Employee Wellbeing Now Outweighs Cost of Living as Top UK Workforce Concern
Something significant has shifted in what keeps UK employees awake at night. For the first time since tracking began in 2022, physical health and fitness has overtaken financial security as workers’ primary concern, according to new research from Mercer.
The Inside Employees’ Minds 2025-2026 report surveyed over 4,000 UK employees across various sectors and organisation sizes. At first glance, headline engagement figures look stable. But dig deeper and a different picture emerges: a workforce struggling with confidence across three critical areas—health, financial security, and skills development.
What’s Changed in Employee Priorities
Health Takes Centre Stage
The shift is striking. Back in 2022, covering monthly expenses dominated workers’ concerns. Now the top five worries look completely different:
Physical health and fitness sits at number one, followed by workload and work-life balance. Mental and emotional health comes third, then personal fulfilment and purpose, with pace of life and free time rounding out the top five.
This isn’t just about people wanting better gym memberships. It reflects a deeper reckoning about what makes work sustainable. As reported by Workplace Insight, 41% of UK employees say they’ve been directly affected by difficulties accessing healthcare—hardly surprising given the well-documented NHS pressures. The 2025 Keep Britain Working review puts a stark number on it: 800,000 more people have left the workforce due to health issues compared to 2019.
The Pension Knowledge Gap
Inflation may have eased, but financial anxiety hasn’t gone anywhere. Less than half of employees—47%—feel confident they can retire when they want to. Perhaps more worrying is how many people have no clear picture of their financial future.
Only 35% know where their pension is actually invested. A full 30% admit they have “no idea” whatsoever about their pension investments. For those earning under £25,000, just 38% feel confident about retirement at all.
The confidence gap hits hardest in mid-career. Workers aged 35-54 report the lowest retirement confidence despite being in what should be their peak earning years. There’s also a significant gender divide: only 40% of women feel confident about retirement compared with 55% of men.
Learning for Someone Else’s Benefit
Here’s where things get uncomfortable for employers. Most people—76%—understand what good performance looks like in their role. But only 52% believe their current employer actually values skills or offers incentives to build them. Even more telling: 65% think building new skills improves their earning potential elsewhere rather than where they currently work.
Just over half feel their career goals can be met within their current organisation. That’s not exactly a ringing endorsement.
The disconnect is most pronounced among younger workers aged 25-34. They’re the most active learners in the workforce, but also the most likely to believe their hard-won skills will pay off better somewhere else.
Why People Stay (and Why They Leave)
The Curious Case of Job Security
Here’s an interesting paradox: job security has overtaken salary as the main reason people stay with their employer, yet it doesn’t rank particularly high as a day-to-day worry. What does this tell us? Most employees feel reasonably secure in their roles. But in uncertain times, they’re choosing stability and predictability over chasing rapid advancement.
The top reasons people stay are job security (40%), flexible working (37%), and fair pay (29%). Competitive pay comes in at 23%, with manageable workloads at 22%.
When people do think about leaving, the mirror image appears: unfair pay tops the list at 32%, followed by workload at 30% and work culture at 28%. The factors that keep you are essentially the inverse of what pushes you out.
Fair Pay Matters More Than Top Dollar
There’s an important distinction here between fair pay and competitive pay. Perceptions of fair compensation have been climbing—from 49% in 2022 to 60% in 2025. That’s progress. But fairness still outweighs competitiveness when it comes to keeping people.
The problem? Only 55% understand how their salary is determined. Just 52% trust their organisation’s pay decision-making process. And with unfair pay now the number one reason people leave, organisations are under mounting pressure to be more transparent about compensation.
Flexibility Isn’t Going Away
If there’s one thing the data makes clear, it’s that flexible working has become essential infrastructure for employee wellbeing and retention.
Three-quarters of employees are satisfied with their current work arrangements. But satisfaction varies significantly depending on where people work: 87% of remote workers are happy with their setup, compared with 79% of hybrid workers and 73% of those on-site full-time.
The perceived importance of remote work has been steadily climbing—from 39% in 2022 to 48% in 2023, now reaching 51% in 2025. Even among people who work on-site full-time, half would prefer at least one day a week working from home.
