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Public sector HR professionals have a lot to juggle. With mounting economic pressures and shifting business priorities, keeping operations afloat while ensuring employee satisfaction can feel like a challenge.
But, public sector HR professionals are showing resilience, responding strategically in the face of HR issues. How? By placing employees at the heart of their strategy – ramping up investment in employee wellbeing and leading the charge for DEI initiatives.
Let’s take a closer look at the strategies and challenges shaping public sector HR.
In this blog
The challenges facing public sector HR
Since the 2024 UK Budget, it’s fair to say this year has been anything but straightforward for the public sector.
HR professionals in the field face increasing pressure to improve efficiency, balancing cost-cutting with the need to invest in skills and development. This challenge is compounded by job cuts, including thousands of civil service roles, and widening skills gaps. According to the CIPD’s Labour Market Outlook, hard-to-fill vacancies are significantly higher in the public sector (44%) than in the private sector (29%).
Despite these mounting pressures, there’s plenty of resilience and proactive strategising happening.
Key trends from new HR research
New research reveals that public sector HR leaders are staying focused on what truly matters: employee wellbeing, DEI initiatives, and getting to grips with smart technology, including AI. They are focusing on people first strategies and are looking to rise up against economic uncertainty.
Economic pressures are impacting recruitment and retention strategies
In light of the overall cautious sentiment, 69% of public sector HR professionals say their recruitment and retention strategies are changing in response to current economic pressures, shifting government policies, and critical skills shortages.
Recruitment in the public sector has never been easy. HR professionals in this industry are often tasked to seek individuals with niche qualifications and regulatory requirements, resulting in longer hiring cycles and higher recruitment costs. Now, rising economic pressures are adding even more strain.
But, public sector HR teams are rising to the occasion, rethinking how they attract and retain talent by leaning into workforce planning and investing in internal development. The goal? Long-term sustainability, less turnover, and higher retention among top talent.
DEI is a priority for most
One of the most fascinating insights from our survey was that, despite widespread media coverage of an apparent pushback against DEI initiatives, the UK public sector continues to demonstrate its commitment to inclusion – with 81% dialling up their focus in this area.
In a sector that serves everyone, it makes sense that your workforce reflects the communities you support. Not only is this the right thing to do – it’s also key to unlocking fresh perspectives, closing persistent skills gaps, and creating meaningful career pathways for underrepresented groups.
With a commitment to DEI, the public sector is demonstrating that fairness and representation are more than just values; they’re part of the industry’s recruitment strategy and a core lever for talent attraction, retention, and long-term organisational health.
Employee wellbeing investment is increasing
In times of economic volatility, anxiety over job security mounts, and employee wellbeing is often tarnished as a result. And the public sector knows this – with over half (54%) of its HR teams increasing investment in employee wellbeing in 2025 and beyond.
Public sector teams understand that wellbeing programmes are becoming a smart, strategic tool, not just to reduce burnout, but to build healthier, more sustainable work environments. And let’s be honest: when budget constraints limit your ability to boost pay, a well-designed wellbeing offer can go a long way in improving morale, loyalty, and retention without breaking the bank.
AI adoption is gaining momentum
The most interesting and perhaps most future-driven finding? The public sector is starting to carve out a meaningful role for AI in HR, with 64% of HR professionals saying they’re embracing this.
AI can take the manual weight off HR’s shoulders, automating tasks like onboarding, offboarding, and compliance processes. It can surface trends in your workforce data, helping you make smarter decisions about where to invest, how to manage talent, and how to allocate resources.
Sure, there’s an upfront investment – financially and in shifting how teams work – but the long-term return is clear: better decisions, improved efficiency, and a lot less admin. And in a sector where resources are always under pressure, AI is proving itself to be a practical tool that’s already delivering value.
Conclusion: Public sector HR teams are stepping up
Despite the economic uncertainty, public sector HR teams aren’t standing still. They’re making serious strategic responses to real-world challenges, dialling up efforts where it matters most – embedding DEI into their culture, investing in employee wellbeing, and getting serious about the potential of AI.
There’s a strong sense of direction here: people-first, insight-led, and resource-savvy. And while no two organisations will have the exact same challenges, this data gives HR leaders a solid benchmark to check in with and some inspiration to take into the next quarter.
Key takeaways
- 69% of public sector HR professionals say economic pressures are impacting recruitment and retention strategies.
- Employee wellbeing and DEI are top priorities for public sector organisations.
- The role of AI in HR is rising in prominence, with 64% of public sector HR professionals embracing this tool to reduce admin and make more date-driven decisions.
- Public sector HR professionals are adopting long-term strategies to combat current economic pressures, focusing on both employee engagement and tech investment.
“What’s the mood?” Read the full report
What’s the Mood? HR’s Take on Business 2025, was conducted by the HR Ninjas community. It’s based on a survey of 490 UK-based HR professionals from diverse industries.
