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The decline in employee engagement is accelerating, with global levels falling for the second year in row, according to Gallup’s annual State of the Global Workplace report.
Industry watchers believe, however, that the report may also be hinting at time-poor leadership as the root cause.
This year’s report examines employee engagement trends, job market perceptions and employee wellbeing in 2025.
Since reaching its peak in 2022-2023, global employee engagement has been in decline. South Asia experienced the largest dip, down five percentage points, while no region of the world increased engagement levels in the past year.
To quantify what that means, each percentage point loss of engagement represents approximately 21 million fewer engaged employees.
Last year, low engagement cost the world economy approximately $10trillion in lost productivity, or 9% of GDP. A decline in global engagement means employees are feeling more detached from their employers, creating negative consequences for productivity and growth, and also affecting the ability of organizations to manage change, such as with AI adoption.
Manager engagement decline drives risk
Lower engagement among managers accounts for much of the recent downturn in employee engagement since 2023. Managers typically experience an “engagement premium” of consistently higher levels of engagement compared to individual contributors, but increasingly, their engagement levels are getting much closer to those that they lead.
In South Asia, manager engagement declined even more than that of employees, falling by eight points in 2025, far more than any other region.
Flatter organizational structuring may be a factor, with the percentage of workers who are managers in South Asia also declining in 2025, suggesting employers are cutting management roles. Recent Gallup research on team size found that manager engagement can decline with larger spans of control, which could explain the drop in manager engagement in South Asia.
The engagement of managers is particularly important for AI roll-out. A separate Gallup US workforce survey in Q1 of 2026 found that the strongest predictor of whether employees will use AI is whether an employee's line manager actively champions it.
Job market confidence on the up
Perhaps surprisingly, employee sentiment about the current job market did improve in 2025, although it is still below its 2019 peak. That increase came entirely from non-remote, fully on-site workers, whose perception of the job market rose two points.
Future job market optimism declined for fully remote workers, down five points, and remote-capable, fully on-site workers, down 14 points, while there was no change for hybrid workers. The decline in optimism was likely due to changed employer policies or the automation of knowledge work.
Counter to the global trend, two regions experienced steep drops in job market optimism in 2025: US/Canada was down 10 points, and Australia/New Zealand, down 12 points.
In the first few years after the height of the pandemic, from 2022 to 2024, Australia/New Zealand ranked first among global regions in employee job market perceptions, but given a sharp decline in job market optimism over the past year, it now ranks second, behind Southeast Asia. The US/Canada region is now second-to-last in regional job rankings, having fallen 23 points since 2019.
US business media reported on a “no hire, no fire” job climate for most of 2025. More recent revisions to official jobs numbers found that the US added 181,000 jobs last year, compared with 1.5 million in 2024, with Gallup’s US employee job market survey tracking official jobs data closely.
Many are wondering how AI is likely to affect the future of the job market, and Gallup’s US workforce survey from Q1 of 2026 finds that the perceived likelihood of job elimination due to AI is rising, with 18% of US employees saying it is somewhat or very likely their job will be eliminated in the next five years due to technological innovations such as automation or artificial intelligence, compared with 15% reporting so in the past two years. In organizations where employees report AI has been implemented, that figure rises to 23% reporting it is likely.
In some industries, such as finance at 32%, insurance at 32% and technology at 31%, nearly a third of employees think it is somewhat likely or very likely their job will be eliminated in the next five years.
A relatively robust job market globally, with the exception of declines in the US/Canada and Australia/New Zealand, adds to turnover risk as well. Disengaged employees are more likely to be looking for another job when job markets are good and come to work disconnected and unproductive when job markets are tight.
Engagement is falling most among managers, who are often the primary way employees experience their employer. But global trends are not all pervasive with some organizations engaging their managers at four times the global average.
Reaction to Gallup Workplace report
The report has received plenty of reaction from online commentators and industry experts and leaders, who point to a crisis around management's capacity to lead rather than .
Carole Gaskell, Founder & CEO of Full Potential Group, said: “Gallup’s 2026 State of the Global Workplace report confirms what many organisations are already feeling: employee engagement remains stubbornly low and more concerningly, manager engagement has declined significantly since 2022. This will likely trigger a familiar response; more focus on engagement, more investment in manager capability, and more leadership development programmes.
"But engagement is not the real problem; it is the signal of a far deeper, more systemic issue - a leadership capacity crisis.
"Across industries, leaders today are being asked to operate in conditions of unprecedented complexity - balancing constant change, competing priorities, rising expectations, the rapid acceleration (and threat) of AI, and a workforce with ever-evolving needs. Yet the systems in place to support leaders - which were designed for an era in which change was episodic, complexity was far reduced and time to recover between challenges was greater - simply haven't evolved. This is creating a gap between what leaders are expected to deliver and what they can sustainably hold. When that gap widens, decision quality declines, execution becomes fragmented and culture turns reactive rather than intentional.
"Instead of asking "how can we improve engagement", those reading and reflecting on Gallup's report should ask “do our people have the capacity to lead in the world we’ve created?" Until that question is answered honestly, engagement will remain the symptom, not the solution."
Commenting on LinkedIn, Vicki Saunders, founder of the EVP consultancy, said: “The engagement gap can’t be entirely a ‘wellbeing’ failure, it must be something else.
“The report identifies three conditions that together drive both welling and engagement at work - employees enjoy their work; they feel it improves others lives; they believe they have choices in the work they do.
“The first two are in every EVP articulation I’ve ever seen; purpose, meaning, contribution. The third one though, choice, is the one I think most of us aren’t really thinking about. Not just flexibility, real agency over the work itself and the feeling that your day isn’t being dictated to you.
“And that totally matches what I see in my own work. In focus groups people rarely ask for meaning (though they do appreciate it), they ask for choice, for trust, for not being micromanaged, for having some say over how the work actually gets done. It’s the classic difference between the what being prescribed and the how. So, choice might well be the ingredient we’re missing.”
Woodrie Burich, Leadership & Team Performance Strategist, and TEDx Speaker, added: “This data is a good reminder: managers aren’t disengaged because they don’t care, they’re disengaged because they don’t have time to lead.
“When teams are at capacity, quality, feedback, and connection are the first things to go, followed by poor outcomes... Without time to talk, how are we going to lead effectively?”
