Employee well-being also in 2025 biggest challenge for European employers

Just like last year, employee well-being will continue to be the biggest hr challenge for European employers in 2025. Employee retention & turnover (25%) and recruiting new talent (24%) rank second and third, while employee experience and engagement (23%) and compensation (22%) complete the top five. All this is according to new international research by leading European HR service provider SD Worx among 5,625 HR managers and 16,000 employees from 16 European countries. But do employees see the same challenges within their organizations?

The top five challenges facing European employers when it comes to human resources management have hardly changed in 2025 compared to last year. However, there is an overall decrease in the extent to which employers see challenges.Employee well-being thus remains at the top of the list (28%), in 2024 this was still a challenge for 37% of employers. In Croatia, Norway and Slovenia, employers see this as their single biggest challenge. Employee retention takes second place, at 25% (33% in 2024). Attracting new employees follows with 24% (34% in 2024). Especially in Belgium, France and the Netherlands, this remains a major challenge. Employee experience and engagement comes in at number four at 23% (27% in 2024). Compensation comes in new, knocking skills development (at five, with 23% in 2024) out of the top five. As such, it is the only challenge in the top five that rises in percentage (albeit slightly), from 21% in 2024 to 22% in 2025.

Yet there are also hr challenges that employers mention more often in 2025 than in 2024. For example, 17% of European employers consider compliance with labor laws and regulations a major challenge, up from 14% in 2024. Payroll optimization (14% in 2025 versus 11% in 2024) and internal mobility and career management (13% in 2025 versus 11% in 2024) are also on the rise.

When it comes to employee wellness, many organizations struggle with the issue of mental health. Four in ten (39%) of European employers see this as a challenge, and this is reflected in employees, 38% of whom claim not to feel healthy or fit while at work. In addition, significantly more employees (56%) find their job mentally demanding and stressful. This stress increases with age: 46% of young people under 25 years of age experience this, and from 25 years of age onwards this rises to 57%. 

Nearly one in five (18%) workers were at home last year because of mental health problems. Interestingly, this is more common among the younger generation. A quarter of workers under age 35 stayed home for this reason, compared with 18% of 35- to 49-year-olds and 11% of 50- to 64-year-olds.

Although employers see employee retention as the second biggest challenge, many employees remain loyal to their jobs and employers. Only 13% are actively looking for a new job outside the organization, another 13% want to change jobs, but within the existing organization. 

Both employees and employers do experience a shortage of talent to get all the work done. 44% of employees notice this shortage in their own team, 45% expect it to increase in the coming years. Among employers, the numbers are 46% and 53%, respectively. 

SD Worx, the leading European HR service provider, assists smaller and larger organizations with their HR and payroll challenges. To keep a finger on the pulse of employers and employees, SD Worx regularly conducts in-depth surveys. The analysis of the most recent “HR & Payroll Pulse” provides organizations with valuable insights to focus and future-proof their HR and payroll strategy.

The survey was conducted in February 2025 in 16 European countries: Belgium, Germany, Finland, France, Ireland, Italy, Croatia, the Netherlands, Norway, Poland, Romania, Serbia, Slovenia, Spain, Sweden and the United Kingdom. A total of 5,625 employers and 16,000 employees were surveyed. The results provide a representative picture of the labor market in each country.