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Episode 104 - What impact will Trumps tariffs have on the Australian recruitment industry? image

Episode 104 - What impact will Trumps tariffs have on the Australian recruitment industry?

Recruitment News Australia
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Episode 104 - What impact will Trumps tariffs have on the Australian recruitment industry?

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Transcript

AI in Recruitment: Transforming or Disrupting?

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AI is the buzzword of this decade. Bullhorn is embedding AI capabilities across the entire recruitment lifecycle to empower all of your recruiters to work like your best recruiters. Use AI to quickly automate key activities throughout your recruiting workflow.
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AI agents take on entire workflows, saving recruiters time, increasing their output and giving them more time for human interaction. Contact Bullhorn today to find out more.

Leadership Moves: Erin Devlin's Strategic Decisions

00:00:34
Speaker
This is the news for the 8th of April, 2025. I'm Ross Klenit.
00:00:39
Speaker
10 years after merging her Melbourne-based recruitment agency, Devlin Alliance, with People2People, Erin Devlin has announced the sale of her People2People shares and her departure from the group. In a LinkedIn announcement last Tuesday, Devlin posted, after 10 years of People2People, I've successfully sold my shares back into the group and say goodbye to some of my favourite colleagues and friends for now, in a huge and exciting career move.
00:01:03
Speaker
Devlin will continue as an RCSA board director. Devlin won the 2017 RCSA Professional Recruiter of the Year and in early 2021 published her book, Get the Job You Really Want.
00:01:15
Speaker
Devlin also announced she had repurchased all the shares in the company Infront Sports, which she had folded into the People2People group in 2015. Founded by Devlin in 2010, Infront Sports specialises in sport recruitment, coach development and career transition services for professional athletes.
00:01:32
Speaker
Before establishing Infront Sports and Devlin Alliance, Devlin was a dancer for a total of seven years with firstly the Australian Ballet Company, then West Australian Ballet. Taking the reins of people-to-people in Melbourne is Mary Savova, who has been appointed Acting Branch Manager.
00:01:48
Speaker
Savova is in her 10th year with company and recently became a shareholder, according to her LinkedIn profile.

Impact of AI on Hiring Costs and Workforce Growth

00:01:56
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The cost of a new hire has dropped significantly in Australia and New Zealand, as an increased use of AI, automation and direct hiring methods is streamlining processes, reducing reliance on recruiters, according to software platform Elmo's 6th Annual HR Industry Benchmark Report.
00:02:13
Speaker
The survey reported an average cost of $18,600 to hire a new employee in Australia and New Zealand, a 7% decline compared to the previous year. Other survey results included 84% of ah HR professionals say their workforce will increase in size 2025, 9% predicted no change and 7% forecast a decline in headcount this year.
00:02:37
Speaker
It takes an average of 19 days in Australia and 21 days in New Zealand to hire a new employee across all seniority levels and the average employee turnover rate for organisations is 14% in Australia and 13% in New Zealand.
00:02:51
Speaker
The ELMO survey of 900 HR professionals in Australia and 322 in New Zealand employed by organisations with least 20 staff was conducted by YouGov between the 13th and 21st of January this year.

Public Service Work-from-Home Debate: A Shift in Perspective?

00:03:05
Speaker
Opposition leader Peter Dutton has abandoned his hardline stance on two unpopular Trump-like labour market policies in a stunning election backflip. Yesterday, the coalition leader softened his threat to end work-from-home arrangements for the federal public service. "'We made a mistake in relation to this,' he told the Today Show on Monday.
00:03:24
Speaker
"'It's important that we say that and recognise it.'" We've listened to Australians and we've made it very clear that work from home is a reality for many people, for our friends, for people in our workplace, and we're supportive of that.
00:03:35
Speaker
Dutton also walked back his promise to cull 41,000 public service jobs, saying instead that a coalition government would freeze future hirings rather than force redundancies. The backlash to policy similar to those of US President Donald Trump and polling, showing strong support for work from home, have seemingly unnerved the coalition as Labor enjoys a bounce in the polls.
00:03:58
Speaker
The latest news poll showed Labor increasing its lead over the coalition heading into the second week of the election campaign. The Albanese government is ahead fifty two to forty eight on a two-party preferred basis.

