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RNA Episode 123 - What will the recruitment industry look like in 2035?
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RNA Episode 123
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Transcript
Ephraim's New Venture and Backlash
00:00:11
Speaker
You're listening to Recruitment News Australia. I'm Adele Last. And I'm Ross Klenit and it's the 19th of August 2025. Adele, what's the big news in the recruitment industry this week?
00:00:21
Speaker
Ephraim is back, Ross. He is back. And how do we know he's back? Ephraim Stevenson on Friday last week posted on LinkedIn that he was launching a new consulting business called Ephraim's.
00:00:34
Speaker
The post was loaded. There were a number of comments on it that I could see mainly from ex-staff who were very upset by this news and accused him of, you know, trying to start up another business when he had owed the money and he had failed in his previous businesses.
00:00:50
Speaker
And I sent it through to you, Ross, and an hour later you told me that it had been taken down. So he's back, but so um it's going to be a very interesting path. Yes, clearly that LinkedIn post was not popular. However, Ephraim's.com website is live and it tells me, I'm looking at it, strategic growth advice for recruitment founders grounded in real experience.
00:01:14
Speaker
Ephraim Stevenson has launched, scaled and exited multiple recruitment businesses across Australia and the UK, tailored support for recruitment leaders who are serious about growth. What credibility, Adele, do you think Ephraim has to be offering such a service?
Ephraim's Business History and Credibility
00:01:30
Speaker
He's definitely very bold. I'll give him that. But for those that don't recall the story about Ephraim Stevens, maybe you could give us a recap, Ross.
00:01:39
Speaker
Yeah, briefly, Ephraim, originally from the UK, came out to Australia, started his recruitment career in Australia. He established ah Design & Construct, Kona & Co. Both those businesses ultimately were closed.
00:01:54
Speaker
But he's most well-known for the Collar Group. Collar Group was founded in July 2021 and was a very public growth story. And Ephraim was constantly on LinkedIn promoting the growth of the business.
00:02:10
Speaker
And he said it was $45 million dollars in turnover by the end of the 2023 financial year. And in the 2024 financial year, he was hoping to triple that.
00:02:23
Speaker
And unfortunately, that's not what happened because the business went into administration early in 2024.
00:02:32
Speaker
And more so than just that terrible story, it was the way this was handled. As you mentioned, he was very vocal on all sorts of um public places around how his business was going. He was all over social media. He was in um presentations on stage. You know, there was all sorts of places where you heard him kind of really bragging about how well he was doing.
00:02:54
Speaker
And then to see it so dramatically fail with very little communication from what we understand to staff because they were public about about that. ah Many people were just kind of, you know, logged out of the system on the Monday.
00:03:07
Speaker
ah There were stories of somebody who'd come over from the yeah UK and lost their job a week later. You know, it was a terribly, you know, handled situation. And I think that's what's left a really bad taste in everybody's mouth.
00:03:20
Speaker
Well, particularly because it happened twice. i mean, the business went into voluntary administration on the 27th of May 2024. And then within about six or seven weeks, Ephraim had retaken control of the business because there was not another offer.
00:03:38
Speaker
to the company administrators for control of the company. So Ephraim took control back with the support of a positive. And within six months, the business had failed again and was effectively liquidated. So I think that is probably the real point of concern that it wasn't just once, it was twice under the Collar brand that Ephraim let people down. And certainly there were some very, very angry people posting on LinkedIn.
00:04:07
Speaker
ah Of course, the very disappointed people who made a commitment with their employment to Ephraim and Collar Group who were without work. So perhaps he's decided starting running a recruitment business isn't for him, but he can consult to others that are doing that.
00:04:25
Speaker
Who would pay him to tell them how to run their business or scale or grow their business? Well, one thing we know for sure, he's certainly going to try and make this a big thing as well because he's also launched The Trench as a podcast.
00:04:39
Speaker
I don't know how he's going to go with this. Look, there is a possibility the podcast could be his salvation if he's prepared to be really real and humble and tell his story and and people can hear what actually happened and what he's learned.
00:04:51
Speaker
There is a potential for him to phoenix out of this. But if he just launches as if nothing else happened and, you know, he's a top business advisor, I think he is um going to find, know, a bit of a root shock.
