Financial operating conditions and technology transformation are among top concerns for European employers over the next 12 months, according to Littler’s annual European Employer Survey Report.

The survey of human resources executives, business leaders and in-house counsel found that 63% are substantially concerned about the impact of financial conditions on workforce management over the coming year, with more than a quarter (29%) expressing the maximum level of concern.

Some 54% of respondents said they were substantially concerned about technology transformation, including AI adoption and integration, followed by social and cultural issues (53%), national politics (45%) and ESG (43%). Those social and cultural issues, coupled with elections in the US, are creating new challenges for European employers, Littler said.

As many as 86% of respondents said they are facing “at least some degree” of difficulty managing politics in the workplace, including diverse beliefs among employees. More than three quarters of respondents (77%) also said they are concerned about how the US presidential election could impact their business.

Stephan Swinkels, a Littler partner and co-lead of the firm’s global practice, said: “European employers’ level of concern regarding the US presidential election indicates just how global the workplace has become. Political changes in major economies like the US are having a local impact on organisations across Europe, but this is also a meaningful change in mindset as management takes a global view towards the state of the organisation. What happens across oceans can and does affect their outlook.”

AI adoption is also causing headaches for employers, with only 53% of respondents confident that employees are not using AI tools improperly, with just 29% saying they have policies in place governing its use.

Deborah Margolis, Littler senior counsel in the UK, said: “As generative AI use expands across European workplaces, developing clear and thoughtful policies is crucial to mitigating risk and deriving the most value from the technology. That said, there is no one-size-fits-all approach to AI policy development and the most effective policies will be those that are tailored to an organisation’s broader business objectives, risk tolerance and intended use cases.” 

Meantime, ESG also remains high on European employers’ agendas, with 79% of respondents saying their organisations have increased their focus on ESG initiatives over the past year. This is likely due to growing sustainability regulation in the EU, Littler said.