Ad­corp re­cov­ers losses from labour law changes

CityPress - - Business -

Labour bro­ker Ad­corp has man­aged to “re­cover” about 80% of the dam­age done to its mar­gins by the amend­ments to labour laws last year.

The con­tentious and widely mis­un­der­stood amend­ments in­tro­duced the idea of “joint” re­spon­si­bil­ity for con­tract work­ers af­ter three months on a job.

In a trad­ing up­date this week, Ad­corp re­peated an ear­lier claim that it lost 20 000 place­ments, 20% of its to­tal con­trac­tor head count, as a di­rect re­sult of the changes.

By re­duc­ing its own cor­po­rate em­ploy­ment by 561 as part of a cost-cut­ting ex­er­cise, and gain­ing 6 300 new con­trac­tor place­ments, much of the dam­age had been re­versed, it said.

Last year, the com­pany’s ini­tial ex­pe­ri­ence fol­low­ing the changes to the Labour Re­la­tions Act were ex­trap­o­lated to pre­dict a colos­sal na­tional blood bath of 245 000 con­tract jobs.

This as­sumed no re­hir­ing of work­ers on a per­ma­nent ba­sis, but ac­cord­ing to Ad­corp’s an­nounce­ment, the losses “were prin­ci­pally the re­sult of cer­tain clients opt­ing to of­fer con­tract work­ers per­ma­nent em­ploy­ment”.

The es­ti­mate came from Loane Sharp, for­merly Ad­corp’s in-house an­a­lyst. He now works for the Free Mar­ket Foun­da­tion think-tank.

Ad­corp has ex­panded into the Aus­tralian mar­ket af­ter con­sol­i­dat­ing its po­si­tion as South Africa’s largest labour in­ter­me­di­ary by ac­quir­ing ri­val Kelly Group, all since 2013.

In a sep­a­rate cau­tion­ary an­nounce­ment this week, it said that “ne­go­ti­a­tions re­lat­ing to, in­ter alia, part­ner­ing with fi­nanciers on its in­ter­na­tional ex­pan­sion strat­egy” were on­go­ing.

Ad­corp’s share price has been on a con­tin­u­ous de­cline since July last year, more or less when it made its ini­tial as­sess­ment of the ef­fects of the le­gal changes.

The share has fallen from more than R30 then to R18.05 this week.

– De­wald van Rens­burg

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