HR's Q4 reality check: tight hiring, rising stress, and AI moving fast
Australian HR leaders are closing out 2025 with a split-screen picture: strong hiring intent, a surge in stress-related absences, and AI embedded across most organisations - without consistent guardrails.
The latest national survey data points to a labour market that's still hot. At the same time, internal churn and tech adoption are stretching people, processes, and patience.
Hiring is up - and so are redundancies
The Net Employment Intentions Index sits at +48 for the December quarter, the highest since the survey began and level with the previous quarter. Half of organisations plan to increase headcount, with larger employers leading the charge.
But nearly a third also expect redundancies - the second-highest reading on record. The public sector reports the greatest likelihood of cuts, followed by health, education and production. HR has to plan for both growth and reduction at once.
Stress is now a leading cause of absence
Fifty-seven per cent of employers cite stress as a cause of unscheduled absence, up from 42 per cent last year. Average absence holds at six working days per employee, though the public sector has eased down to five.
Home responsibilities and minor illness remain common reasons, but the rise in stress reflects wider concern about psychosocial risks. See guidance from Safe Work Australia on controlling these risks in practice: Psychosocial hazards.
The 5Rs effect is real
Many organisations are juggling the 5Rs at once: recruitment, retention, reskilling, reorganisation and redundancies. That mix strains workload, blurs role clarity and stresses relationships at work. Without clear priorities and strong change management, people burn out and performance dips.
AI is everywhere, but policy isn't
AI is now in 93 per cent of organisations. Three-quarters are training employees, led by the public sector where 92 per cent report upskilling. Yet only 68 per cent have formal AI policies in place (90 per cent public vs 64 per cent private).
Most employers are positive on outcomes: 82 per cent say AI is making or will make their organisation more efficient and productive. Still, 60 per cent say work intensity is increasing. Concerns remain around fairness, bias and performance monitoring. For privacy and governance basics, see the OAIC's guidance: AI and privacy.
Entry-level roles: more transformation than loss
Four in ten employers report an increase in entry-level roles linked to AI, while 19 per cent report a decrease. Growth is strongest in the public sector. Routine tasks are changing, but junior pathways aren't disappearing - they're shifting.
Recruitment pressure persists; turnover steady
Among employers hiring, 35 per cent face recruitment difficulties, with the tightest spots in health, education, retail and hospitality. Turnover sits at 15 per cent for the year to September 2025, with over a quarter of organisations at 20 per cent or higher - a drag on productivity.
Wage expectations cool
Average basic-pay growth is forecast at 2.7 per cent to October 2026, down from 2.9 per cent last quarter and 3.3 per cent earlier in the year. Public-sector expectations remain higher than private.
What HR should do next
- Stabilise the 5Rs: Map all in-flight initiatives. Freeze low-value change. Sequence recruitment, reorganisations and reskilling to reduce whiplash.
- Get serious about stress risks: Treat stress as a safety issue, not just a wellness topic. Run workload reviews, set clear role boundaries, and train leaders in early intervention and quality conversations.
- Draft and enforce AI policy: Define approved tools and use cases, data handling rules, human-in-the-loop checks, bias testing, and monitoring limits. Train managers to apply the policy.
- Invest in skills with a plan: Baseline AI literacy, then build job-specific capability. Tie training to real workflows and measure usage and impact. If you need structured options, see curated programs by job role: AI courses by job.
- Protect entry-level pathways: Redesign roles so juniors learn judgment, not just tasks. Use apprenticeships, internships and rotations to build pipelines.
- De-risk redundancies: Set transparent criteria, run redeployment first, and align reskilling to future roles. Communicate early and often; uncertainty is a major stress trigger.
- Tune recruitment operations: Shorten approvals, build talent pools, and sharpen your EVP in shortage areas. Use AI for sourcing and screening with fairness checks baked in.
- Balance pay with retention levers: Pair moderated pay rises with skill-based progression, flexible work, better schedules, and manager quality.
KPIs to track this quarter
- Stress-related absence rate and time to support
- AI training coverage, policy adoption, and exception requests
- Time to hire and offer-accept rate in hotspot roles
- Internal mobility rate and redeployment success
- Entry-level role share and ramp-to-productivity time
- Turnover in critical teams and manager-level variance
Bottom line: growth and cuts, efficiency and overload, automation and anxiety - you're holding both. Clear policies, honest communication and targeted skills investment are the levers that reduce noise and keep performance steady.
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