountering a significant shortage of payroll skills, with only 43% of companies employing payroll processing specialists, marking the lowest rate in the Asia-Pacific region.

This shortage is prompting a swift movement towards the implementation of automated and AI-enabled payroll solutions to enhance accuracy and ensure compliance. According to ADP's report, titled "The Potential of Payroll in 2025," 36% of businesses have identified a lack of automation as a primary cause of payroll inaccuracies, while more than half of the respondents at 53% expressed a desire to automate data entry as a means of saving time.

ADP's annual report, which surveyed senior payroll leaders from multinational organisations with over 1,000 employees, underscores the urgent need for investment in payroll talent, technology, and integration with business systems to improve efficiencies and ensure compliance within the Australian market.

The report highlights an acute skills shortage in payroll services in Australia, which ranks as the most significant in the Asia-Pacific region. Furthermore, only 44.5% of Australian firms have compliance experts, compared to Singapore at 51%, China at 57%, and Japan at 64%. This deficiency is acknowledged by 20% of Australian businesses as a considerable challenge impacting payroll service delivery.

The emphasis on automation and AI is growing as Australian companies strive to address payroll-related issues. Currently, 36% of organisations attribute payroll inaccuracies to a lack of automation, and 53% are keen to automate data entry to reduce workloads. Significantly, 40% of businesses are aiming to cut down the time dedicated to data entry tasks by payroll teams.

With payroll's role evolving strategically, the report stresses the importance of payroll transformation as businesses navigate a complex regulatory environment, workforce limitations, and increasing operational demands. It suggests that organisations investing in automation, AI, and workforce development will be well-placed to improve efficiencies, maintain compliance, and boost employee satisfaction.

Judy Barnett, Operations Director at ADP Australia, commented, "Automation is transforming payroll, streamlining processes and reducing manual errors, but its true value lies in how it supports human expertise." 

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