CPA Australia has warned that the country’s productivity downturn is deepening, raising concerns about long-term economic growth, wage prospects and living standards.

In newly released analysis, the professional accounting body said output per worker has continued to stagnate despite resilient employment levels, underscoring structural weaknesses in the broader economy.

The organisation said productivity growth — a key driver of sustainable wage increases and improved living standards — has failed to recover meaningfully from recent declines.

While the labour market has remained comparatively tight and unemployment low by historical standards, gains in workforce participation have not translated into stronger output per hour worked.

CPA Australia attributed the slump to a combination of factors, including weak business investment, regulatory complexity, skills shortages and slow adoption of technology in parts of the economy.

It argued that without coordinated policy reform, Australia risks entrenching a period of subdued growth that could constrain public finances and erode competitiveness.

The body called on federal and state governments to prioritise measures aimed at boosting innovation, streamlining regulation and accelerating infrastructure development.

It also highlighted the need for targeted skills training and migration settings aligned with workforce gaps, particularly in high-productivity sectors such as advanced manufacturing, digital services and renewable energy.

The warning comes as policymakers grapple with moderating inflation and elevated interest rates, conditions that have weighed on business confidence and capital expenditure.

CPA Australia said restoring productivity momentum would help ease cost pressures over time and support stronger real wage growth without fuelling inflation.

Economists have long regarded productivity as the foundation of durable economic expansion.

The latest assessment reinforces the view that structural reform — rather than short-term stimulus — will be critical if Australia is to lift output growth and maintain its standard of living in an increasingly competitive global environment.