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Episode 117 - Does same job same pay mean the end of the labour hire sector?
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Episode 117
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Bullhorn Amplify: AI in Recruitment
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Have you checked out Bullhorn Amplify? It's the AI game changer for recruitment teams. Amplify delivers 17% faster submit times, 22% higher fill rates, 49% better candidate matches.
00:00:23
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If you want to boost your productivity, visit bullhorn.com to learn more about Amplify.
Leadership Changes at Ethos Beeth Chapman
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This is the news for the 8th of July, 2025. Adele Last. i'm adele last Last week, Ethos, Beeth Chapman, CEO for Australia, Andrew Keyes, announced his departure from the business after 29 years in the recruitment industry and 20 years leading the company he co-founded.
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In early 2005, Keyes and four other senior IT recruiters left Hudson, formerly Morgan & Banks, and founded Ethos Corporation. In 2014, the business merged with Asian recruiter Beeth Chapman and rebranded as Ethos Beeth Chapman.
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Japanese recruiter Will Group acquired a majority stake in EBC in 2017 when the company had 17 employees. The following year, they acquired key appointments.
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In 2023, the combined EBC key appointments entity reported an operating profit of $4 million dollars on sales of $154 million dollars with an employee headcount of 70.
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According to the respective brands' websites, the current entity has 79 staff across its Australia and Southeast Asian operations. In his LinkedIn post announcing his departure, Key said, a bit like Mel Meninga coaching that Queensland juggernaut to eight straight Origin Series wins, the last few years of my job have been to simply remove obstacles, stand out of the way and let the immense talent express itself.
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So calling it time is easy when you've got this much capability in the ranks. Claire Tedden, who joined Ethos in 2006, was appointed CEO for Australia three months ago.
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having been the local managing director since April 2019.
Wage Breaches in Horticulture Sector
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Labor hire firms have emerged as the worst offenders in widespread wage breaches uncovered during a three-year investigation into the horticultural sector by the Fair Work Ombudsman. A three-year campaign investigated more than 500 employers and revealed the regions with the worst rates of workplace law non-compliance.
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The newly released Horticultural Compliance Report shows the non-compliance rates for employers targeted for surprise inspections in 15 regional hotspots under the Regulator's Horticultural Strategy twenty twenty one to twenty twenty four Labor hire operators had notably higher breach rates than growers in every region where both were investigated.
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Victoria's Mornington Peninsula and Yarra Valley regions had the highest rate of overall non-compliance, with 83% of targeted employers found to have failed to meet obligations under the Fair Work Act.
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Under the completed three-year strategy, inspectors visited 360 farms and orchards and investigated 512 businesses in a rolling campaign coordinated with crop seasons.
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The Ombudsman issued over $760,000 in fines to employers who had failed to meet their payslip and record-keeping obligations, with 91% of those 166 infringement notices going to labour hire providers.
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Only 15 fines were issued to growers who employed workers directly.
Australia's Employment Projections
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The Australian labour market remains resilient, supported by strong, although slowing, population growth and public sector demand, according to the March 2025 labour market update released by Jobs and Skills Australia last week.
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Employment growth is projected to decline from its current rate of 2.1% to 1.4% by the end of the year, resulting in a rise in the unemployment rate to 4.3%.
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Over the 12 months to March 2025, employment growth was driven by jobs that typically require post-secondary qualifications, most commonly in those occupations associated with a vocational education and training VET pathway.
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In the same period, employment increased by 2.4% in the capital cities and 1.6% in the rest of state areas. Employment increased in six major occupational groups and declined in two major occupational groups over the years,
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to February 2025, with the largest increase for community and personnel services workers up 4.4% and the largest decline recorded by clerical and administrative workers at 4.4%.
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point four per cent Australia is at risk of falling short in delivering a skilled workforce as most employers continue to face barriers in hiring apprentices and trainees, the AI Group has warned.
