One of the universal truths in our industry at present is that recruiters are being asked to jump higher, run faster and be smarter...for less money. The pressure on margins continues to be a concern for business owners, from a profitability point of view AND in terms of staff management (it's hard work motivating consultants to give 100% effort to a job with continually reduced returns).
This week, I was told a story that shocked me. It seems that at least one agency in Sydney has found a way to ensure that they can compete for low margin work by charging the temporary employee 2.5% of their gross wages as an 'administration and insurance' fee.
Effectively this means that the agency can bid for low margin work and charge clients less than those agencies who pass these 'on costs' to the client. I cannot even believe that someone is doing this. Well I can, because they want to make money and perhaps they think that this is the only way they can do it, but it is such a short term solution. Why? Because at some point, the temporary employees will stop agreeing to work under these conditions.
The gentleman who brought this to my attention (see comments on this post), is not a rookie employee. He is working in a project management role, and the 2.5% of his gross wages that his agency is garnishing represents a significant amount of money over the length of his assignment.
The agency is definitely having their cake and eating it too. They may be able to look their client in the eye and say that they are only taking a 7% margin (or whatever it is) for the contract employment of 'Bob', but, in fact they are making significantly more, because they merely moved the cost of employment from the client to the employee. When you think about it, it would be like my boss docking my wages to cover the office rent. I don't know the name of the agency doing this, and I am not going to ask. But what I am going to do is make sure our consultants tell each and every one of our candidates that people2people does not take money from their temps' wages to cover administration, insurance or anything else that is not governed by law.
And I will make sure that our consultants tell every single client that we do not pass on the cost of doing business to our temporary work force, that each employee is paid exactly what they have agreed to, and what they are entitled to. This industry has a chequered reputation.
Candidates love to hate us. It makes me very disappointed that there are agencies out there giving candidates a very good reason to think that we are greedy, dodgy cowboys.