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News for the week beginning 12 February 2024 and Question of the Week: "Are there better opportunities in large corporate agencies compared to small boutique specialists?"
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Transcript
Weekly News Overview
00:00:09
Speaker
This is the news for the week beginning 12 February 2024. I'm Ross Clannett.
Workers' Rights and Reforms
00:00:15
Speaker
Workers will gain new rights to switch off outside paid hours as part of a slate of industrial relations reforms poised to pass federal parliament. The right to disconnect has won the support of the government, Greens and key crossbenchers alongside measures giving greater protections to gig economy workers and more rights to casual seeking permanent employment.
00:00:34
Speaker
The new definition of employment incorporates post contract assessment of the true nature of the relationship.
Employment Definitions and Contractor Status
00:00:41
Speaker
Independent contractors working regular hours and receiving income predominantly from a single source would be likely classified legally as employees on this basis. However, high income earning independent contractors will have an opportunity to opt out of coverage from the new definition.
Temporary to Permanent Employment Pathways
00:00:58
Speaker
A single conversion pathway from temporary employment to permanent will be accessible at six months employment, but driven by employees removing the existing employer notification requirements. Unreasonable contact from employers outside paid hours will be curbed under the laws with workers able to tap the Fair Work Commission if they're hassled, which could ultimately result in a fine.
Union Access for Underpayment Investigations
00:01:20
Speaker
But there are carve outs for bosses calling employees about changes to their roster shifts and protection
00:01:25
Speaker
against frivolous and vexatious claims. Unions will also be able to enter workplaces without notice to investigate under payments when the legislation passes later this month.
Probation Dismissal Case Outcome
00:01:38
Speaker
A worker was unsuccessful before the Industrial Relations Commission of NSW with a claim it was unfair for his employer to terminate him before the end of his probation period.
00:01:48
Speaker
The worker argued that the six-month probation period was set in advance and thus cannot be overridden by the three-month period mentioned in the regulation. Additionally, he argued that the dismissal occurring just over two months into the six-month probation was premature and unfair considering the need for the full six months to assess performance.
Corporate Financial Reports
00:02:07
Speaker
The IRC disagreed saying the employer's termination of his position was reasonable although he was dismissed two months into a six-month period.
00:02:15
Speaker
Largely this is because it is quite possible to understand that while it may take up to six months to give an employee a chance to show that they are up to the full duties of a role, it is also possible for an employee to demonstrate earlier that they cannot perform the role properly. Japanese publicly listed recruitment business, Wheel Group owner of local brands DFP Recruitment, Key Appointments and Ethos Speech Chapman reported a revenue decrease of 4.3%, an operating profit fall of 28%,
00:02:44
Speaker
and a 33% decline in net profit after tax for the nine months ended 31 December 2023 when compared to the same period last year.
00:02:54
Speaker
Recruit Holdings, the fifth largest global staffing firm and owner of local brands, People Bank and Chandler McLeod, reported a decrease in revenue of 4.5% in constant currency for its fiscal third quarter ended 31 December 2023. However, operating income rose 12.5% and adjusted EBITDA also rose 14.4%.
00:03:17
Speaker
By segment, HR Tech revenue dropped 13.4%, while revenue in both matching solutions and staffing rose by 3.9% and 4.3%, respectively. Recruit's market cap is currently the equivalent of US$65 billion. ASX-listed talent community platform Live Hire reported its first ever positive quarter of net operating cash flow in the December 2023 quarter.
00:03:45
Speaker
Cash receipts from customers totaled $2.7 million, down 10% on the previous December quarter, but operating cash flow was down 42%.
Economic Outlook and Predictions
00:03:54
Speaker
The result was boosted by a $1.4 million R&D tax refund. Last week's pause on interest rate increases confirmed at the RBA's fight against inflation is ahead of schedule after the prior week's CPI release for the December 2023 quarter.
