Public Sector Update: Replacements, restructures and retention trends

As 2025 unfolds, the public sector in Australia and New Zealand is facing significant workforce pressures shaped by ongoing budget constraints, structural shifts, and high staff turnover. Over half of government teams (55%) have experienced budget cuts this year, with 31% reporting that the cuts were significant. These financial pressures are being felt across departments, with 62% of government professionals describing their teams as under-resourced. This shortage of personnel is affecting both operational performance and the ability to deliver consistent public services.

Recruitment is another major concern. A staggering 81% of public sector managers report losing candidates due to slow hiring processes. Most recruitment efforts are reactive, aimed at maintaining current staffing levels. Replacements account for 60% of hiring activity, followed by team restructures (46%) and increased workloads (25%). Meanwhile, hiring driven by business growth or project work is notably low, indicating that expansion is not currently a strategic focus.

Looking at the top recruitment drivers for 2025, 39% of hiring is attributed to replacements, while 31% of employers report having no hiring plans at all. Seasonal needs and growth initiatives are being sidelined as teams focus on filling existing gaps and sustaining basic functions.

Retention is proving just as challenging. The most common reasons for staff departures include a lack of job security (37%), limited career progression (27%), and uncompetitive salaries (15%). These trends indicate that benefits alone are not sufficient to keep public sector workers engaged. What is needed is a greater focus on long-term career opportunities and improved job confidence.

"Teams are under pressure, both financially and operationally"

Nicole Consterdine, Recruitment Consultant at people2people Australia, reflects on the challenges facing government hiring in 2025. "Teams are under pressure, both financially and operationally," she says, summarising the complex environment in which public sector managers must now operate.

According to Nicole, the recruitment landscape is dominated by backfilling roles. "Replacements make up 60% of the hiring activity, and that's largely out of necessity," she notes. Team restructures and increased workloads are also forcing departments to prioritise urgent needs over strategic planning. "Most are hiring to maintain—not to grow," Nicole adds.

Slow hiring processes are exacerbating these challenges. "Eighty-one percent of managers have lost candidates just due to how long recruitment takes," she explains. This inefficiency not only frustrates applicants but also risks leaving vital roles unfilled for extended periods.

Nicole also points to the causes behind staff attrition. "Job security concerns, lack of progression, and lower salary packages are driving people away from public roles," she says. In her view, these aren't problems that can be solved with one-off incentives. "Improving benefits helps, but the real issue is the absence of long-term career prospects and a sense of stability."

Looking ahead, Nicole warns that without investment in streamlined hiring and retention strategies, the sector could face deeper issues. "If these trends continue, public services could be compromised, and long-term sustainability of the workforce will be at risk," she concludes.

Winning strategies to strengthen your public sector workforce

1. Streamline hiring to secure top talent
Delays in recruitment can cost you high-quality candidates who are likely entertaining multiple offers. Fast, structured hiring processes show decisiveness and help maintain engagement throughout the candidate journey.

2. Offer clear career progression
Job seekers are prioritising long-term growth and development opportunities. Well-defined career pathways make roles more attractive and help retain ambitious talent.

3. Prioritise job security and stability
Transparent communication about role longevity and company direction builds trust. Long-term workforce planning reduces uncertainty and increases employee confidence.

4. Reassess salary packages for market competitiveness
While budgets may be tight, competitive compensation remains a key factor in attracting talent. Reviewing salary bands in light of private sector benchmarks can help reduce offer rejections.

5. Build workforce resilience, not just headcount
Hiring with a focus on team structure, cross-functional capabilities, and future business needs supports long-term success. A resilient workforce adapts better to change and reduces rehiring cycles.