Manufacturing Workforce Shortages: The Gap Is Real, But Changing

What keeps you up at night?

When we ask Australian manufacturers, the answer hasn't changed much in the last three years. Finding and keeping the right people.

Labor shortages are not a new problem. But at the halfway point of 2026, the picture underneath that headline is more complex than most industry commentary lets on. Understanding the complexities can help you adapt rather than continue applying the same solution to an evolving problem.

What the data is actually showing

Overall occupational shortages have eased slightly, with Job and Skill Australia reporting shortages are down from 33% of occupations in 2024 to 29% in 2025. However, according to Australian Manufacturing, 71% of manufacturers still report that skills shortages are actively hurting productivity. The national vacancy fill rate reached 70.2% by September 2025, which means nearly one in three roles go unfilled. For technical roles specifically, the picture is worse: the Skill Level 3 fill rate sits at just 54.3%, meaning almost half of those trade and technical positions aren't being filled at all.

There's also a longer-term structural issue that sits beneath the month-to-month vacancy data. According to Oxford Economics and the Australian Food and Grocery Council, more than 40% of food and grocery manufacturing workers are facing retirement this decade. That wave is coming regardless of what the economy does, and for batch and process manufacturers in food, beverage, and related sectors, it represents a significant knowledge and capability risk that workforce planning alone won't solve.

The problem hiding inside the headline

It may surprise you to learn that the manufacturers struggling the most are not always the ones with the most vacancies. It's the ones who've started automating production lines without modernising management.

Automation is supposed to reduce reliance on individual workers, and it does, at the production level. However, when workforce data still lives in spreadsheets, on paper, or across systems, the knowledge and scheduling dependency on specific individuals simply moves.

There is always an MVP on every team. When they are sick, on leave, or walk out the door, they take their expertise with them. Who can run that machine? Who's been trained on which process Although it may seem like it, those are not questions a manufacturer should be answering on the fly. They're questions a connected system should reliably answer in seconds.

Where the real opportunity sits

One of the most consistent gaps we see in ANZ manufacturing businesses at mid-year is automation. The capital investment is there, but workforce visibility is missing.

The manufacturers benefitting the most from automation have connected their production and operational data. Now when a role goes unfilled, the scheduling and capacity impact is visible immediately.

According to Jobs and Skills Australia's 2025 Occupation Shortage Report, the gap is easing, but easing is not resolved. For manufacturers still carrying manual workforce management alongside increasingly automated production, the risk of a single person's absence cascading into a missed deadline is higher than you might think.

What this means for the rest of 2026

The workforce story in Australian manufacturing is no longer simply "we can't find enough people." It's becoming "we don't have the visibility to deploy the people we do have effectively." The businesses that close this gap will have a foundation that makes every future workforce challenge significantly less damaging when it arrives.

If you're not sure where your business sits on workforce visibility, our Manufacturing Performance Assessment is a good place to start. It is a quick diagnostic that shows you exactly where the gaps are.