Over 80% of HR Professionals Struggling with Rising Costs and Workforce Planning Challenges

13/04/2025

elementsuite, a Zellis company, HR and workforce management provider, announced new research into the state of HR in 2025 in the UK. The findings expose a challenging landscape for HR professionals, with 80.5% reporting that National Insurance (NI) changes have negatively impacted cost management and workforce planning. Additionally, 62.5% report that economic pressures, government policies, and skills shortages have led to significant or moderate shifts in hiring strategies. Despite these challenges, the research highlights a silver lining: HR leaders are responding with resilience and strategic agility. With 74.5% of HR professionals indicating they are prepared to address key economic challenges in 2025, and over half (50.3%) remaining optimistic about the current business climate, UK organisations are clearly adapting and planning for success amidst uncertainty.

The new research, which surveyed 490 HR professionals from the UK’s largest online HR community, HR Ninjas, reveals that HR is moving beyond firefighting. Instead, it is embracing a more strategic role, driving workforce efficiency, championing employee wellbeing, and preparing for future workforce shifts.

“HR as a function is nothing but resilient by nature,” commented Lizzie Henson, Founder of HR Ninjas. “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.”

Key findings:

Economic pressures are real – but so is HR readiness

80.5% of HR professionals say NI changes have negatively impacted cost management and workforce planning, with sectors like retail, real estate and agriculture feeling the squeeze the most.

Despite this, a resounding 74.5% of HR professionals say they feel prepared for the economic changes ahead.

HR is becoming more strategic

72.5% of HR professionals say their role has become more strategic in the past three years.
Larger organisations (1,000-4,999 employees) report the biggest shift (80%).

AI and HR tech adoption is rising

53.1% of HR teams are piloting or exploring AI tools, with 17.9% already using them.
Despite tight budgets, 20.4% of organisations are increasing their HR tech spend in 2025.

Redundancies on the radar for some

31.3% of HR professionals expect workforce reductions in 2025.
Retail, education, and restaurants are the sectors most likely to face job cuts, while smaller businesses (<50 employees) are least likely to consider redundancies (13.6%).

Recruitment and retention remain challenging

62.5% of HR teams have adjusted their recruitment strategies due to economic pressures.
42.6% of organisations are confident in their ability to attract top talent, but only 21.8% say they’ve improved turnover.

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: 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 findings:

Growth vs survival: industry divide emerges

Cost-cutting is the primary business strategy for 33.1% of organisations, especially in education, manufacturing, and retail.
Meanwhile, growth-focused industries like IT & communications, utilities, and professional services are doubling down on innovation and expansion.

Wellbeing is the top HR priority

Employee wellbeing leads HR’s 2025 agenda across most sectors, particularly in education, healthcare, and hospitality.
43.5% of HR leaders say their organisations will increase investment in wellbeing initiatives.
Education (55%), Hotels (55%) and Financial Services (54%) are leading the charge on wellbeing spend.

ED&I still matters despite budget pressure

59% of HR professionals still rank equity, diversity, and inclusion (ED&I) as a high or moderate priority.
Not-for-profit (87%) and public sector organisations (81%) are most committed.

About the research

elementsuite partnered with HR Ninjas to better understand how HR teams are adapting to the business climate in 2025. HR Ninjas, the UK’s largest free online HR community, provides valuable support and insights to over 36,000 HR professionals. The survey gathered insights from 490 HR professionals across various industries and business sizes, shedding light on how HR leaders are responding to economic challenges, shifts in government policy, evolving workforce priorities, HR leadership, and the adoption of HR technology and AI.

Original Article: HRNews

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