Employee well-being remains a top priority for European employers in 2025, with 28% ranking it highest among priorities, but down from the 37% who identified well-being as a challenge in 2024, according to research from HR service provider SD Worx.
Notably, in Croatia, Norway, and Slovenia, employers see this as their single biggest challenge.
Meanwhile, 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. Compensation was also the only challenge in the top five that rose in percentage, from 21% in 2024 to 22% in 2025.
SD Worx noted that there are HR challenges that employers mention more often in 2025 than in 2024. For example, 17% of European employers consider compliance with labour laws and regulations a major challenge, up from 14% in 2024. Payroll optimisation (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, organisations are struggling 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. 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.
Further research showed that 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 organisation, and another 13% want to change jobs, but within the existing organisation.
Employees and employers both note that talent shortages are preventing work from being completed: 44% of employees say they notice a lack of needed labor, and 45% expect it to rise in coming years. Among employers, the numbers are 46% and 53%, respectively.
“Internal advancement offers organizations an opportunity to retain and further develop talent in this tight labour market,” Bruce Fecheyr-Lippens, chief people officer of SD Worx said in a press release. “More than one in 10 employees is actively seeking this, making it a win-win situation for both employer and employee.”
“By offering employees career guidance and training, organizations create a culture that encourages growth and makes it attractive for employees to develop new competencies. This allows both parties to become more agile and better equipped in a rapidly changing society. This, in turn, can help reduce stress in the workplace,” Fecheyr-Lippens said.