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The AI Group Centre for Education and Training has released a new study on the experiences of Australian employers who are hiring apprentices and trainees. According to Innes Wilcox, AI Group Chief Executive, Australia will need an extra 186,800 skilled technicians and trade workers by 2034. The warning comes as the AI Group CET report found that 96% of employers continue to face challenges in hiring apprentices or trainees.
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The top two barriers cited are difficulty in finding suitable candidates, nominated by 65% of respondents, and difficulty in supervising or training on
Global Recruitment Criticisms
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the job, 33%. thirty three percent International healthcare recruitment practices by wealthy countries are a rip-off, according to a global body representing nurses, which cited figures suggesting billions are being saved by recruiting overseas staff rather than training their own.
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The International Council of Nurses, ICN, criticised the yeah UK, Canada and other countries for failing to sufficiently compensate the countries from which they had recruited many nurses in recent years.
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Last month, the ICN's Chief Executive, Howard Catton, called for the creation of an international fund to help support the development of countries exporting large numbers of nursing staff. He cited new data from the Canadian Academy of Health Sciences and the Royal Society of Canada,
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suggesting that Canada saves around $1 billion dollars each year by recruiting healthcare workers, including doctors and nurses, from overseas without incurring the costs of their training. Meanwhile, nursing representatives in some African countries have reported to the ICN that their government was only receiving as little as $1,000 per nurse from the country recruiting them.
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Speaking at a conference in Helsinki, Catten said, it feels like a rip-off. We'll give you $1,000 or $2 for your nurses, but we're saving billions. Catton also said the World Health Organisation's Global Code of Practice on the International Recruitment of Health Personnel must be strengthened, including a prohibition on active recruitment from countries facing acute workforce shortages, known as the Red List.
Women in IT: The STEM Leaky Pipeline
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A new study from the Wharton School of Management has found that when women are rejected for contract roles in male-dominated fields, specifically IT and computer programming, they are far less likely than men to continue looking for work in those industries.
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Post-rejection, women are also far more likely than men to seek jobs outside tech and many stop looking for work altogether. The research led by Professor Tian Tianyang analyzed 700,000 applications for over 200,000 job postings for contract work offered by more than 70,000 employers on an online employment marketplace.
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The study spanned 12 years from 2000 to December 2012. According to the study, women who were rejected for IT and computer programming gigs were less likely to reapply than rejected men, and they reduced their overall job seeking activity relative to rejected men.
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But the same didn't hold true for writing and translation contract roles to female dominated fields. The scholars found no gender differences in the behaviors of male and female applicants for those jobs.
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Yang said the response of women to rejection when applying for STEM roles is contributing to the leaky pipeline in STEM, where women and minorities enter those careers, only to leave at some point their ambition crushed by experiences of discrimination, isolation or lack of opportunity.
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The takeaway is that as long as gendered norms persist, they will shape both sides of the labour market, employers' hiring decisions and job seekers' behaviour. These norms don't just influence how candidates are perceived, they also shape how individuals navigate the job search itself, Yang said.
Cult of Monday's Acquisition of Mondo Search
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Sydney-based learning, leadership and talent consultancy Cult of Monday has acquired Sydney executive search firm Mondo Search. Mondo Search was founded by ex-Morgan & Banks recruiter, Simone Allen, in 1998 and specialises in the consumer goods sector.
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According to last week's announcement, Allen and colleague Carmela Alterdonner, Head of Research and Talent, will join Cult of Monday with Allen in a senior advisory role. Terms were not disclosed.
US Job Growth Trends
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US job growth was unexpectedly solid in June. However, nearly half of the increase in non-farm payrolls came from the government sector, with private industry gains the smallest in eight months as businesses battled rising economic uncertainty.
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Non-farm payrolls increased by 147,000 jobs in June after an upwardly revised 144,000 advance in May, according to the Bureau of Statistics. Economist polled by Reuters had forecast payrolls rising by 110,000.
00:09:29
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Hiring for roles in the federal government, professional services and manufacturing declined in June. However, roles in state and local government education increased. The unemployment rates declined to 4.1% from 4.2% in May, was in part because of a drop in labour market participation.
