The impacts of the proposed ‘Same Job Same Pay’ (SJSP) legislation is putting some doubt around the future of labour hire businesses like PeopleIn. PeopleIn’s share price has fallen over 10% on the back of record FY2023 earnings guidance announced last week, however the lack lustre share price over the last 6 months is likely due to SJSP bubbling away in the background. Investors are now more concerned about SJSP and the uncertainty it creates for PeopleIn’s businesses model than the current performance of the business.
However, the proposed legislation is not going to sail through without resistance. Business has united to fight against the ‘Same Job SamePay’ legislation because they believe it is unfair. From the AFR this morning:
The entire business community, including miners and farmers, has declared war on the Albanese government over its proposed labour hire laws, arguing the changes will remove reward for effort and ultimately stifle wage and business growth.
In the biggest joint campaign of its type, eight peak organisations have launched a multimillion-dollar campaign – which they vow will run indefinitely if need be – and which mocks the government’s “simplistic” sales pitch that cracking down on the use of labour hire was about “same job, same pay”.
Business Groups are saying:
”the proposed laws go beyond so-called cowboy labour hire and will not only stifle its legitimate use, but also hit subcontractors and independent contractors.
“The so-called ‘same job, same pay’ proposal does not mean equal pay for men and women. It does not speak of fairness and justice, as its name falsely represents,” the groups said in a joint statement.
“It means by law, employers will have to pay workers with little knowledge or experience exactly the same as workers with decades of knowledge and experience.
Images from the ad campaign fighting Labor’s IR agenda.
“It means by law, you cannot earn better pay by working harder or longer, if your colleague does not share your ambition or work ethic.”
They also contend the laws will deny companies the flexibility needed to enlist labour when needed on a temporary basis, such as during a ramp-up of operations.”
Tony Mahar from the National Farmers Federation (NFF) said:
“Same Job, Same Pay would be a red tape minefield for farmers.
“Most farms are small, family-run businesses that don’t have lawyers or an HR department to turn to.
“It would spell chaos and confusion at peak periods like harvest where contractor numbers on farms can surge 500 per cent for just a few weeks.
“This isn’t about fairness. We can’t pretend every temporary contractor has the same value as a longstanding employee. We should be allowed to reward loyalty and experience.”
What does all this mean for PeopleIn?
SJSP is creating a lot of uncertainty for labour hire businesses. Labour hire is a much needed service for industries with large seasonal variations in labour requirements, eg, farming where labour requirements vary by 500%.
I don’t think the need for labour hire services is going away. However, the red tape and certainty associated with the new legislation will most likely increase costs and reduce margins for labour hire businesses.
The best case scenario for labour hire service is that the SJSP does not see the light of day, and the current ‘shakeup’ roots out the few ‘cowboys’ in the sector that are tarnishing the reputation of a necessary and legitimate industry.
Uncertainty around SJSP and it’s impacts is likely to continue for months, I don’t think there is any urgency to buy PeopleIn right now, even though it seems on the surface to be a wonderful business at a very cheap share price. It’s a hold for me while business groups fight it out with the unions and the Australian Government. Hopefully a fair and sensible solution is reached that supports all sectors.
Held: IRL (2%)