00:04:13
Speaker
Prices rose 0.6% in the final quarter of the year which took annual headline inflation to a two year low of 4.1%. The RBA's preferred measure of underlying inflation which strips out the more extreme price movements was 4.2% over the year to December. This was a significant moderation from the 5.1% recorded in the year to September. The result confirms that inflation is cooling faster than the RBA predicted
00:04:40
Speaker
and increases the likelihood of a cut to interest rates being the next change rather than a rise. Deloitte Access Economics says the outlook is mixed. The economy is expected to avoid a recession in 2024 with GDP forecast to fall to 1.3%, the weakest number since the early 1990s, excluding the pandemic years.
Global Workweek Innovations
00:05:01
Speaker
Some industries appear to have turned the corner while others are bracing for more pain still to come. Mining has largely defied soft global demand.
00:05:10
Speaker
but that outperformance looks likely to be tested. Cost of looming pressures will continue to plague the retail industry while residential construction is failing to keep up with population growth and Australia's housing market continues to be strained. Germany has started a six month, four day work week trial that will allow employees at 45 companies across the country to work one less day per week for the same pay.
00:05:35
Speaker
Germany is struggling with lower productivity growth and a labour shortage. It's hoped working fewer hours per week might also convince those who are not willing to work a full week to enter the workforce, helping to reduce the current labour shortage. Germany is currently struggling with a lack of workers in skilled high growth sectors, with around half of all German companies in those sectors reporting recruitment difficulties.
Employment and Legal Issues
00:05:59
Speaker
The Bureau of Meteorology, BOM, has terminated a research scientist who was caught lying about his whereabouts while working remotely. The employee was fired in June 2023 after a months-long investigation stemming from his refusal to show up on site at the BOM's Melbourne office after his approved recreational leave between late August and mid-September in 2022. The employee became largely uncontactable from the start of February and left his laptop in the office.
00:06:28
Speaker
A report of his IT systems access also showed that he was overseas during late January 2023. During the investigation, the research scientist defended that he accessed the BOM's IT system while in the US because he believed he had authority to do so. Regarding concerns about his work location, the employee argued that remote work was a common practice and acceptable behaviour among bureau employees. On his alleged early 2023 travel,
00:06:55
Speaker
The employee asserted that his passport was stolen and that it was used by someone other than him to travel. The FWC however sided with the BOM and upheld its termination decision. The Commission pointed out that if the employee genuinely planned to return on site but was held back by reasons beyond his control, he would have explained it to his employer at the time.
00:07:16
Speaker
The United States jobs market continues its winter momentum, with total non-farm employment rising by 353,000 in January on a seasonally adjusted basis, exceeding the 185,000 median forecast in a Bloomberg survey of economists. Both November and December's employment numbers were revised up 9,000 and 117,000 respectively.
00:07:41
Speaker
With these revisions, employment in the last two months of 2023 was 32% higher than previously reported, further underlining the ongoing strength of the US labor market. A former executive of a trucking company has been sentenced to jail for his role in the Eastern Freeway crash that killed four police officers in April 2020. Last month, Magistrate Daniel Rice sentenced Chris Large, former National Operations Manager at Connect Logistics,
00:08:09
Speaker
to three years in jail after he was found guilty of breaching health and safety standards. A fatal crash occurred when a semi-trailer operated by Connect Logistics collided with several vehicles while stopped on the side of the freeway. The driver of the semi-trailer Mohinda Singh was fatigued and under the influence of drugs and alcohol at the time of the incident. He was sentenced to more than 18 years in jail with a non-parole period of 14.5 years.
00:08:35
Speaker
The case prompted a seventh-month investigation into the business practices at Connect Logistics, which revealed several breaches to safety standards. This included allowing drivers to drive without proper training, fatigue management or supervision, and falsifying timesheets for drivers including Singh. In court, the magistrate called out the Connect Logistics Manager for his deceitful and deliberate actions that endangered his employees and other road users.
