The 2025 edition of Gallup’s State of the Workforce Report has found a drop in employee engagement for the first time in the last four years.

Surveying nearly a quarter of a million workers in 160 nations, the report focuses on  “a pivotal moment in the global workplace” with engagement falling and AI rapidly changing the world of work.

“The data show that employees — particularly managers — feel disconnected, which does not bode well for their preparedness for a future shaped by AI. And at the same time, the very tools that might boost engagement and performance are arriving with astonishing speed,” it stated.

UNLEASH took a deep dive into the report’s findings to uncover four key takeaways for HR leaders.  

Global employee engagement falls to Covid-19 levels

The headline finding of this year’s report was a global decline in employee engagement, at a cost of $48 billion to the world economy in lost productivity.

The global percentage of engaged employees fell to 21% in 2024 from 23% the year before, representing the first annual fall since 2019-2020 and the impact of the Covid-19 pandemic lockdowns.

Credit: Gallup, State of the Workforce Report 2025

The driver behind the decline was a drop in manager engagement from 30% in 2023 to 27% in 2024.

While overall individual engagement stayed consistent at 18%, Gallup highlighted that managers under the age of 35 and female managers recorded the highest fall in engagement – 5 and 7 percentage points respectively.

However, the report warned that the global issue won’t stop with just managers unless addressed by senior leadership: “Manager engagement affects team engagement, which affects productivity.

Gallup highlighted the connection between employee engagement and productivity, which is heavily impacted by managers – countries with less engaged managers are more likely to have less engaged individual contributors, the report found.

Business performance — and ultimately GDP growth — is at risk if executive leaders do not address manager breakdown,” Gallup stated.

Employees around the world experiencing mixed wellbeing but managers at risk

Alongside engagement levels, employees around the world are also experiencing a decline in wellbeing, or ‘life evaluations.’

Gallup found global employees who rated their wellbeing as ‘thriving’ dropped to one in three (33%) last year, from 34% in 2023 and 35% 2024. This follows on from a period of consistent, year-on-year improvement between 2016 and 2022.

The largest drop in wellbeing was once again recorded among managers. Gallup found a five-percentage-point decline in wellbeing in the past year for older managers, while female managers saw a seven-percentage-point drop.

Gallup’s life evaluations encompass factors that take place outside the workplace and the report highlighted that employees in the US and Canada had experienced one of the most significant decreases in this area.

Credit: Gallup, State of the Workforce Report 2025

The report notes that while the results are “still high by global standards”, the ongoing decrease in both nations means the US and Canada are “now performing far below their historical averages.”

While factors such as “housing costs and inflation are playing a significant role,” Gallup also stated that it’s not surprising that work plays a major role in how they evaluate their lives.”

When we consider the decline in both manager life evaluations and employee engagement, a deteriorating workplace environment is the common denominator.”

European workers disengaged but happy, North Americans are thriving but stressed

Of all the regions surveyed by Gallup, Europe was found to have the highest percentage of unengaged employees at nearly three in four (73%).

A further 15% were found to be ‘actively disengaged’ from their roles.

However, this is also consistent with previous years’ findings – Europe has recorded 12-13% engagement since 2016, a potential reflection of various working cultures and values throughout different European nations.

While Europe’s engagement rates rank lowest of all regions, workers in the continent were also among the least likely to experience anger or daily loneliness.

Despite over half (57%) of workers believing it is a good time to find a job, just one in three (30%) intend to leave their current roles by actively searching for new opportunities.

This compared to the US and Canada, where employees were among the most engaged (31%) and have the highest wellbeing (52% are thriving) of all surveyed regions.

However, North American employees were also found to have the highest levels of stress (50%) and were much more likely to be actively looking for new roles (50%).

Focus on fixing manager woes to address the productivity problem

Gallup’s report stated that the global workplace is “not headed in the right direction” and that addressing the issues facing managers can present a “productivity boom opportunity”.

It estimates that if the world’s workplace was fully engaged, $9.6 trillion in productivity could be added to the global economy, the equivalent of 9% in global GDP.

While the report acknowledges that achieving 100% productivity is an unrealistic achievement for most organizations, Gallup highlighted that rethinking the role of manager is key to reversing declining productivity and improving employee wellbeing.

A decline in manager development can be addressed by ensuring managers receive training to reduce disengagement. 

Gallup found that less than half (44%) of managers globally had received training in management, with half as many managers who received training being actively disengaged as those who are not trained.

Meanwhile, teaching managers effective coaching techniques were found to boost manager performance from 20% to 28%.

Poor manager wellbeing can also be addressed through ongoing development. The report found that when employers provide manager training, it improves manager thriving levels from 28% to 34%. 

In addition, if they have training and someone at work actively encourages their development, manager thriving increases even further to 50%.

By redefining the role of managers itself, as well as expectations and associate support, Gallup stated that business leaders can “create an environment where managers thrive — and when managers thrive, so do their teams. 

The choice for executives is simple: Invest in the future of management or risk the consequences of inaction.”