Engagement amongst Australian employees has fallen to its lowest point in the past year, according to a recent report, with only three-in-ten employees saying they feel economically secure.
The findings, from HR platform ELMO Software, show engagement for the second quarter of 2025 sat at 68% – falling from 71.8% in the fourth quarter of last year.
“The softening of the Index reflects ongoing employee concerns around the broader economic environment, financial security, and overall wellbeing,” ELMO Software’s Employee Sentiment Index, states.
Economic and job security dropped from 25.2% to 24.5% for Q2 2025 – with compensation and recognition also showing a small decrease in the past three months.
Wellbeing and mobility, however, saw a slight increase.
Other key issues effecting employee engagement
Among other issues effecting employee engagement in Q2 2025, income is not reflecting wage sentiment generally.
Nearly half of employees (45%) feel they aren’t paid enough, yet the sentiment on wages remains steady – with 70% saying they believe they’re paid fairly for their work, which is consistent with previous quarters.
This suggests, ELMO state, that whilst “economic pressures weigh heavily, many employees still view their pay as fair relative to their role.”
Exhaustion amongst employees is also high, with two-in-five feeling burnt out in the past three years. This is comparable to Q1.
Mental health days are also on the rise, findings suggest, with 17% taking one this quarter.
Despite concerns across the workforce about how much they’re working, concerns about automation and artificial intelligence remain low.
Seven-in-ten employees agree that their skills are specialised and, therefore, are unlikely to be replaced.
Key questions raised in informing employee engagement
The Employee Sentiment Index, as well as focusing on what are key factors around employee engagement, also raised questions HR leaders need to ask themselves to boost performance outcomes.
“It’s interesting to see that fewer than two in five (38%) employees say their organisation has a formal, consistent process with clear criteria and regular documented reviews, despite 81% agreeing their goals and expectations are clear,” the report finds.
“This suggests a gap between individual clarity and broader organisational alignment, potentially undermining performance outcomes.”
The three main issues discussed in the report focused on the ability to disconnect from work – with many employees saying they’ve responded to out-of-hours contact, with employees also suggesting the Right to Disconnect isn’t fully embedded in workplace culture – and the importance of feedback.
Only two in five employees say they receive helpful feedback frequently enough to support their improvement and motivation.
This, ELMO suggests, lack of consistent feedback could be undermining performance, engagement and growth.