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Episode 165 - What makes Ross so optimistic about the recruitment sector at this time?
1 Playsin 9 hours
This week we discuss reports that recruitment and facilities management giant Programmed may be the subject of a portfolio review by its Japanese owner Persol, a Victorian labour hire firm's licence cancellation over disclosure failures, and the Federal Government's $312 million plan to overhaul Australia's employment services system. We also examine a Queensland Government policy change that restores the use of Pty Ltd contractor arrangements following industry advocacy, a New Zealand case where a recruiter won compensation after workplace harassment by a candidate, and new industry forecasts showing the Asia-Pacific staffing market continuing to outpace the rest of the world while Australia's recruitment market is expected to remain flat.
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Transcript
Introduction and Host's Advice
00:00:06
Speaker
Ross, if you could give recruitment agency owners one piece of advice right now, what would it be? Stop trying to do everything yourself. The most successful agency owners know how to leverage support so their recruiters can stay focused on clients, candidates and
Wingman Recruitment Services
00:00:21
Speaker
placements.
00:00:21
Speaker
And that's exactly what Wingman recruitment helps agencies do. Whether it's sourcing, talent pooling, market research, candidate care or back office support, Wingman helps agencies increase capacity without the cost and risk of hiring locally.
00:00:36
Speaker
More productivity, more placements and more time spent where it counts. Visit wingmangroup.com.au and explore their recruitment solutions today. Welcome to Recruitment News Australia. This is the news for the 16th of June, 2026. I'm Adele Last.
00:00:53
Speaker
And I'm Ross Klenit.
Programmed Sale Rumors
00:00:55
Speaker
Adele, it seems labour hire giant Programmed might be on the market. Yes, I read in the AFR last Wednesday that Programmed's owner, Persol Holdings, the second largest recruitment firm in Japan, was considering a sale, although they issued a statement the next day denying the AFR report.
00:01:14
Speaker
Persol stated that while a portfolio review is currently underway, no formal divestment decisions have been made. They pledged to disclose any material resolutions promptly if things change, which of course they must do as a publicly listed company.
Persol Holdings Financials
00:01:30
Speaker
It would be a huge move considering Persol bought the then ASX-listed program back in 2017 for $778 million. dollars Before that, Programmed, predominantly a facilities management business, had already grown significantly by merging with its labour-hired business rival Skilled Group in 2015. At the time of that merger, their combined sales were already just under $3.5 In the most recent financial report for the year ended March 31, 2026, Persol noted that the Asia-Pacific Business Unit showed revenue growth driven by strong performance in its facilities management business, although they didn't release sales and revenue results for programs specifically.
00:02:17
Speaker
The APAC Business Unit, even with the increased sales reported, their adjusted EBITDA and operating profit declined due to some temporary factors. It makes you wonder if that result is what triggered the divestment rumours in the first place.
00:02:30
Speaker
It's possible, but for now, we'll just have to wait and see what that portfolio review leads to and whether there is a sale later in the year.
Victoria's Labor Hire Authority Decision
00:02:41
Speaker
Ross, Victoria's Labor Hire Authority has taken the significant step of cancelling the licence of construction labour hire firm 24-7 personnel following an investigation into the business and the people running it. The key issue, Adele, appears to be that the company failed to disclose Jai or Jai Zhu as a relevant person under Victoria's Labor Hire Licensing Act. The LHA found that Zoo was a senior decision maker within the business, but his role wasn't declared to the regulator.
00:03:13
Speaker
And LHA went further than that. It also found that the company knowingly provided false and misleading information about Zoo's involvement in the business. The regulator's concern wasn't simply about an administrative oversight. The allegation is that there was a deliberate failure to disclose who was exercising influence and control within the company.
00:03:34
Speaker
The case has attracted additional attention because of Zhu's criminal history. In 2011, he was sentenced to 19 years imprisonment with a minimum term of 15 years for the fatal stabbing of a 17-year-old in Melbourne. Now, based on these dates, Ross, it appears he may have just got out of prison.
00:03:52
Speaker
Well, either that or he's been running the business from behind bars, Adele. Let's hope not. While the cancellation decision centres on disclosure obligations under the licensing scheme, the case highlights why labour hire regulators place such importance on identifying the individuals who control and direct labour hire businesses.