00:05:03
Speaker
I'll file this under, let's wait and see. i do not have high hopes for the rebirth of Ephraim.
APSCO's Anti-Age Discrimination Program
00:05:12
Speaker
Our next news item is the APSCO Age Inclusive Recruiter Program has been launched, Ross.
00:05:18
Speaker
Yeah, last Tuesday, AppsCo sent out a press release and let me read. The initiative aims to recognise recruiters who demonstrate a strong commitment to fostering an inclusive work environment that values and supports employees of all ages.
00:05:33
Speaker
Participating agencies must commit to educate and train senior leaders and recruitment consultants to improve their knowledge and understanding of age discrimination and by doing so, be more considered and well-informed about recruiting people age 50 plus.
00:05:48
Speaker
This is a fantastic initiative started by APSCO and I believe there's been some flagship agencies that have joined up to the program to get it started. ah Talent Quarter, Sirius and... Aquent.
00:06:05
Speaker
Aquent. Thank you. um So it's great to see some big brands supporting it and I think this is a really good step in the direction of helping to raise the awareness of age discrimination, bring it to the forefront and tackle it as an industry ourselves.
00:06:20
Speaker
Well, it's certainly a topic that we've covered before, Adele. I think it's a critical one that all recruiters take a leadership role in. So I celebrate APSCO for launching this and i will follow this with a great deal of interest.
Economic Indicators from July Jobs Data
00:06:35
Speaker
Latest labour market update. ABS released the July jobs data and it was good news. Yes, employment rose by 25,000 and unemployment decreased by 10,000 people. So we saw a fall of 0.1% 4.2% in July.
00:06:56
Speaker
That was very good news, particularly after the, let's face it, quite shaky results in May and June. There was stagnant employment growth. So we had a 25,000 rise in our workers, and that was above the monthly average of the past year of 22,000 a month. But there was more good news, Adele, because the type of jobs were um the best type.
00:07:24
Speaker
Full-time employment. That's right. So we had 60,000 added to full-time employment and there was the 36,000 reduction in part-time employment. So good news for the federal government. So I think they'd be very, very happy with that result.
00:07:41
Speaker
And by state, Victoria recorded the highest unemployment at 4.6 and Tassie had the lowest at 3.8. New South Wales, in fact, produced the best month-on-month result because in ah June, 4.4% was the New South Wales unemployment rate and that dropped to 4% in July. So that's very good news for recruiters in New South Wales.
00:08:08
Speaker
Things are looking good. They are.
Contrasting Financial Results in Recruitment Industry
00:08:11
Speaker
And we have some company results to share, Ross. Yeah, some good news and bad news. I'll start with the bad news first. ah Page Group, the owners of the brand Michael Page, reported gross profit for the six months ending 30 June went down 9.7%. That's global result It was worse in Australia. Page Group Australia was down 13% and they said they had ongoing challenging conditions across most states.
00:08:41
Speaker
So not good news, but Page Group are really just following in the footsteps of the other big white collar brands. However, we do have a business bucking the trend, unlisted companies.
00:08:52
Speaker
Company Ambition Group, so they own the brands Ambition, Watermark Search, Amtech, and Accountability. They released their results for the first six months of the 2025 calendar year. Revenue was up Gross profit was up twenty three percent twenty three $1.4 million. dollars EBITDA was nearly $2 million. dollars And so that was a turnaround, a massive turnaround from last year.
00:09:26
Speaker
So that's very encouraging news. And the company said the strong net fee income performance was driven by Blov plan results from Watermark plus the London and New York City offices. So doesn't suggest that White-collar recruitment in Australia was a huge contributor, but certainly Asia and the UK and the USA contributing to a very good result there for ambition.
00:09:54
Speaker
Good to hear some of those good news results. Thanks, Ross.
AI's Impact on Recruitment: Automating Low-Skill Tasks
00:09:57
Speaker
Stay tuned now for our question of the week.
00:10:09
Speaker
Question of the week. What will the recruitment industry look like in 2035? Bit of futurism going on, Ross. ah Well, of course, the honest answer is we don't really know, but we're going to have a little bit of a go at um speculating today.
