New report discusses what’s keeping us up at night
Australia’s HR departments are entering the final quarter of 2025 facing a mix of strong hiring sentiment, rising stress-related absences and rapid adoption of artificial intelligence, according to new national survey data that paints a picture of workplaces under simultaneous pressure and transformation.
The Australian HR Institute’s latest Quarterly Australian Work Outlook shows a labour market that remains tight despite talk of easing conditions. Its Net Employment Intentions Index sits at +48 for the December quarter — the highest level since the survey began in 2023 and unchanged from the previous three months. The index reflects the gap between employers intending to hire and those expecting to reduce headcount.
Health and education continue to lead employment growth, while the public sector remains a major driver of new roles. Half of all organisations surveyed plan to increase staffing levels this quarter, with recruitment intentions particularly strong among large employers.
At the same time, redundancy expectations are also rising. Nearly a third of employers expect to make positions redundant, the second-highest level recorded in the survey’s history. Public-sector organisations report the highest likelihood of cuts, followed by health, education and production.
Stress emerges as a leading cause of absence
Alongside strong employment demand, HR teams are dealing with a sharp rise in stress-related absences. The survey shows stress is now cited by 57 per cent of employers as a cause of unscheduled absence, up from 42 per cent in 2023. Page 20 of the report highlights this jump, noting stress has overtaken many traditional causes of absence.
Unscheduled absence remains at an average of six working days per employee per year, with the exception of the public sector, where the figure has fallen from six to five days over the past year. Home responsibilities and minor illness remain the two most frequent reasons for absence, but the sustained rise in stress aligns with broader concerns about psychosocial hazards across many workplaces.
Survey findings attribute this trend partly to what AHRI calls the “5Rs effect” — a growing pattern of organisations simultaneously undertaking recruitment, retention efforts, reskilling programs, reorganisations and redundancies. This clustering of internal change, combined with advancing automation and AI adoption, is creating environments in which workloads, role clarity and work relationships are under strain.
AI now in 93 per cent of organisations — but policy gaps remain
The report’s dedicated AI section shows a rapid mainstreaming of the technology. Ninety-three per cent of employers now use AI in some form, and three-quarters of organisations say employees are being trained in AI for work purposes. Public-sector agencies report the highest training levels, with 92 per cent providing at least some form of AI upskilling.
Despite this uptake, the findings reveal uneven governance. While 68 per cent of organisations have formal AI policies or guidelines, almost a quarter say they do not. Public-sector organisations are far more likely to have structured guidance in place, with 90 per cent reporting policies, compared with 64 per cent of private-sector employers.
The report identifies a clear link between investment in AI training and above-average financial performance, with the analysis shown in Annexe 1. HR’s role in AI governance is also increasing: three-quarters of respondents say HR is driving or supporting AI training at their organisation.
Most employers agree that AI is boosting organisational efficiency. Page 22 shows that more than four-fifths — 82 per cent — believe AI “is making or will make my organisation more efficient and productive,” with 40 per cent saying they “strongly agree."
However, views on AI’s impact on work intensity are divided. Sixty per cent of respondents agree that AI is increasing work intensity, while 34 per cent disagree. Many HR managers appear cautiously optimistic about AI’s potential to reduce stress and role ambiguity, but concerns remain around fairness, bias and the use of AI in performance monitoring.
AI and entry-level roles: early signs of growth
In contrast to public fears about AI eliminating junior positions, the report shows a more nuanced reality. Four in 10 respondents say they are seeing an increase in entry-level roles due to AI, while 19 per cent report a decrease. The chart on page 27 shows public-sector organisations in particular reporting stronger growth in entry-level opportunities.
This finding aligns with external research cited in the report, which suggests that while some routine tasks traditionally performed by junior employees may be automated, “entry-level roles may be more likely to transform than diminish.”
Recruitment pressures persist as turnover remains stable
Despite headlines about cooling labour demand, employers report ongoing challenges sourcing talent. Thirty-five per cent of organisations that are hiring say they are experiencing recruitment difficulties, with shortages most pronounced in health, education, retail and hospitality. This level is slightly above the previous quarter.
Employee turnover sits at 15 per cent for the 12 months to September 2025 — consistent with earlier surveys. More than a quarter of organisations report turnover of 20 per cent or higher, a level the report notes is associated with reduced productivity.
Wage expectations ease
Pay expectations have moderated for the third consecutive quarter. Employers anticipate an average basic-pay rise of 2.7 per cent in the year to October 2026, down from 2.9 per cent in the previous quarter and 3.3 per cent earlier in the year. Public-sector pay forecasts remain higher than those in the private sector.
What this means for HR leaders
For HR managers, the report underscores a set of intertwined priorities:
- High employment demand coupled with escalating redundancy intentions
- Rising stress levels linked to organisational restructuring and technological change
- The need for structured AI policies and robust employee consultation
- Increasing expectations for HR to lead AI skills development and governance
- Continued pressure to recruit in sectors with persistent shortages
- Balancing cost constraints with wage moderation and retention strategies
The report notes that 82 per cent of organisations have consulted employees about AI use, using approaches ranging from staff surveys to health and safety committees. Yet consultation is not universal: only 68 per cent of small organisations report engaging employees on AI.
For HR leaders seeking to manage rising stress, introduce technology safely and plan for workforce change, the data suggests a need for clearer policies, better communication and coordinated investment in skills.
The survey findings, drawn from more than 600 senior HR professionals and decision-makers, offer a detailed snapshot of Australian workplaces heading into 2026 — a labour market still expanding, but increasingly defined by rapid technological adoption and significant organisational churn.
