"We've got extra machinery that's come into the labs, we don't get any more space, all these consumables sitting all over hallways and corridors, extra staff coming in to do the stuff. So we've lost all our tearooms, we've lost all our office space, our conditions are markedly less than they should be."
Taylor said labs have capacity to deal with symptomatic cases only.
He said Omicron is circulating widely, and mass surveillance testing is not the answer.
Covid-19 PCR test results are taking up to five days to process in Auckland despite officials' plea for people without symptoms, or a valid reason for a test, to stay away.
Meanwhile, laboratory workers along with contact tracers and other critical health staff are planning to strike twice next month after rejecting a pay offer from district health boards.
The workers want higher pay, equal treatment with other health professions, and action on safe staffing and retention.
But Public Service Association (PSA), the union which represents 10,000 workers, said it was the last option they wanted to take but unless health boards came back with a better offer the strikes would go ahead.
Ministry of Health figures last month indicated that New Zealand labs were running about 20,000 PCR tests per day.
In an Omicron environment, laboratories reported they would be able to do about 30,000 PCR tests per day nationwide, said Dr Juliet Elvy, who is a consultant clinical microbiologist with the country's largest provider of Covid-19 testing, the Asia Pacific Health Group.
Dr Elvy said the labs would have a surge capacity of up to 80,000 tests per day but warned that this higher level of testing could only be sustained for a week or two.