00:10:30
Speaker
so do you want me to start? Please. All right. Well, what I'm going to refer to is a research paper that was published two months ago in the National Bureau of Economic Research.
00:10:44
Speaker
And it's by David Autor and Neil Thompson. And the title of the paper is Expertise. So let me just quote the summary. It's an explanation of the non-uniform impact of ai on the world at work.
00:11:00
Speaker
In short, it explains that AI can be applied to tasks of differing levels of expertise from the low skill to the high skill. Where AI is applied has divergent impacts on both the size of that occupational sector and of the compensation and status of that sector.
00:11:18
Speaker
If you automate the low skill tasks, the sector shrinks. because the experts who are left will now also be the coordinators of AI who can X100 the output.
00:11:32
Speaker
If you automate the high skill tasks, the sector expands because the barrier to entry has come down, increasing the suitable labor supply. But this also will reduce the compensation as supply overwhelms demand.
00:11:49
Speaker
So it's pretty obvious where recruitment is at the moment. It's the low skill tasks that are being automated and that shrinking our sector. And I think that's already being seen.
00:12:04
Speaker
And so those that remain are going to be those that are going to be very proficient at using generative AI to maximize the return of that GenII on low skill tasks.
00:12:19
Speaker
you agree, Adele?
Will AI Replace Complex Recruitment Tasks?
00:12:21
Speaker
I agree to an extent with this, but I also disagree because if you start to replace the more complex tasks, the higher skill tasks, as the article says, which allows lowers the barrier to entry, it potentially wipes the barrier out altogether, meaning they're not required. So,
00:12:42
Speaker
As an example, if a client, if all of the administrative tasks, let's say even candidate sourcing and, you know, getting candidates all the way, you know, even interviewing candidates and, you know, if the whole process is automated, the it's very easy for the client to then say, well, I don't need a recruiter. I can access these tools myself.
00:13:05
Speaker
I don't need to use a recruiter at all. I'm going to go out to the market. I'm going to source, screen, interview, all of the things right up to, you know, making the decision about the candidate making an offer. So i sort of think that if you do attack the high-skilled areas with an AI lens and say, okay, that's the stuff we should also look at, it's going to expand, I'm not sure I agree with it. I think that it's going to be the beginning of the end. i if If I extrapolate out the timeline here of going, okay, what does the recruitment industry really look like in the next 10 years?
00:13:39
Speaker
based on our current adoption of AI and our and our fear, I suppose, of what it's going to do, it's going to be a slow road. But at the end of the road, i can't see there is much work for recruiters. It sounds a bit doomsday-ish, but there's not much that that can't be replaced. Virtually everything, I think, in the recruitment process could be replaced. Whether we want it to be replaced as humans is a different argument.
00:14:07
Speaker
As humans, we may want to have human elements in there around decision making, things like negotiating offers. But I think that eventually will be there won't be a job.
00:14:21
Speaker
No, don't agree with that at all because I think, I mean, you just take the very pointy end of the recruitment process, the putting of an offer, the negotiating of an offer, the handling and of objections, I still think the credibility of the person doing that will matter a lot.
00:14:42
Speaker
a lot And that is that premium, I think, will only increase, which will mean the premium on the best recruiters will go up.
00:14:55
Speaker
They will be even better paid than what they are now because they're able to influence so the very best candidates to take one offer over another.
00:15:10
Speaker
And the average recruiters just simply cannot do that. Well, firstly, they're probably not going to be dealing very often with those high-quality candidates. And when they do, they're not going to have sufficient sway or influence to have them do what the client wants them to do, which is to accept the offer.
00:15:28
Speaker
I don't disagree with that. I think you're right that that AI in our industry will wipe out the lower-skilled or, you know, replaceable elements of people who are, recruiters who are doing very, you know, basic mundane elements of the job and who aren't influencers and who aren't able to negotiate.
00:15:47
Speaker
It will definitely wipe out, you know, a big chunk of our industry. We're already starting to see that. And I agree with you that those that are left will hone those skills or have very well honed negotiation, decision-making, influencing skills with a client and candidates.