Flexibility consistently emerges as one of the most powerful enablers of wellbeing. Some 41% of employees cite it as directly supporting their health.
Different Generations, Different Struggles
The Mental Health Generation Gap
The mental health picture changes dramatically depending on who you ask.
Among 18-24 year-olds, only half report good mental health, with 37% describing their mental health as poor or extremely poor. That’s sobering. Things improve gradually with age: 58% of 25-34 year-olds report good mental health, rising to 61% among 35-44 year-olds. By retirement age, 84% of those 65 and over say their mental health is good.
Younger generations are definitely more open about mental health challenges—partly influenced by social media and peer conversations making these discussions more visible. But this openness also reflects genuine struggles with work-life balance and the financial pressures of early career life.
The Squeezed Middle
Mid-to-late career workers aged 45-64 are in a particularly tough spot. They’re least likely to get learning recommendations for their next role and show lower engagement with reskilling opportunities overall. Their career progression outlook is the weakest: only 41% of 45-54 year-olds see clear paths for advancement.
They’re also most likely to cite lack of time as a barrier to development. Many admit they only complete mandatory training and find existing development programmes pretty unsatisfying. Feedback, when it comes, rarely feels meaningful.
These are people caught between delivering results, maintaining continuity, and managing peak financial and life pressures. Operationally critical, yet somehow strategically overlooked. They feel the constraints of change more acutely than any other group.
Learning Skills, Taking Them Elsewhere
Workers aged 25-34 are enthusiastic learners with serious career ambitions. But here’s the rub: 80% believe their skills will be rewarded more by other employers than their current one. Even though 70% say their employer values skills, they see the real payoff happening somewhere else.
After years of wage stagnation in the UK, job-hopping has become the fastest way to get a meaningful pay rise. The workforce is being pushed away from traditional multi-year careers with one employer and towards a more project-based, gig-economy mentality. Employers invest in training; employees take those skills to the highest bidder.
The Benefits Blind Spot
People Don’t Know What They Have
Here’s a peculiar problem: many employees simply don’t know what benefits they’re entitled to. Some report not having a pension when they actually do. Others can’t identify their health benefits because they don’t know where or how to find information about them—often searching by provider names rather than what the benefit actually does.
There’s also a persistent gender gap in access. Men are more likely than women to have private medical insurance and other employer-funded health benefits.
Meanwhile, perceptions of benefits competitiveness have slipped. In 2023, 57% thought their benefits were competitive; by 2025, that’s dropped to 49%. As budgets tighten, employees sense reduced investment in wellbeing and rewards—or at least less visible investment.
How People Want to Learn About Benefits
Most employees—83%—prefer managing their pensions online. But there’s an interesting twist: younger workers aged 18-24 are actually the most likely to pick up the phone and call a helpline. When you’re navigating unfamiliar territory, sometimes you just want to talk to a real person.
This points to the need for a blended approach: user-friendly digital platforms backed up by accessible human support when people need it.
Sustainability Is No Longer Optional
Over half of employees—57%—now expect their pension to be invested according to environmental, social, and governance (ESG) principles. That expectation is highest among 18-44 year-olds, who increasingly view sustainability transparency as part of the broader employee value proposition. It’s not a nice-to-have; it’s table stakes.
The AI Adoption Gap
The workforce isn’t exactly embracing AI with open arms. Only 36% say it’s improved their productivity. Just 38% feel comfortable using it in their daily work, and only 29% have received any relevant training. One in five don’t understand how AI will affect their job at all.
Compare that with senior leaders, where 63% report AI has improved their performance. The difference? Leaders typically use AI for data analysis, decision support, and automating admin tasks. They also have better access to tools and support, which makes adoption smoother and builds confidence from the start.
Without clear communication about how AI will reshape work, organisations are fuelling anxiety rather than building confidence.
What Employers Should Actually Do About This
Based on all this data, three priorities emerge for organisations that want to retain talent and build a workforce ready for what’s coming.
Make Employee Health a Real Business Priority
Heavy workloads, limited recovery time, and rising burnout are eating away at engagement—especially among mid-career workers. Employers that rebalance workloads, genuinely protect wellbeing, and actually follow through on flexibility will be better positioned to sustain performance and build trust.