Recognition and Controversies: Deloitte Awards and AMP's Backlash

00:04:11
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Talent has been announced as one of six top-performing private Australian companies recognised for their outstanding business performance in Deloitte Australia's 2024 Best Managed Companies Awards.
00:04:23
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It is the only Australian recruitment business to be recognised. The Best Managed Companies program identifies and celebrates privately owned and managed companies across Australia that set high standards of business performance.
00:04:35
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Companies are evaluated by an independent judging panel comprised of representatives from program sponsors in addition to special guest judges. The program ranks companies across four key categories, strategy, culture and commitment, capabilities and innovation, and governance and financials.
00:04:52
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Global CEO Mark Nielsen said, Here at Talent, change is our competitive advantage. We are committed to innovation, ensuring that it permeates every individual, team and facet of our business.
00:05:03
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With an 87% employee engagement rate, we continue to strive for better in our industry, and aren't afraid to take risks, learn from our mistakes and challenge the norm. The finance sector union has blasted AMP, claiming staff were given one week to sign draconian new contracts, which also give up rights, including overtime, penalties and annual leave loading in exchange for a flat rate of pay.
00:05:27
Speaker
The proposed contracts would also allow the ASX 150 financial institution the right to carry out continuous ongoing video surveillance of employees, even when they're working from home, and require employees to undergo a medical examination by a doctor chosen by AMP.
00:05:43
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The FSU says around 2000 staff were issued the new contracts last month and asked to sign and return them within seven days. The union urged members not to sign and wrote to AMP urgently demanding that the contracts be revised.
00:05:56
Speaker
This is the worst employment contract we've ever seen, and it's easily the worst contract in the finance sector, FSU National Assistant Secretary Nicole McPherson told news.com.au.
00:06:08
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We are advising AMP workers not to sign. It's not just what's in the contract, it's what's not in it. Because AMP refuses to bargain for a new enterprise agreement, important rights are in policy, meaning AMP can remove or change things at any time.
00:06:23
Speaker
For example, the new contract does not contain details of any guaranteed pay increase, leave or redundancy entitlements. The union also alleges AMP is trying to undermine the right to disconnect by including a clause in some contracts that require employees to read and respond to contact from AMP and third parties outside ordinary hours.
00:06:45
Speaker
The right to disconnect is an essential entitlement to ensure that employees can keep their work and personal life separate, the union said. It is appalling that when this law has only been in place for a matter of months, AMP is already trying to avoid providing their employees with this basic right.
00:07:01
Speaker
A spokesperson for AMP said, AMP's updated employee contracts were drafted and reviewed by an external law firm who verified that all of the contract clauses align with common industry practice used by many other organisations and comply with current legal requirements.
00:07:18
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An Australian employee of a Canada-based tech company was ordered to be paid nearly $8,000 by the Fair Work Commission after she was fired by email and never heard from her employer again.
00:07:29
Speaker
Freya Powell was a senior application manager at Cognitive, a tech firm headquartered in Canada, offering predictive customer intelligence using AI tools, and she'd worked for the company for nearly eight years.
00:07:42
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In November last year, Powell was made redundant, effective immediately via an email, with the Fair Work Commission hearing that delays in the sale of Cognitive's enterprise loyalty business made its financial position untenable and required immediate job cuts.
00:07:57
Speaker
Cognitive's four Australian-based employees were all made redundant at the same time. Powell attempted to contact her employer after receiving the email but had no further contact with the company. With Powell not seeking reinstatement and having since found alternative employment, the Fair Work Commission ordered Cognitive to pay her three weeks' wages equating to just over $7,700 within two weeks.

