One of the enduring legacies of COVID-19 is the seismic shift it created in the workforce. It’s no exaggeration to say that the pandemic has changed the world of work. Employees, including in government, now have different expectations about where, how, and why they want to work. They expect flexibility, voice, work-life balance, and personal wellbeing.

If employers don’t meet these expectations, employees have made it clear they will vote with their feet and leave for jobs that they believe better meet their needs. Current uncertainties surrounding government employment could also accelerate this trend.

The 2025 Megatrends from UKG provide a map for navigating these uncharted waters. Each year, UKG assembles thought leaders from around the globe who reflect on workforce developments, predict how these forces will shape the future and, most important, how organizations can respond. For the 2025 Megatrends, we collaborated with hundreds of stakeholders, conducted our own original research, and reviewed dozens of external research studies. The resulting 2025 Megatrends are:

• The Escalating Global Labor Deficit 

• The Amplified Employee Experience Imperative 

• The Human-AI Advantage 

Let’s explore how these Megatrends could impact the public sector in the years ahead. 

#1 The Escalating Global Labor Deficit

Across the globe, 75% of employers are struggling to fill vacancies. In the U.S., there are only 85 workers for every 100 jobs, and, by 2032, we will face a deficit of 6 million workers. This shortage is already hitting the public sector. For example:

• According to the U.S. Bureau of Labor Statistics, the ratio of vacancies to hires in state and local government (2.9) is more than twice the private sector ratio (1.4).

• 89% of state and local governments had to reopen recruitments in 2024 because they didn’t attract enough qualified candidates. 

• 63% also report that a retirement wave is occurring now or will occur in the next few years.  

As one government HR director put it, “We’re all feeling the pain.” 

#2 The Amplified Employee Experience Imperative

Decades of research have revealed that employee engagement fuels organizational performance. In government, highly engaged employees are 10 times more likely to believe their organizations are achieving their mission and three times more likely to say they are influencing both cost and customer service. Organizations in the top 25% of employee engagement levels have 51% lower turnover than organizations in the bottom quarter.  

#3 The Human-AI Advantage

AI promises to improve efficiency and performance. Seventy-five percent of employees believe AI will affect their jobs, in some cases positively. However, 75% of employees also want their organizations to be more transparent about AI and how it can improve their jobs. Employers must understand that leveraging AI is not just about technology and algorithms—it’s about change management and people. 

Responding to the Megatrends 

Each of these Megatrends has critical implications for the public sector’s ability to attract and retain talent and operate efficiently—do more with less. 

Understanding the trends is important, but government must respond in practical ways. While there isn’t a one-size-fits-all solution, below are specific suggestions related to each Megatrend. 

The Escalating Global Labor Deficit 

Conduct comprehensive workforce planning. Organizations must assess current and future talent needs for full-time, part-time and gig workers, identify any gaps, and take action to close them. Public sector organizations should also conduct succession planning to fill projected leadership and key skills gaps. 

Diversify talent pipelines. With the shrinking pool of workers, government needs to expand the pool of talent, including by adopting a skills-based strategy. This means eliminating arbitrary requirements such as college degrees and years of experience where they are not required. Government needs to tap into the rich talent pool of more than 70 million employees in the U.S. workforce who don’t have college degrees. This means adopting methodologies to assess skills and competencies instead of just relying on markers like college degrees and years of experience. Skills-based organizations are 98% more likely to have a reputation as a great place to grow and develop, and retain high performers.  

Streamline application and hiring processes, and recruit aggressively. Today’s job candidates, especially younger ones, expect a fast, user-friendly, and transparent process. For example, job seekers want to apply through their smart phones and 78% of applicants expect the application process to take no more than 30 minutes. Among younger candidates, 37% expect status updates on their applications at least once each week. Sixty percent of all job seekers have abandoned a job application due to its length and complexity. 

Hiring talent also means recruiting aggressively and managing the organization’s brand. Sixty-five percent of job seekers read at least five online employee reviews before deciding to apply, and 51% say positive reviews would make them more inclined to apply. However, 55% of employers don’t monitor or address negative feedback on job sites or social media. 

The Amplified Employee Experience Imperative 

The key to building a high level of employee engagement is delivering a positive employee experience. That is, the “moments that matter” between the employee and employer that determine if the employee will perform at a high level—and stay with the organization. These moments occur throughout the entire employee lifecycle, beginning even before the employee is hired, and continuing until the employee departs. These interactions can occur daily, weekly, monthly, annually, or just at the beginning and end of the employee’s tenure. Here are some examples of how organizations can deliver a positive experience. 

Understand what matters to employees. This means giving employees a voice and listening to them. The most effective way to understand what matters to employees is to simply ask them, usually through periodic employee surveys.  

Develop more effective people managers. The behavior of a team leader determines 70% of the variance in the team’s engagement. When managers are engaged, employees are more likely to be engaged. Moreover, 69% of employees say their manager affects their mental health more than their doctors (51%) or therapists (41%)—and even as much as their spouse or partner.

Developing supervisors and managers means identifying key competencies, providing training and coaching, and then holding leaders accountable for being effective leaders. Through 30 years of research on company culture, UKG’s Great Place To Work® has identified nine key characteristics of leaders in great organizations:

• Listening 

• Speaking 

• Thanking 

• Developing 

• Caring 

• Sharing 

• Celebrating 

• Inspiring 

• Hiring and welcoming 

Recognize employee contributions. Employees who believe they will be recognized are more likely to be engaged. Recognition doesn’t always have to involve money, which public sector organizations often can’t provide. Sometimes, it’s just about letting employees know they are appreciated and valued. 

Onboard effectively. Effectively onboarding new employees improves engagement and retention, and results in faster time to full productivity. Effective onboarding is an integrated series of activities that begins before the new employee reports to work and continues throughout the employee’s entire first year. Many of these activities are aimed at creating a positive relationship, from the start, between the new employee and their supervisor/manager. 

The Human-AI Advantage

 Seventy-two percent of organizations are already using AI in at least one business function, with the biggest increase occurring from 2023 to 2024. About 65% of organizations are using generative AI (GenAI), up from 33% in 2023.

Three of four employees would be more accepting/excited about AI if their organization was more transparent about how AI can improve their work, and how their organization is using this technology. Successfully deploying AI involves the 10-20-70 rule: 

• 10% of the effort is building new algorithms and the science behind them  

• 20% involves deploying the tech stack and ensuring the right data feeds into the right systems 

• But 70% of effort should be devoted to change management and other people-related processes.

Applying the 10-20-70 rule means being transparent about how AI is being used in the organization, educating employees on AI, involving them in identifying new opportunities to use AI, and sharing best practices. 

AI can directly improve the employee experience by making employees more efficient and productive, enabling them to spend more time on meaningful tasks, and increasing the quality of their work. AI applications that can enhance the experiences of managers, supervisors, and frontline employees include:

• Summarizing meetings and providing notes and action items 

• Helping supervisors and employees manage schedules, shifts, and location preferences

• Collecting and analyzing employee survey data  

• Entering and summarizing employee goals and feedback

• Providing employees with easy and user-friendly access to policy and benefits info 

• Conducting statistics-based forecasting (e.g., of retention/retirement, turnover risk, and employee fatigue) 

• Writing first drafts of position descriptions and job ads

• Matching job candidates with job requirements

The world of work has changed, and government must adapt to be able to deliver for the American public. The 2025 Megatrends from UKG provide a roadmap for how the public sector can respond to the global talent shortage, boost engagement, and apply AI. 

The stakes are too high for the government not to adapt.