Adcorp recovers losses from labour law changes
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