AI's Role in Team Dynamics and Emotional Experience

00:08:17
Speaker
within two weeks A study conducted at consumer goods giant Procter & Gamble by a research team from the Wharton School at the University of Pennsylvania found that AI significantly boosted performance with individuals using AI matching the output of human teams without AI.
00:08:36
Speaker
The researchers examined the impact of AI as a teammate in knowledge work using a randomized control trial involving 776 professionals at Procter & Gamble. Participants developed product ideas, packaging and retail strategies for real business units.
00:08:51
Speaker
Half of the teams and individuals were given access to a generative AI tool such as GPT-4 and half were not. AI-enabled teams perform best overall, especially in producing top-tier solutions.
00:09:04
Speaker
The use of AI also blurred expertise boundaries, allowing professionals to produce more balanced solutions regardless of their specialisation. Most surprising to the researchers was that working with AI led to better emotional experiences, with participants reporting higher levels of positive emotions and lower levels of negative emotions compared to those working without AI.
00:09:27
Speaker
Other significant findings were AI-enabled groups worked 12% to 16% faster while producing longer and more detailed solutions, and AI helped less experienced employees perform at levels comparable to teams with experienced members, while noting that participants had a limited prompting experience, potentially underestimating AI's benefits.
00:09:49
Speaker
The researchers suggested that AI sometimes functions more like a teammate than a tool. While not human, it replicates core benefits of teamwork, improved performance, expertise sharing, and positive emotional experiences.
00:10:02
Speaker
And the researchers concluded, the most exciting implication may be that AI doesn't just automate existing tasks, it changes how we think about work itself. The future of work isn't just about individuals adapting to AI, it's about organisations reimagining the fundamental nature of teamwork and management structures themselves.

