Why employers are prioritising reskilling and redeployment over redundancies

Australian workers are opting for job stability as economic uncertainty drives the lowest turnover rates in three years, according to new research from the Australian HR Institute.

Rising job demands remain a significant risk for workforce wellbeing, and employers are focusing on internal reskilling and redeployment to manage cost pressures.

Australian HR Institute’s (AHRI) June Quarter 2026 Australian Work Outlook report showed employee turnover has fallen by 11.2 per cent in the past six months from 15.2 per cent to 13.5 per cent, the lowest level recorded since the survey launched in May 2023.

Sarah McCann-Bartlett, CEO of AHRI, highlighted that the prominent indication from the report was that reskilling, retraining, and redeployment are being used as deliberate workforce strategies instead of layoffs.

“Many organisations report that they are planning to invest in reskilling or retraining, alongside reorganising teams and redeploying employees into different roles,” she said.

“Employers that prioritise reskilling and redeployment retain institutional knowledge, maintain team continuity, and preserve the investment they’ve made in their workforce.

“However, this positive strategy must be paired with genuine transparency about pay, workload expectations, and non-financial benefits.”

The report did, however, show that wage growth expectations remained relatively modest despite rising cost pressures.

Pay increase expectations for the year ahead remained moderate at 3.1 per cent, down slightly from 3.3 per cent in the previous quarter.

The report warned that many employees will experience a further deterioration in real earnings.

This ultimately showed that wage increases are not necessarily keeping pace with inflation and cost-of-living pressures.

Regarding workforce and cost pressures, McCann-Bartlett noted that these challenges can also give rise to psychosocial risks if organisations do not actively manage their impact on employees.

“The organisations that will emerge strongest from current workforce pressures are those actively investing in people capability now, while simultaneously addressing the psychosocial risks bubbling beneath the surface,” she said.

“This means undertaking psychosocial safety risk assessments, monitoring job demands and workload, and acting decisively on identified concerns.”

Retaining and redeploying employees also helps prevent the psychosocial issue of additional workload stress on remaining staff.

The report found such an approach might also offset the risk of increasing workload pressures, which remained the leading psychosocial concern, as noted by 23 per cent of the survey.

Conflict or poor workplace relationships (22 per cent), lack of role clarity (19 per cent), and poor support (17 per cent) were also commonly cited causes of complaints.

Maintaining experienced teams can reduce disruption, improve support networks, and avoid workplace anxiety, which is often linked with large-scale layoffs.

“Many employers are seeking to hold on to their existing workforce to preserve skills and organisational capability,” McCann-Bartlett said.

By prioritising reskilling, retraining, and redeployment over redundancies, some of the major psychosocial hazards that are identified in the report – such as excessive job demands, uncertainty during organisational change, and pressures on employee engagement and wellbeing – may be mitigated.

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