Pay Inequities in the UK
00:09:01
Speaker
The company, which is no longer operating, was previously convicted and fined $2.31 million after it pled guilty for its involvement in the crash. In the UK, the High Pay Centre estimated it took just under three and a half days for the FTSE 100 CEO's median earnings for 2024 to surpass the median UK workers' full-time annual salary.
00:09:25
Speaker
Median FTSE 100 CEO pay excluding pension currently stands at ยฃ3.81 million, 109 times the median full-time UK workers pay of just under ยฃ35,000. This represents a 9.5% increase on median CEO pay from March 2023, while the median workers pay has increased by 6%.
00:09:48
Speaker
Other pay data released by the High Pay Centre shows the average 2023 earnings for a partner at a top tier London law firm was ยฃ1.92 million. A big four accountancy firm partner earned ยฃ871,000. A senior banking executive at one of the top five UK banks earned ยฃ807,000.
Career Opportunities in Agencies
00:10:10
Speaker
And a minimum earning of ยฃ145,000 placed you in the top 1% of the UK's earners.
00:10:18
Speaker
And now your news is up to date for the week commencing the 12th of February, 2024. I'm Adele Last. Question of the week this week, Adele. Are there better opportunities in large corporate agencies compared to small fatigue specialists? What do you reckon? Well, this was from a conversation that I raised with you
00:10:47
Speaker
this week because I saw a post from Sinead Hurigan who works for Robert Walters and she's been there for 20 plus years and there's an announcement that she's got a new position called Global Head of Customer Experience and I noted that and thought wow that's really interesting because I believe Sinead and I are similar vintage and have had similar
00:11:12
Speaker
experience I suppose in the recruitment space albeit she started in Ireland and came out to Australia and and I've worked in Australia my whole career so I just saw it and I thought that's rather interesting we had a conversation you and I Ross and you raised a similar story with Jackie Carter I believe who worked at Hayes for a similar period of time as you as well so joined just before you did and retired last year after 25 years
00:11:40
Speaker
also in a similar role, global customer experience director out of Hayes. So two people that we both know that I guess have had a different career path to you and I, both in much larger corporations, larger recruitment agencies. And so that caught me just sort of thinking about this question around, are there better opportunities in those larger companies? And I guess for me, I'm starting to think the answer is yes. You know, when I look at those sort of examples, I think
00:12:09
Speaker
You know, these bigger companies often obviously have global reach, you know, national, international, global reach. And so the opportunities when you're larger and global seem to be there, they seem to exist in greater numbers and complexity. You know, these organizations are more complex and have more moving parts. They have better resources, they're cashed up, they've got more money usually. And so, you know, that also provides opportunities for people
00:12:39
Speaker
who work for these organizations. I think about having to move industries in my own career. I often had to move companies to move industries because I often work for smaller businesses. So if I wanted to work in a different industry and recruitment, I had to change companies. And in these bigger companies, that's not so much of an issue. You can move markets, you can move countries without leaving the company at all.
00:13:04
Speaker
and be exposed to a wider number of people and leaders and skill sets and learnings in that pathway. So my answer to this question this week, Russ, is yes, I do think there are better opportunities in large corporate agencies, but tell me what you think. So I kind of get, yes, I kind of get all of those things. However, you may have noticed
00:13:35
Speaker
that Hayes ANZ cut 220 heads compared to the previous year in the 2023 calendar year. So there were 220 fewer fee earning consultants at Hayes ANZ. And that is an example of the, should we say, rather cutthroat or brutal nature of being a publicly listed recruitment company. You have to meet financial targets. The market does not
00:14:04
Speaker
take kindly to financial targets not being met. And as we know, the single biggest cost inside any recruitment agency is staffing salaries. So if numbers are not being hit, then staffing heads, consultant heads are going. And that can be pretty tough because you may be one of those people who is in their third or fourth month. You're doing okay in a strong market. You'd be given time.