Future of Recruitment: RCSA's Strategic Survey

00:10:24
Speaker
YRCSA is conducting a recruitment and staffing industry census to help plan, protect, promote and position the industry for success over the next five years. Individuals and businesses are requested to complete a 20-minute survey by Anzac Day Friday 25 All participants will be entered into a draw to win a $1,000 MasterCard gift card.
00:10:46
Speaker
To participate, the RCSA LinkedIn page contains the link to the Census. The US labor market held steady through March, continuing to outperform expectations even in the face of continued uncertainty and the looming threat of changes to trade policy.
00:11:02
Speaker
Non-farm employment in the United States grew by 228,000 in March, above the average monthly gain of 158,000 over the prior 12 months, while the two previous months were revised down by a collective 48,000 jobs.
00:11:17
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Healthcare and social assistance continued its streak, of adding a large share of total jobs, accounting for 34% of March's gain. The US unemployment rate ticked up slightly to 4.2%, but remained stable on a three-month moving average basis.
00:11:34
Speaker
And that's the news for the 8th of April 2025. I'm Adele Last. Stay tuned now for Question of the Week.
00:11:49
Speaker
Our question is, will Trump's tariffs impact the Australian recruitment market? There's a lot going on in the news at the moment, Ross. Tell us what you think. Yes, well, obviously, this is very topical, Adele. Last week, President Trump announced...
00:12:05
Speaker
wide-ranging tariffs that are going to be imposed on basically all countries that trade with the United States, which which of course is basically all countries.
00:12:16
Speaker
And that's caused a massive meltdown in terms of the markets in the US and basically around the world. So from having one of the best performing global economies, it now seems a strong likelihood that the United States will actually move into recession.
00:12:35
Speaker
So, you know, this is, ah you know, interesting news, sure, but, you know, what's this got to do with the Australian recruitment market? Well, let's start with the impact of the United States globally. So if you look at um gross domestic product, the United States is far and away the largest economy in the world. So they're 50% larger than China.
00:13:00
Speaker
And China is four times the size of the third ranked economy, which is Germany. So that just gives you some sense of how big the United States is.
00:13:12
Speaker
in terms of its economic impact. So if there's a slowing down in the growth of GDP in the United States, that impacts everyone all around the world because they're trading with everyone.
00:13:24
Speaker
Demand reduces in the US and that then flows through and reduces demand pretty much everywhere else. So it's a real problem for not just our country, but for many other countries.
00:13:38
Speaker
So those tariffs are on goods ah going from Australia to the United States, but Australia's top yeah ah employing industry sectors, we don't do a lot of importing of product, do we? a lot of what we do is self-sufficient here.
00:13:54
Speaker
it It is. So to to provide some context in terms of Australia's trading partners, ah China is far and away our largest trading partner. So almost three times as much trade Australia has with China compared to our next largest trading partner, which is the United States.
00:14:17
Speaker
And then the United States is about 60% trading. <unk> greater than the third largest trading partner with Australia, which is South Korea.
00:14:29
Speaker
So we've got the concern before I move on to ah talk about domestics that because China and the US have such a strong reciprocal relationship,
00:14:40
Speaker
that if demand slows in the United States, and clearly the tariffs on China are very punitive, then demand in China is going to slow.
00:14:51
Speaker
And demand in China slowing is bad news for Australia, given how significant it is as our number one, far and away, our number one trading partner. Okay, so now it's hitting a little closer to home. If China starts to have a reduction in their GDP, Australia's going to feel, they're they're going to catch the you know, they're going to sneeze and we're going to catch the cold, so as they say.
00:15:14
Speaker
Well, yes, because, I mean, the health and growth of the Chinese economy has been a very big part of why why the Australian economy has been, over the last three to four decades, one of the best performing global economies.
00:15:29
Speaker
And so any slowdown in demand in ah China is generally bad news for Australia. Not all parts of the economy, but you know certainly parts.
00:15:42
Speaker
So what are the sectors in Australia that are likely to be impacted or perhaps not impacted? Well, let's start with our largest employing sector, easily the largest employing sector is healthcare and social assistance.
00:15:55
Speaker
So clearly, ah almost all of that demand comes from internal demand. Australia's population demanding healthcare and social assistance services.
00:16:07
Speaker
So that is highly unlikely to be impacted by tariffs because we are not, we as in Australia, are not imposing tariffs on the United States.
00:16:19
Speaker
So any technical equipment, and clearly a lot of medical equipment does come in from the United States, that's not going to change in price unless there's any change in the Australian government policy.
00:16:31
Speaker
Construction. Now, clearly, construction is focused on satisfying local demand, but residential, clearly, as we all know, there's a housing crisis, so that's not going to impact it greatly.
00:16:44
Speaker
But it's more in commercial, because clearly, if China slows down, and that's reducing the amount of money that... Australia is getting from China, then that is going to reduce general demand in the business community and therefore the demand for commercial property is probably going to maybe not fall, but certainly not rise as fast as it might otherwise do.
00:17:07
Speaker
