HR faces a challenging landscape in 2025 as 80.5 percent say national insurance (NI) increases have negatively impacted cost management and workforce planning.
More than three-fifths (62.5 percent) report that economic pressures, government policies, and skills shortages have led to significant or moderate shifts in hiring strategies.
However, while these are two of the key findings from research into the state of HR in 2025 from elementsuite, which is part of Zellis, survey results also suggest that HR is “moving beyond firefighting” to respond to challenges with “resilience and strategic agility”.
The research, conducted with 490 HR professionals from UK online community HR Ninjas, found that 74.5 percent of respondents feel prepared to address key economic challenges this year, while 50.3 percent are optimistic about the current business climate, saying that UK employers are “adapting and planning for success amid uncertainty”.
The researchers said the results show that HR is embracing a more strategic role, driving workforce efficiency, championing employee wellbeing, and preparing for future workforce shifts.
More than seven in ten (72.5 percent) of respondents said their role has become more strategic in the past three years, with larger organisations (with 1,000-4,999 employees) seeing the most change with 80 percent reporting this shift.
AI and HR tech adoption is rising, with 53.1 percent of HR teams piloting or exploring AI tools, and 17.9 percent already employing these tools.
Budgets might be tight but 20.4 percent of organisations are increasing their HR technology spend in 2025.
However, not all UK organisations have avoided the economic turmoil with 31.3 percent of respondents expecting workforce reductions this year.
Results show that retail, education, and restaurants are the sectors most likely to face job cuts, while smaller businesses (with less than 50 employees) are least likely to consider redundancies with 13.6 percent reporting this.
Recruitment and retention remain challenging as 62.5 percent of HR teams have adjusted their recruitment strategies as a result of economic pressures. More than two-fifths (42.6 percent) of employers are confident they can attract top talent, but only 21.8 percent agree they have reduced turnover.
Lizzie Henson, founder of HR Ninjas, said: “HR as a function is nothing but resilient by nature. No matter what gets thrown in their way, we’ve seen time and time again how the HR community rolls up their sleeves, comes together, and figures it out.”
Victoria Beaven, HR Ninjas HRIS partner at elementsuite, said: “What I found most fascinating about the findings in this report, is that it’s a raw and honest reflection of the current reality of HR in 2025. [This means] balancing cost pressures with people priorities, navigating evolving government policies, and ensuring organisations remain agile in a constantly shifting landscape. But more than anything, it highlights the sheer grit and adaptability of HR teams across the UK.”
Further survey findings show that a divide is emerging between growth versus survival. Cost-cutting is the primary business strategy for 33.1 percent of employers, especially in education, manufacturing, and retail. But for growth-focused industries like IT and communications, utilities, and professional services, innovation and expansion continue to garner support.
Workforce wellbeing leads HR’s 2025 agenda across most sectors, particularly in education, healthcare, and hospitality as 43.5 percent of HR leaders say their organisations will increase investment in wellbeing initiatives. Sectors that are leading on this investment are education (55 percent), hotels (55 percent) and financial services (54 percent).
Even with budgets under pressure, nearly six in ten (59 percent) survey respondents say diversity, equality and inclusion (DEI) remains a high or moderate priority.
The employers most committed to DEI are in the not-for-profit (87 percent) and public (81 percent) sectors.