Australia's Recruitment Reform
00:04:13
Speaker
There's a massive shake-up looming, Adele, in the government-funded recruitment sector, with the federal government announcing last month that they are moving away from that old one-size-fits-all model.
00:04:25
Speaker
I read it is being called a once-in-a-generation reform by Employment Minister Amanda Rishworth. The Federal Labor Government is committing $312 million dollars to replace the uniform model with three distinct service streams tailored to what different cohorts of job seekers need.
00:04:42
Speaker
The new set-up triages people into different levels of support based on an assessment process. There is a digital service for those who are ready to work immediately and this will return to being run by the public service, a kind of reboot of the old CES from the last century.
00:04:59
Speaker
Second tier is a service for people who need to build up their skills and confidence and the third tier is for those facing complex barriers to work and who need intensive, flexible support. It is a major change for the over 1 million Australians currently accessing these services.
00:05:18
Speaker
It seems necessary, especially since only 11.7% of job seekers found long-term employment through a provider in the 2024-25 financial year. Minister Rishworth mentioned how the current payment system incentivises providers to park harder to place people while focusing on quick placement fees.
00:05:38
Speaker
Yes, even employers are frustrated because they are being sent unsuitable candidates. So what's the timeline for these changes, Ross? There is a public discussion paper open for submissions until the end of July and then the Department of Employment and Workplace Relations will report back at the end of this calendar year.
00:05:58
Speaker
The existing provider contracts have been extended by 16 months. Final implementation of the new scheme is not slated until October 2028.
Queensland's Contractor Panel Revision
00:06:08
Speaker
The advocacy with the Queensland Government finally paid off with a major change to the Temporary and Contracted Workers' Panel.
00:06:17
Speaker
This occurred after there was an industry uproar when the Government recently announced that contractors sourced via the panel would no longer be allowed to provide services through a company structure.
00:06:27
Speaker
The government is recognising that some contractors work as PAYG employees or as a sole trader through an ABN, while others operate through their own company. The changes are designed to accommodate all arrangements, giving recruitment agencies and contractors more choice in how they work together.
00:06:45
Speaker
Sounds like this was desperately needed to fix some unintended consequences that cropped up. Apparently, when the state started strictly enforcing deed conditions for supplied workers, it created a lot of friction for recruitment agencies on the panel, hence the RCSA's intervention.
00:07:03
Speaker
Exactly. And to formalise this, the government is going to circulate a deed of variation to update the definitions and scope of the arrangement. This should streamline how the 170 plus suppliers on that panel operate.
00:07:16
Speaker
There are some strings attached though. The government is enforcing the requirements for recruitment agencies to ensure all workers employed through an entity have the necessary insurances and be covered by work cover where required under Queensland's arrangements.
00:07:31
Speaker
It is a fair trade-off and once this variation is finalised, it will provide much-needed clarity for both the agencies and the government entities they support.
Workplace Safety and Compensation Case
00:07:39
Speaker
Across the Tasman, a former recruitment agency account manager has just won a payout after harassment from a candidate. Mariana Kennedy, a former employee of Remarkable People, won a $20,000 payout from the New Zealand Employment Relations Authority.
00:07:56
Speaker
The candidate from her caseload was employed by Remarkable People and given work placements. It was Kennedy's role to be available to candidates generally and to communicate with them about their placements with Remarkable People's clients. However, this particular candidate engaged in behaviour that included late night calls, texts, and even unannounced visits where he tried to get into her locked office. the Candidate sent emails calling her a hot boss and saying she could win his soul.
00:08:31
Speaker
the issue seems to be that the company have handled this ineptly. Kennedy's manager told her it was just her job to communicate with him. Even after she told him she didn't want to speak to him and that she felt unsafe, management eventually put some safety measures in place, but the candidate didn't stop his relentless stream of messages.
00:08:49
Speaker
When she asked to work from home because she didn't feel safe in the office, her manager basically told her they could just call it a day and end her employment right then, which is why the ERA ruled that the company's actions fell short of what a fair and reasonable employer should do. The employer breached their duty of good faith and failed to provide a safe workplace.
00:09:12
Speaker
It's a wake-up call for employers. Along with that $20,000 compensation, the company has also been ordered to pay her for five and a half weeks of lost wages.
APAC Staffing Market Projections
00:09:22
Speaker
Adele, the latest data from staffing industry analyst, projects the APAC staffing market will grow by 7% annually through to 2028. Although the bad news is that this year, China is forecast to overtake Australia as the region's second largest market.