00:14:33
Speaker
to grow your desk, but in a market where numbers are not being met, it's an easy decision to make to go. We've just got to cut heads. That person's just starting and it's easy from an unfair dismissal point of view because they're within their first six months to go. So that's the downside of being in a large corporate. And look, the upside of being in a small business, and I think, I mean, my experience at Recruitment Solutions was
00:15:01
Speaker
In a classic example, I came in when the business was probably about 25 consultants. I had a strong, well, not to start with, not a strong start, a weak start, but I was a very cheap resource and I finished up doing well. I've got a couple of promotions and ultimately I got a slice of equity as part of the public or the initial public offering.
00:15:30
Speaker
of recruitment solutions limited. And that is the opportunity in small companies. You can get a decent slice of equity. You can get leadership opportunities faster. You can be a more impactful person in terms of company culture. You've really got the opportunity to be important on a larger scale in a small business. I mean, you might say being a big fish in a small pond, maybe.
00:15:58
Speaker
But certainly from an equity point of view, I know there's plenty of people that have taken a chance with a small business and finished up walking away with millions when that company was sold. So I suppose it depends what's really important to you, because I mean, I think just in listening to what you said and what I said, there's different types of opportunities
00:16:25
Speaker
in a small company compared to a big company in the recruitment sector. So you wouldn't necessarily say better opportunities, but rather different opportunities, like you're saying. And I guess it depends on what your own ambition is in terms of where you'd like to head and where you think your career path is going to go. And none of us know that, obviously, when you're stepping on those first steps on the path, you don't know where the path will end. You just keep taking one foot in front of the other. But I guess, yeah, reading
00:16:56
Speaker
Sinead's story for me was, I guess, underlyingly, maybe it's for me personally, I've had a regret that I haven't worked overseas.
Career Reflections and Preferences
00:17:03
Speaker
So, you know, I look back at my career and if I could change one thing, it probably would have been to have some opportunity to work in other countries, in other markets to get that sort of overseas experience. But then, you know, I guess that does come with other sacrifices as well. You know, what, what do you have to
00:17:24
Speaker
sustain, endure in a large corporate business that is harder to do and perhaps why I opted out. I did start my own career in a large corporate IT firm similar to Robert Walters, but after a number of years decided to opt out and kept downsizing into smaller businesses till I found one where I did feel like I was making an impact, like you said, where I was really feeling like I was noticed, where
00:17:51
Speaker
the hard work I was putting in was having a direct impact to the business, to the company, the culture, the bottom line. And I could see that and I really enjoyed that satisfaction. Yeah. Well, I suppose I'm also slightly anti-bigger companies because I'd worked for 20 months at, well, what's now known as Hayes in London. And then when I came back to Australia, they said, Oh, sorry, it's really tough. We don't have a job for you. So,
00:18:18
Speaker
The supposed benefits of being in a global global company didn't pan out for me in that instance. And that's when I had the opportunity to join Recruitment Solutions.
00:18:32
Speaker
as it was known, well, wasn't known, but became known as Recruitment Solutions. And then that actually turned out to work well for me. But then it finished up not working out because there was a change of leadership. Greg Savage had left and new CEO came in.
00:18:49
Speaker
And I was not popular anymore and there was nowhere else to go. I couldn't go to another country within that business. It was like, oh, well, if he's the CEO and he's just been newly appointed, it's a no-brainer. He's going to win out ahead of me. So it ultimately had a bit of a painful end, but it still doesn't overshadow the fact that there were a lot of
00:19:13
Speaker
benefits that I gained from being part of that smaller company that became, I would say, a medium-sized recruitment business, certainly in this country. Alright, so to close out our question, if some of our listeners are sort of early in their career and thinking about where should I work? Should I work for a large corporate? Should I work for a small specialist agency? What's your final bit of advice? Well, I think the point you made was great Adil. It depends what you want.
00:19:39
Speaker
If you're someone who's very happy in one market and just billing, billing, billing, billing, then a small company is probably a better option. But if you're someone who wants to expand markets, perhaps move to a non-fee earning role, go to another country, then I would say a larger corporate recruitment agency is probably a better bet for you.