00:16:03
Speaker
But that to me is going to be fewer, not more. I can't see how it's going to expand the industry. It'll expand the industry in dollar value of what you get paid, but it's not going to expand the industry in the numbers of people in the industry because the the skill set will become such a high combination that very few are able to master it.
00:16:22
Speaker
I agree. i think the total size of the recruitment industry will be by 2035, I suspect,
00:16:35
Speaker
um I'm going to say 20% smaller than what it is now, because the workforce, based on the rate of growth, is certainly going to be a lot larger in 10 years' time.
00:16:47
Speaker
So I'm not expecting... the number of recruiters to plunge by half. It could happen. I don't expect it will happen. But I think the number of recruiters as a proportion of the total number of jobs in the economy will be much less.
00:17:05
Speaker
Yeah, and i think our industry is potentially one because these are big decisions. You know, someone changing a job, someone employing a staff member that has an impact to their business. These are big decisions that people make.
00:17:18
Speaker
We're likely to be an industry that hangs on to the human element as long as is possible.
The Enduring Value of Human Recruiters
00:17:24
Speaker
if If the end game of AI is to completely replace humans in virtually every element of what we do, there are going to be some sectors we all recognise that we're we're not going to be very easy we're not going to let go very easily. So things like the medical profession, you know, we want to see a human doctor. We don't want to be assessed effectively.
00:17:46
Speaker
for ah you know a cancer diagnosis or something quite serious, we don't want ah an AI telling us that. We want a human involved. And I'm not suggesting recruitment is as serious as that, but those kinds of things where we want a human involved, we are going to hold on to that for as long as we possibly can until out ah our adoption and adaption to the technology itself starts to become the norm. And we see this in lots of industries. You know, if you think about something like passport control, where we would have thought that was very important that a human is assessing you and making sure you look like you do and that, you you know, everything matches up before we let you in the country, you know, has very easily and very quickly been replaced by artificial intelligence. And it's it's a preferred method now. Who of us would go and line up to talk, to go through human passport control when you can stand in the queue for two minutes and put your passport through and go through?
00:18:42
Speaker
And it's the same self-checkout in supermarkets. The expansion at my local Woolies is self-serve checkouts have gone from, don't know, there was maybe eight or 10.
00:18:53
Speaker
And I think there's like double that now. And I mean, clearly Woolies and other big supermarkets have an incentive to do that because it's more cost effective. But clearly, if customers didn't really want to do that, then they wouldn't be doing that.
00:19:07
Speaker
And I think the advances in tech show how quickly that if we get what we need from the tech, then we're just happy with it. And I suspect, again, going back to recruiters, that all of the process parts, we're very happy for tech to do all that.
00:19:26
Speaker
But at the pointy end of the process, whether you're a hiring manager or a candidate, the most consequential decisions are most likely still going to be ones facilitated by an expert recruiter.
00:19:39
Speaker
And there's probably a legal element to that as well, because if you make a decision to hire somebody and they cause significant loss to the business or death or, you know, if that person is negligent in their job, nobody wants to trace it back and say, well, the AI hired them and that's why it was a mistake in, you know, a glitch in the program.
00:19:58
Speaker
There ultimately has to be a human that sat there and said, yeah we decided to hire that person and we trained them this way and we you know gave them instruction to do the job this way. And it's the human element that if we're taking a job, then we're taking a job to work for a human, to work with humans in in most cases. And so we want the human recruiter or the hiring manager to be the one making the decision or facilitating the process that, well, you know the most important part of the process, which is the offer process. So
00:20:29
Speaker
ah you know I still see that being a very important role, and I just think it boils down to the clear fact that those key human credibility, expertise, influencing skills, as important as they've always been in recruitment, I just think the – the significance of those skills will be like a factor of four or five times compared to now. And those recruiters who have those skills are going to be earning half a million to a million a year, maybe more, because they're just so um skilled and so sought after.
00:21:08
Speaker
Well, I look forward to your version of the future, Ross, where I can be earning a million dollars and sitting back on my ah lounge chair by the pool drinking a cocktail or two and earning a million dollars with.
00:21:22
Speaker
Well, one thing's for sure, Adele, I will be retired before you do that. So anyway, I'll look forward to returning to this question at periodic intervals. It's an interesting discussion. Yes, we'll continue on.