Ignite shareholders wake up (and other news of note to end the year)

To finish 2020 here’s a quick summary of good news, not-so-good news, the same old story and, to conclude, I offer a few things to think about as you contemplate 2021.

The good news

• Australia is officially out of recession, with the economy expanding 3.3 per cent in the September quarter as restrictions eased and businesses reopened. The result follows a massive 7.0 per cent  contraction in June and represents our fastest quarterly expansion since the mid-1970s.
• Full-time employment in November increased by 84,200 to 8,725,700 people, and part-time employment increased by 5,800 to 4,135,000 people. 
• In seasonally adjusted terms, in November 2020, monthly hours worked in all jobs increased by 42.8 million hours (2.5%) to 1,752 million hours.
• The unemployment rate decreased 0.2 pts to 6.8% (although it is 1.7 pts higher than a year ago) with the total number of (officially) unemployed people decreased by 17,300 to 942,100 (although increased by 240,700 over the year to November 2020).
• Advertised job vacancies increased by 13.9 per cent in November. The average number of job ads per month had increased to 145,684 in November. That was 13.9 per cent more than October and just 4.7 per cent fewer than February, before the pandemic took hold.
• The number of Australian businesses that have become insolvent has actually fallen in 2020. The data suggests that if 2020 had been similar to the previous two years, then an additional 800 businesses (on top of the existing 2,880) would likely have entered external administration by now, and a further 1,400 would do so before the end of the year.

Not-so-good news

• But despite the return to growth, the economy is still 4.2% smaller today than where it was in December last year – and in per capita terms, that figure is closer to 5% (representing an income loss of $850 per person in the quarter).
• In the seven months from May to November total employment has improved by 706,000 jobs however 74 per cent of these jobs (521,000) are part-time.
• IFM chief economist Alex Joiner saidit seems clear that “the vast majority of employment growth” over recent months has come from people returning to old jobs rather than businesses creating new ones.
• ABS data shows there are plenty of employees who would like more work: Underemployment remained stubbornly high at 10.4 per cent in October.

The same old story

The sorry mess that is the performance of Ignite Limited (formerly Clarius, formerly Candle) continues under the failed leadership of Executive Chairman, Garry Sladden.

The 2020 Annual report contained its usual morass of:

• inept financial results (“….a full-year loss from continuing operations after tax of $3,777,000…),
• reheated initiatives (“…..the Group had already been focussed on reducing its fixed labour and property infrastructure costs while at the same time maintaining and growing revenue and improving consultant productivity..”),
• new leadership appointments (“The first half saw the Specialist Recruitment division leadership refreshed in all key markets, with new external appointments in NSW and Victoria…”)
• auditors’ warnings as to the dire state of the business (“… that a material uncertainty exists that may cast significant doubt as to the Group’s ability to continue as a going concern.”)
• and a special brand of blind-faith optimism for the company’s future that for which not a shred of credible evidence exists (“….your Directors are confident about the prospects for the 2021 financial year given the significant work undertaken in the 2020 financial year.”)

Thankfully some shareholders are still paying attention and major shareholder Octavium Capital requested, on 8 October, two new directors be added to the Ignite board, without incurring any directors’ fees.

The next day Sladden’s email response was short and to-the-point: there are no board vacancies and we don’t need any additional help.

Subsequent to the AGM a special general meeting of Ignite shareholders, to vote on the proposed new directors, will be held tomorrow (yes, Christmas Eve), for which online voting closed yesterday.

Stayed tuned for the results.

Some things to think about

• Amazon added 427,300 employees between January and October this year, pushing its work force to more than 1.2 million people globally, up more than 50 percent from a year ago. The hiring has taken place at Amazon’s headquarters in Seattle, at its hundreds of warehouses in rural communities and suburbs, and in countries such as India and Italy. In the week leading up to Sept. 16, which the company billed as “Career Day,” Amazon said it received more than 384,000 job applications in the United States and Canada. The scale of hiring is even larger than it may seem because the numbers do not account for employee churn, nor do they include the 100,000 temporary workers who have been recruited for the holiday shopping season. They also do not include what internal documents show as roughly 500,000 delivery drivers, who are contractors and not direct Amazon employees. Amazon’s rapid employee growth is unrivalled in the history of corporate America. It far outstrips the 230,000 employees that Walmart, the largest private employer with more than 2.2 million workers, added in a single year two decades ago. At this pace, Amazon is on track to surpass Walmart within two years to become the world’s largest private employer.
• Facebook is reportedly looking to build a services feature that connects gig workers with users looking for home repair or freelance jobs, in direct competition to TaskRabbit.
• Work-from-home is likely to be the most discussed workplace issue of 2021. A recent Boston Consulting Group report said there was a “clear expectation gap between employee desires and the working models envisaged by their employers”. Almost two-thirds (63 per cent) of employees want a hybrid model that involves some working from home and some days in the office, employers say it will only be available to about 40 per cent of staff.  A study by the consultancy AlphaBeta, a part of Accenture, found one-in-four businesses had a drop in productivity when working from home during the pandemic. Productivity was about the same for half of     businesses during that period, while 25 per cent said it had improved.
• In the US the large tech companies are leading the way in deciding what cuts to salaries, bonuses and stock options will be applied to workers who move from the traditionally expensive cities, such a New York and San     Francisco, and make a new life elsewhere, while retaining their positions, now as remote employees.

 And finally, a prediction for 2021

The labour supply for temporary and contract work next year in Australia will be tightest it has been in anybody’s memory.

The dramatic reduction to the normal flow of critical categories of candidates in the non-permanent market; namely working holiday-makers, overseas students and New Zealanders, will stretch recruitment agencies to new levels of focus and innovation as they look to both build far greater loyalty with the best temp/contract candidates and avoid using SEEK to source new candidates.

Merry Christmas and a happy New Year to all.