Employee engagement falls worldwide as AI investment fails to deliver productivity gains

Global employee engagement has declined for a second consecutive year, despite rapid investment in artificial intelligence, according to Gallup’s latest State of the Global Workplace report. The study, based on one of the largest ongoing surveys of employee experience, suggests that organisations are struggling to translate technological change into measurable improvements in performance or working life. Employee engagement fell to 20 percent in 2025, down from a peak of 23 percent in 2022 and its lowest level since 2020. This decline has significant economic implications, with Gallup estimating that low engagement costs the global economy around $10 trillion in lost productivity, equivalent to 9 percent of global GDP.

The report links much of the downturn to falling engagement among managers. Since 2022, manager engagement has dropped by nine percentage points, eroding what had previously been an “engagement premium” associated with leadership roles. In many organisations, managers are now no more engaged than the employees they supervise.

This shift is significant because the report identifies managers as central to the effective adoption of AI. While many organisations have invested heavily in AI tools, the benefits have yet to materialise at scale. Only 12 percent of employees strongly agree that AI has fundamentally changed how work is done in their organisation, despite widespread deployment.

Surveys of executives show a similar pattern. Most report little or no impact on productivity from AI so far, reinforcing a disconnect between individual efficiency gains and organisational outcomes. The report argues that this gap reflects organisational readiness rather than technological capability, with leadership and management practices playing a decisive role.

Global job market sentiment has shown modest improvement, with 52 percent of employees saying it is a good time to find a job, although this remains below pre-pandemic levels. However, confidence has declined sharply in some regions, particularly the United States and Canada, where perceptions have fallen significantly since 2019.

At the same time, concern about the impact of AI on employment is growing. Around 18 percent of US workers believe their job is at risk of automation within five years, rising to 23 percent in organisations that have already implemented AI. The effects vary by organisation size, with larger firms more likely to reduce headcount following AI adoption, while smaller organisations are more likely to expand.

Despite these pressures, there are signs of improvement in employee wellbeing. The proportion of workers classified as “thriving” rose slightly to 34 percent in 2025, the first increase in three years. However, levels of stress, anger and sadness remain above pre-pandemic levels, indicating a more demanding emotional environment at work.

Regional variations remain pronounced. Engagement is highest in the United States and Canada at 31 percent, while Europe continues to report the lowest levels at 12 percent. Southeast Asia records the most positive job market perceptions, while the Middle East and North Africa report the weakest.

The report suggests that employee engagement is increasingly a measure of organisational readiness for change. In the context of AI, disengaged workforces may limit the benefits of new technologies, while actively disengaged employees could introduce additional risks.

Gallup concludes that the success of AI in the workplace will depend less on the technology itself and more on how organisations manage people. The evidence points to management quality, rather than technical capability, as the key factor determining whether investment in AI leads to meaningful improvements in productivity and performance.