Only 12% of employees say their organisation has a genuinely healthy culture. That’s a damning statistic. Policies aren’t enough. Culture is ultimately shaped by leaders who model healthy behaviours, normalise taking breaks, and link performance to sustainable effort rather than who stays latest or answers emails fastest.
Help People Understand Their Financial Future
Inflation may have eased, but financial anxiety is still widespread. Retirement confidence is patchy, especially among mid-career and lower-paid workers. Financial literacy gaps exist across all demographics.
What helps? Practical, stage-specific financial wellbeing programmes that connect long-term planning with everyday realities—childcare costs, housing decisions, managing debt. Making financial decision-making tangible and inclusive actually works.
This means offering education tailored to different life stages and demographics, using plain language and simple tools with real-world examples. Help people see their full financial picture in one place through open finance tools. Where appropriate, use AI to personalise guidance. And crucially, give people access to proper financial advice, not just information—there’s a difference.
Connect Learning to Actual Opportunity
In an era of longer working lives, people know they need to reskill. What they don’t know is how learning translates into real opportunity, mobility, or better pay. Younger workers are keen to learn, whilst mid-career employees often feel they’re being left behind.
The basics matter: show people how new capabilities actually influence pay, promotion, and project opportunities. Protect learning time and offer proper reskilling pathways, especially for mid-career workers whose expertise you can’t afford to lose.
Stop planning by headcount and start mapping work to the skills you actually need. Think about how tasks could be shared across teams, projects, or functions. Create clear pathways showing how new skills lead to tangible opportunities and pay progression. Make career mobility something that happens regularly, not just in annual reviews.
Confidence as Currency
After years of disruption, what employees want most is confidence. Confidence that their employer is actually listening. Confidence that their wellbeing, development, and financial security are genuinely supported—not just talked about in company presentations. Confidence that the skills they’re building will prepare them for whatever comes next.
For HR, this means moving beyond reactive engagement surveys and tick-box programmes towards genuine two-way dialogue. When people see their feedback leading to real change, trust grows. The employer-employee relationship actually strengthens.
Here’s what the stable headline numbers are hiding: many employees are “job-hugging”—staying put not because they’re thriving, but because the job market feels uncertain. Overall satisfaction with the employee experience has slipped from 69% in 2023 to 67% in 2025. People aren’t leaving, but they’re not flourishing either.
Only a small minority get to provide regular, ongoing feedback. That’s a massive missed opportunity for building trust in real time. Confidence grows when listening is continuous, not annual.
What Happens Next
In a world where adaptability defines both personal growth and business results, the employers who build confidence—by actually listening, learning, and adapting—will be the ones who keep their best people and outperform competitors.
As work continues being reshaped by technology, generational shifts, and evolving expectations around wellbeing and fairness, organisations face a choice. They can treat these trends as temporary fluctuations to weather, or recognise them as fundamental shifts requiring real strategic response.
The data suggests employees are willing to invest in their own development and commit to their employers. But only when they can see a clear path forward, feel their wellbeing is genuinely valued, and trust that fairness underpins how they’re treated and rewarded.
That’s the new deal. Take it or watch your talent walk out the door.
The full Inside Employees’ Minds 2025-2026 report is available from Mercer. The research was conducted in July 2025 and surveyed 4,021 UK employees across various sectors, organisation sizes, and demographics.
About This Research
The survey covered 4,021 UK employees in July 2025, spanning different sectors, organisation sizes, and demographics.
The split was roughly even by gender (52% female, 48% male), with representation across all age groups from 18 to 65 and over. Income levels ranged widely: 43% earn between £25,000 and £44,999, whilst 21% earn £50,000 to £79,999.
In terms of where people work, 47% are on-site, 34% hybrid, and 16% fully remote. The top sectors represented were government and public sector (12%), healthcare (12%), education (11%), technology (11%), and retail and hospitality (9%). The survey also included diverse representation: 10% Black employees, 8% LGBTQ+, and 6% Asian employees.
This is the third year of the Inside Employees’ Minds study, which allows for meaningful year-on-year comparison since 2022.