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The average work week was also shorter last month, suggesting businesses were reducing employee hours. Indeed's June Labor Market Update issued a note of caution, commenting, There are real weaknesses in the market, including concentrated job gains, slowing wage growth and falling participation that have persisted for months, and there are scant signs of those concerns fading any time soon.
Global Economic Slowdown
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Heightened trade tensions and policy uncertainty are expected to drive global growth down this year to its slowest pace since 2008, outside of outright global recessions, according to the World Bank's latest Global Economic Prospects report.
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The turmoil has resulted in growth forecasts being cut in nearly 70% of all economies across all regions and income groups. Global growth is projected to slow to 2.3% in 2025, nearly half a percentage point lower than the rate initially expected at the start of the year.
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A global recession is not expected. Nevertheless, if forecasts for the next two years materialise, average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.
Impact of 'Same Job, Same Pay' Ruling on Labor Hire
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And that's the news for the 8th of July 2025. I'm Ross Clennett. Stay tuned for Question of the Week.
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um
00:11:09
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Question of the Week. Does same job, same pay mean the end of the labour hire sector? Well, same job, same pay has been around since 2023, Ross. So why are we asking this question today?
00:11:23
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Well, there was a very significant case five weeks ago, or sorry, the decision was handed down five weeks ago when the Mining and Energy Union had lodged applications for same job, same pay, targeting WorkPAC and Skilt.
00:11:42
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And both of those agencies had supplied workers to Mores Creek Coal. And the assertions were that the employees via WorkPack earn $17,761 per annum less than the host company's employees.
00:12:02
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And skilled employees earn nearly $30,000 less per annum than the host company's employees. And of course, this is the goal of Fair Work Same Pay.
00:12:15
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So, yeah, let's just unpack that a little further um with some this type of legislation. If people don't know, they might have heard that term, same job, same pay.
00:12:26
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um But this is this is it in real application, right, Ross? This is where we're seeing an employer who has employees on site doing the same job as a labour hire employee hired through a recruitment agency.
00:12:39
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And this is about equality in paying them the same for the same job regardless of whether they're employed direct or through an agency. Exactly. And that was exactly the intent of the legislation.
00:12:53
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And the issue specifically here is, would it be fair and reasonable to make a same job, same pay order? And the judgment was Yes.
00:13:06
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And what Skilled and WorkPak were arguing was that um we would have increased costs, we would have decreased profits, and it would disturb the existing EBAs.
00:13:22
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And the judgment found that that was not sufficient reason to not grant the equivalent pay to the labour hire workers. Okay. So our question is saying is at the end of the labour hire sector, you're asking because presumably they either have to absorb the cost and and the case study law states the the judgment is saying that, you know, it's not going to be that much of a financial burden to work pack or skilled to um pay the worker the same, indicating they'll absorb the cost or they're going to pass it on to their client. So, yes, they're going to pay the worker a bit more and then they're going to charge the client a bit more.
00:14:02
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And in either case, they're either um going to make less money themselves, less profit, or they're potentially going to lose the client because the client's going to say this is too expensive now. So that's why we're saying potentially the end of the labour hire sector. And this kind of reminds me of ah my time in the blue-collar recruitment space when I worked with a very large manufacturer in the food processing um industry um in the western part of Victoria, Australia.
00:14:29
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who had workers on site doing the same job as the the kinds of workers we were supplying as a labour hire provider. And they had an EBA on site and the EBA had some very favourable conditions and pay rates for their workers.
00:14:44
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But they specifically asked us not to pay under their agreement and that we were to pay against the award. However, they did say that we could pay a above award, which is what we did. So we have workers working so alongside each other, some paid directly by the employer,
00:14:59
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some paid by us on award rates but above a award. The unions got involved in it. They heard about this occurring and they came after us and we had conversations with the union around these pay rates.
00:15:13
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And the thing that actually I think stopped the conversation going any further was the fact that we were paying above award. We weren't paying the same as the other workers on site. There was some advantage to being employed directly but we were certainly paying much more than the award rate. And that seemed to squash any further action or activity from the unions or the workers themselves. So this sort of reminds me of that instance.