00:09:38
Speaker
The 7% figure surpasses global growth rates of 3% in 2026 and is forecast at 4% for each of the next two years, solidifying APAC region's status as the fastest growing staffing region in the world.
00:09:54
Speaker
Based on 2025 revenue of US$173 billion, us dollars the APAC region accounted for 27% of the global staffing market, generating sales of US$639 billion.
00:10:08
Speaker
China's staffing sector revenue is projected to grow 13% for 2026, while Australia is forecast to have a year of no growth and remain at $28 billion. dollars Meanwhile, Japan remains APAC's largest and the world's second largest staffing market behind the US, with a projected revenue of $76 billion us dollars and growth in
00:10:35
Speaker
Question of the week.
Recruitment Industry Optimism
00:10:37
Speaker
This is for you, Ross. Why are you so optimistic about the recruitment sector? So I guess you're asking me about the presentation that I gave in Sydney last Thursday. Yes, I wasn't able to be there, but I was very interested to understand why you are announcing optimism in, for what is most people, a pretty tough market at the moment.
00:10:57
Speaker
Absolutely it is. But as I present in that 30, 35-minute presentation, There's way too many things in the headlines that are, let's say, scary or not representative of the stuff that's really going on beneath the surface. And what I show in that presentation is what is going on beneath the surface and why I believe that that means that the recruitment sector is very well placed. Not everyone, and that is part of my presentation, not everyone, but I do think the smart players in the sector are in fact going to have a new golden age in the not-too-distant future.
00:11:35
Speaker
So you're trying to tell me that the the news is wrong, Ross. What I'm reading in the headlines isn't true. are you sure? No, I'm not saying that. I'm just saying that there's certain pieces of information that make good headlines, but the contrary to that, which may occur some weeks or months later, is then not headline grabbing. And okay, so like so let let me give you one classic example. So everyone's seen those headlines about AI is taking jobs and AI is going to decimate industries and decimate professions and so on.
00:12:14
Speaker
ah you've You've seen those sorts of things. Absolutely. Right. And everyone has... But the evidence so far, and I stress so far, and in the presentation, I show four separate labour market research papers ah in different parts of the world that all demonstrate pretty much the same thing, that in aggregate, labour demand has not changed.
00:12:34
Speaker
And there's been a slight change in some sectors and certainly some impact in entry-level hiring. But despite what was said a year ago by the CEO of Anthropic that there'd be 20 to 50% unemployment within five years. We're not seeing anything like that at the moment.
00:12:56
Speaker
So how do you explain this? Well, it's pretty it's pretty simple ah that the potential of AI to to supersede jobs or tasks within jobs might be there in theory, but what we're seeing in practice is not that because what we're seeing and the evidence shows very clearly is there's no aggregate productivity gains inside organisations in almost all organisations. There may be some individual productivity gains, but if you looked at um particularly this MIT study, that I quoted from last September, we're looking at 40 billion US dollars of spend on AI initiatives and there's been zero return reported by 95% of organisations. And even two weeks ago, the COO of Uber was saying, despite all the billions we've put into AI, we're not seeing productivity improvement. So This is the factor, the difference between theoretically what AI could do with ah the labour market and what it is doing at the moment. Look, locally on on you know a grassroots level, recruitment agencies are seeing some significant changes in their own businesses in terms of the way they've structured businesses, in terms of the numbers of staff that they need or don't need now. in terms of the tech available and the way it's using the AI. I mean, we're seeing the impact that it could have to jobs here in in real terms. So how is this doesn't match up in my mind?
00:14:34
Speaker
Well, it's different with recruitment agencies, predominantly very small businesses. It's much easier to extrapolate an individual productivity gain across the organisation when it's three or four or six or 10 or 20 employees.
00:14:51
Speaker
What we're talking about in terms of the headline data are these organisations with not just thousands of employees, but tens of thousands of employees. They're not seeing the productivity improvements. And i'm sure people have seen headlines about work slop.
00:15:07
Speaker
yeah What is work slop? So work slop is when someone uses AI to magnify not very good work and that then creates problems for people further in the chain inside the organisation. And this work slop is causing massive issues inside organisations. How specifically does that relate to recruitment?
00:15:30
Speaker
So not directly in recruitment, but where tech's unintended consequences, let's take that part of it, is impacting employers, hiring managers, ta is that for the first time, technology advances are being used by candidates, by job seekers.