Okay, and then one of our other top employing sectors where we are impacted by China is in education and training. We have a lot of Chinese students studying in Australia.
00:17:18
Speaker
Yes. So the possible impact will be as demand in China reduces, the amount of money available for Chinese people reduces, and that may decrease the likelihood that um Chinese students come and study in Australia or the amount of money that they have to spend in Australia is reduced because they're not getting as much money kind um that are being provided to them by their families.
00:17:46
Speaker
So that's certainly one sector that's significantly exposed. Certainly the tertiary education sector is significantly exposed to the Chinese market. And what about our upcoming election? Do you see any significant impact a change of government could have in this current scenario? What will happen if Australia changes to a Liberal government or we stay Labor? What's the impact likely to be?
00:18:12
Speaker
Well, I think we've just heard, um as per the news, that Peter Dutton, the federal opposition leader, has walked back his promises about cutting the public sector and also ah cutting work from home.
00:18:25
Speaker
I think clearly those um opposition backbenchers have been receiving some pretty strong feedback from their constituents and they've fed those um various pieces of feedback through to Dutton. And so clearly they he's realised they were on to a vote loser.
00:18:43
Speaker
So i don't know what else, of course, Dutton might do if he did become Prime Minister and implement policies that he hasn't mentioned that impact the labour market.
00:18:55
Speaker
What I think we can be clear on is that people in or the electorate, the undecided voters are clearly very concerned about Dutton sounding a bit Trump-like and given what's occurred in the US, are therefore thinking maybe we stay with the devil we know. And so clearly we've seen the likelihood of the Labor government returning either in majority or minority increase.
00:19:21
Speaker
So I suspect what's going to happen is it's going to be a continuity of the things we've already seen in the labour market by the Labour government. Is there likely to be that reduction in spend of the government, ah you know, in terms of agency spend? I mean, that's something that's a perpetual, um you know, ebb and flow. I know that the government's often looking at ways to reduce spend with agencies. So will we see an impact to that?
00:19:48
Speaker
ah Look, they've already had three years of converting many people who are on labour hire contracts to permanent federal employees.
00:19:58
Speaker
They're still, of course, hiring contractors and labour hire employees. I think it's probably more in the consulting space. They've probably cut back. So certainly... Talking to Canberra recruiters, they don't appear to have been dramatically impacted by what's gone on with the Labor government. So whether there'll be some changes if the government is returned remains to be seen. But certainly it doesn't seem like that it's had um a devastating impact on agencies that have serviced the federal government.
00:20:33
Speaker
Okay, so overall, we're facing some uncertainty. We won't know a lot until our election is completed. We won't know too much more until all this tariff and trade war, they're calling it, plays out um and we see the result of Trump's decisions. But, you know, what can we do at a local level? You know, this can seem really global and kind of a bit out of reach. So what can agencies be doing right now to try and weather the storm?
00:21:01
Speaker
Well, I mean, you're right, Adele. It's very hard to know the impact. What Trump has imposed in terms of these tariffs is unprecedented. And of course, that's a word we've used a lot in the last five years.
00:21:11
Speaker
But there is no precedent for this degree of disruption to global trading patterns. So it it is very unknown. I mean, certainly we've seen the immediate reaction from the financial markets.
00:21:25
Speaker
But to me, it boils back to the advice that I give every agency owner and recruiter, and that is focus on the things that you have control over. Don't focus on things you don't have control over. Yes, you should pay attention to what's going on in the markets, but the things that are clearly of greatest control are the conversations you have with your candidates and clients.
00:21:47
Speaker
be talking to your clients. How do they see all of these changes or potential changes impacting their business? What are they planning to do?
00:21:58
Speaker
Because, of course, what they're planning to do will have a big impact on staffing, which will have a big impact on the likely flow through of work to recruitment agencies. And clearly candidates also, what they're saying about what they're hearing from their employer is very important. So, look, it's a cliche, I know, but it's um it's more important than ever to stay in continual contact with your clients and candidates to understand what they're thinking and feeling and what the likelihood is of different plan moving into the next two to three to six months in terms of the global uncertainty.
00:22:38
Speaker
Yeah, and it's what we've known to do when times have been tough, as you said, through previous um historic changes in the market, you know, keeping close to your clients having open conversations with candidates. The market might tighten up as people sort of sit still and don't want to move, but now's the time to increase your contact with people, particularly good quality candidates who aren't going to move right now, but will, you know, in the immediate future or or shortly thereafter. So some great advice there. Thanks, for Ross.
00:23:06
Speaker
And I think just to conclude, remember that in 2020, we went through the most significant disruption that any of us have known in our lifetime with the closures of businesses and the shuttering of the economy and borders due to COVID.
00:23:20
Speaker
So as bad as what this might be, I think we can at least be comforted it's unlikely to be as bad as what happened in COVID.