After the pandemic, the world saw a big change in the way businesses were operating. As more...
The challenge of attracting and retaining talented employees is expected to persist in 2025. A recent EY report reveals that 38% of employees might consider leaving their jobs this year. As employers prepare for potential workforce shifts, monitoring key trends will be essential to adapt and stay competitive.
While employee turnover decreased throughout 2024, possibly due to reduced confidence in the job market, the dynamic could change in 2025. Reports such as Eagle Hill Consulting’s employee retention index suggest that turnover may rise early this year. Employers must sharpen their strategies to address these challenges effectively. Below are five critical trends to watch in 2025.
1. Elevated Unemployment Rates Impacting Hiring Strategies
Unemployment rates are projected to hover above 4% in 2025, a slight increase from the 3.5%-4% range in recent years. Economists anticipate a rise from 4.1% to 4.4% during this period, signaling a potential hiring slowdown.
This shift could alter the dynamics of the labor market. As unemployment rates increase, the bargaining power gained by workers in recent years may swing back toward employers. However, the labor market is expected to remain competitive, compelling businesses to refine their attraction and retention strategies to secure top talent.
2. Transformative Influence of AI and Automation
Artificial intelligence (AI) and automation are reshaping workplaces, creating both opportunities and challenges. Organizations are integrating AI to streamline workflows in human resources, customer service, and software development. According to the World Economic Forum, machines, and algorithms could handle more tasks than humans by 2025, but AI is also expected to generate 97 million new jobs in fields like data analysis, software development, and cybersecurity.
While automation might replace some repetitive roles, it enables employees to focus on creative and strategic tasks. Employers must prioritize upskilling their workforce to match the demands of emerging technologies. Offering AI training programs can help businesses remain competitive and appeal to tech-savvy job seekers.
3. Growing Demand for Weight Loss Medications in Benefits Packages
The rising popularity of weight loss drugs, such as glucagon-like peptide-1 (GLP-1) medications, is influencing employee benefits trends. Originally developed for diabetes treatment, these drugs are now sought after for weight management. An analysis by J.P. Morgan estimates that 9% of the U.S. population could use these medications by 2030.
In response, more employers are considering coverage for GLP-1 drugs in their benefits plans. A 2024 survey found that while 57% of employers offer coverage solely for diabetes, 34% provide it for both diabetes and weight loss. Additionally, 25% of employers are exploring the inclusion of weight loss coverage in 2025 or 2026.
Employers must weigh the costs and long-term commitment of offering such benefits. By tailoring coverage to meet employee needs, businesses can enhance their appeal and retain valuable team members.
4. The Push for On-Site Work Reinstatement
The return-to-office trend continues to gain momentum. According to JLL’s Future of Work survey, 44% of organizations required full-time on-site work in 2024, up from 34% in 2022. Similarly, the percentage of hybrid adopters dropped significantly, reflecting a shift toward traditional office setups.
Major corporations like Amazon, Boeing, and UPS are mandating stricter in-office policies, with Amazon requiring corporate employees to work five days a week starting January 2025. As employers regain leverage in the job market, more businesses are likely to follow suit.
However, balancing company needs with employee preferences remains crucial. Flexible work policies can still serve as a differentiator for attracting top talent, even as full-time office work becomes more common.
5. Rising Popularity of Gig Work
The gig economy is thriving, especially among millennials and Generation Z. TransUnion research reveals that 62% of U.S. adults earn money through gig platforms, drawn by the flexibility and autonomy they offer. Many gig workers report higher job satisfaction compared to traditional employees.
To compete with the gig economy, traditional employers may need to adopt similar perks, such as schedule flexibility, on-demand pay, and increased autonomy. Alternatively, leveraging gig workers can help organizations address staffing challenges without committing to long-term employment contracts.
Conclusion
The labor market is evolving rapidly, and employers must stay ahead by understanding and responding to workforce trends. By addressing employees’ changing needs, integrating advanced technologies, and offering competitive benefits, businesses can strengthen their attraction and retention strategies in 2025.
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