00:15:38
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But in this case, because it's gone to court, they are being ordered to pay that difference completely right up to the same level as the on-site workers, right? They And one of the key aspects of this decision was ultimately that the judgment proved that the differences in the enterprise agreements, in other words, the differences between what the labour hire companies had with their workers and what the host employer had with their employees was not deemed to be sufficient justification for maintaining the pay discrepancies.
00:16:18
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particularly as the employees of the two labour hire companies perform the same work. So this is so just to be clear, Skilled and WorkPack had been employing people correctly.
00:16:34
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they had been abiding by their own enterprise agreement with their own workers. So we just want to be very clear about that in case there's any potential for misinterpretation here.
00:16:47
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But what the judgment found was that that's not a significant reason to not have everyone paid the same for doing the same work.
00:16:58
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So this really does have huge ramifications. As we've said, this is this piece of legislation that we have said has been around actually for a couple of years, finally really biting the industry in a way. This is where this has the capacity for you as a labour hire provider. And we're taught when we say labour hire, we're not just talking blue collar, in fact. We're talking about anywhere where you are on hiring workers to your client who have similar workers doing a similar job or same job on the site.
00:17:32
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And so that could be anywhere. That could potentially be in childcare. That could potentially be um in education or any sector. It could be everywhere across the industry. So this is really huge for us. This is something that as an industry, if you are providing on hire workers in any capacity, and in some ways really where they are at the award is probably the first flag to be aware of. But really, even if you're paying above award, you probably need to have those conversations with your client particularly, as I said, if they've got workers doing the same or similar job on site alongside your workers.
00:18:08
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And what the judgment also very clearly indicates is that even though the Commission considered the financial impact on the labour hire agencies of making this judgment, they deemed that was not as significant a factor as the important principle of same job, same pay.
00:18:28
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And therefore, the judgment was same pay same job, same pay superseded the financial impact of labour hire agencies. So that is a very significant indicator as to what may drive future judgments by the Fair Work Commission in similar cases.
00:18:46
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Well, I guess I'm not surprised to some extent on that because being the Fair Work Commission, based on you know what they really do you know um you know as an organisation, as an entity, is to to look out for the worker. They're often sitting on the side of making sure it's fair work for the worker.
00:19:03
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So it doesn't surprise me that they took greater weighting to the legislation of same job, same pay, as opposed to the financial implication to ah to a commercial entity. I guess that's not surprising, but um I think it is probably surprising to those listening because that would probably be the argument, that they would say it would be too much of a you know financial um imposition and they would have to increase and pass on that cost to to the host employer, to the to the client. And You know, that would make it, you know, an unreasonable, you know, fee to pay. So, but that doesn't sound like it's going to stack up.
00:19:39
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Well, I think as a summary, what this now means is that in the past, many labour hire companies have gained quite significant pieces of business by paying workers less than what the host company was playing paying their own employees and doing it legally.
00:20:00
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Let's be clear, doing that legally. But that is now under threat. And so therefore, labour hire companies are going to have to demonstrate outstanding value because if they can't go in there with, well, our workers are going to be paid less than your workers. And so therefore the price that we can offer makes it good value for money for you, then wow, they're certainly going to have to offer exceptional value for money because otherwise the host company would simply go, well, it looks like it's just going to be better value that we have an internal recruitment person and kind of do it all ourselves.
00:20:42
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Yeah, I think it where price is such a big factor in decision-making in this space, in any kind of labour hire, on-hire situation, i think you're right. It is going to be about what other factors of value can you provide as a recruitment agency in terms of convenience, of access to skill, of um you know portability, of of all sorts of things um to do with your temporary workforce. So it's an interesting one, Ross. Yeah.
00:21:10
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Well, I've got no doubt the ah rca the RCSA will be coming out with some advice in the the near term. But certainly for any of those listeners where this decision causes some concern, the the first place to look would be whoever you consult for your employment law would be the first place that you should look.