00:15:52
Speaker
See, previously, before the launch of ChatGPT, any significant technology outside Google search that was available to employers cost a lot of money within an ATS or an assessment system or whatever. But here we have, with the launch of ChatGPT, and Claude and everything else. the Candidates now have access to these models and job seekers are using them to, for example, mass apply.
00:16:19
Speaker
When they're mass applying, they're using large language models to improve their resume. So it matches the job description. And guess what happens when a lot of candidates are using the same large language models?
00:16:35
Speaker
mapped against the same job to create cover letters and resumes. We're obviously going to see it all looking very much the same. That's right. And so we also see and large language models prefer content produced by them. So if an employer is using something that's more chat GPT powered, it's demonstrable that Any resume produced by ChatGPT will be preferred, not every resume, but there's a definite preference.
00:17:06
Speaker
That makes it very difficult to work out who to phone screen, who to interview. So guess what the ultimate outcome of all that is for internal hiring or a hiring manager?
00:17:18
Speaker
Well, that would make things really difficult, I would assume, for them. They'll be overwhelmed with quantity and then the quality all starts to look very similar. It must be very hard for them to find what they need in that. Exactly. So what's their default after having invested two or three weeks in running their own ad and doing all of the screening, getting nowhere with candidates that they've interviewed? they call their favorite recruiter.
00:17:42
Speaker
Exactly. What's the advantage most and certainly the best recruitment agencies have? They've got to have those deep relationships with the best candidates. That's right.
00:17:55
Speaker
They have the deepest relationships with the best candidates. They can provide that personal endorsement. This candidate's been registered with us for seven years or six years. We've placed them once or twice. We've recommended them being on six interviews.
00:18:09
Speaker
ah We've got their academic transcript. We've got their professional association membership. All of that stuff that provides comfort that the candidate is who they say they are, recruitment agencies possess at a much greater level than internal hiring.
00:18:26
Speaker
And that is going to be, look, and I would assert that that's always been an advantage, but I think it's an even greater advantage in this day and age. I think you make a really good point there around not just having the deep-seated relationships with candidates, having all of that knowledge and information about the candidate, but also making that recommendation. I think that's really underestimated in the value of the relationship between the recruiter and the hiring manager, the the client, because that's what they're wanting. They want your advice. You know, you ring your accountant because you want the best tax advice. You just don't want them to read out tax legislation. You want to understand what they understand. Perfectly identified, Adele. And that's why my talk is bracketed at the end. I'm very optimistic about the recruitment industry, but not for everyone because it is going to be those agencies that have those depth of relationship. If you're an agency that's just relying on running an ad on your favourite job board and then screening that ad response and then and interviewing and forwarding the best people to the hiring manager, that's that's only replicating what the employer is ah doing. Whereas if you've got that confidence and you can say, here's the best three candidates and this is why they are the best three candidates and this is why you should interview them, then that is going to give you a very big advantage over those, let's call it, generic resume referring recruitment agencies. Okay, I'm starting to see where your optimism is coming from. That's that good good. I think that this sounds like a very different model to the way many recruitment agencies have been set up to date and maybe are thinking about setting up or having the strategy around how they'll move forward in this. So it's definitely a really challenging time, I think, for anybody that's owning, running, managing a recruitment agency right now because they've really got to understand
00:20:26
Speaker
how that model needs to adapt to the market. But this presentation of yours, I have heard parts of it. I know that you updated It sounds ah so very valuable in this current market. If somebody wants to find out more or even if they want to deliver this presentation to their clients, like what a great advantage you would have to tell your clients about the impact of the headlines in the market and what it means down the line. Can they do that, Ross?
00:20:53
Speaker
Well, yes, this particular version of the presentation is designed for recruitment agencies and an internal conference, but a slight tweak makes it perfectly fine to deliver for clients. Like many employers are probably just looking at the headlines and they don't really understand the full picture. As I think you can probably hear, Adele, I'm pretty passionate about it. And certainly someone after the presentation on Thursday called it mesmerizing, which was very nice to hear.
00:21:23
Speaker
If you haven't heard this presentation, I think you should absolutely reach out to Ross. Gladly we'll accept your contact. And I think most people know how to get hold of me, Ross at rossclinit.com or connect with me on LinkedIn or via RNA.