New report shows Australia's persistent productivity problem despite AI introduction
The adoption of generative AI tools in the workplace has yet to make an impact on Australia's labour productivity, which remained "disappointing" over the past year, according to a new analysis.
Labour productivity, which is measured by GDP per hour worked, rose by only 0.4% in 2025 to remain 5.5% below the March quarter 2022 peak, data from Indeed Hiring Lab revealed.
"Australian labour productivity... continued to disappoint throughout 2025," said Callam Pickering, senior economist at Indeed Hiring Lab.
"Whatever the source of Australia's dismal productivity performance might be, reversing it will be critical to improving wages, living standards, and the nation's long-term economic health."
Growing AI adoption
The sluggish growth comes despite the growing introduction of generative AI at work, which the Productivity Commission previously said would bring an estimated 4.3% labour productivity growth.
"AI will likely raise productivity, but there is ongoing debate about the magnitude of this effect," the commission said in an interim report last year.
Indeed's report last year found that 32% of employees are already using AI in the workplace multiple times a week, with many believing that it could make them more productive and allow them to focus on more interesting work.
Pickering, however, noted that the projected impact of AI-led transformation "hasn't happened" so far.
"There is no clear evidence that generative AI tools have lifted productivity growth, with forecasts revised down consistently in recent years," the economist noted.
Despite this, adoption of AI is expected to continue. By the end of last year, 5.8% of Australian job postings mentioned AI in their job descriptions. This is double the 2.8% a year earlier.
Occupations in the data and analytics industry posted the highest share of job ads mentioning AI in their job descriptions, according to the report. 
"Australian workplaces continue to adopt AI tools, incorporating them into their recruitment processes, products, and workflows. That will surely continue in 2026," Pickering said.
But the more pressing question for the economist is when AI-led transformation will finally lift Australia's productivity.
"If AI is ever to deliver on the promise of greater productivity, workers will need to be better trained on how to use these tools effectively," he said.
