Australians continued to digest the news this week that our most recent ex-Prime Minister secretly appointed himself to five ministries and the Premier of our largest state was looking suitably embarrassed as the report into the ‘jobs for the boy’s appointment of ex-Minister, John Barilaro to a plum New York trade commissioner job was made public.
Our cousins across the Tasman, thankfully, only have to concern themselves with two levels of government (no regional or provincial governments) which does make the All-of-Government recruitment panel one that a significant number of the country’s recruitment agencies have a vested interest in.
Government recruitment is the majority concern of New Zealand’s recruiters in the country’s second-largest city, Wellington, hence government recruitment is proportionately a much bigger concern for the New Zealand recruitment sector, compared to Australian recruiters.
Government recruitment only becomes the majority concern for recruiters in Australia’s eighth largest city, Canberra. All five of Australia’s mainland state capitals have populations at least twice that of Canberra with both Sydney and Melbourne nearly eleven times more populous than our national capital.
That’s not to say government recruitment is irrelevant for Australian recruitment agencies – far from it. You only have to recall the data released in 2020 that showed, over six consecutive financial years, Hays raking in $486 million in total income from Federal Government recruitment activities; a figure that was more than seven times the revenue of the second highest agency, Randstad, on the list.
Anyway, back to New Zealand; the AoG Generation Two contract was established in 2017 and will expire in September 2023.
The AoG Generation Three contract, administered by The Ministry of Business, Innovation and Employment (MBIE), has been rebadged as the All-of-Government Talent Acquisition Services contract. Submissions close on Friday, 30 September 2022 with a stated intention to have the new contract operational by March 2023.
The contract briefing held over two weeks ago was attended by over 180 recruiters (this is the pro-rata equivalent of 900 Australian recruiters attending a similar briefing in Australia).
The horror and sheer stupidity of what the AoG procurement team is attempting to pull off is hard to comprehend in any labour market, let alone a labour market that is under the largest strain it’s been under for five decades.
As per Sean Walters’s recent blog on AoG (Gen three) the key changes are these:
- All contractors are to be payrolled through the relevant agency at cost (ie contractor pay rate plus direct oncosts plus a slither of payrolling margin).
- In place of an hourly rate mark up a fixed dollar ‘contract fee’ is payable for all contracts of 12 months or more.
- There can only be two different contract fees (applicable to either of two categories of job families)
- All contracts less than 12 months are to be charged a pro-rata contract fee, based on (3), above
- No temp-to-perm fee
If there’s a more unfair and more cumbersome way to recruit contractors then I have never heard of it.
You have to laugh at the sheer breathless hypocrisy of a department that offers up the following, via the tender website;
The new solution aims to achieve the following objectives:
- Delivering increased public value through improvements in the contracted services
- Maintaining a sustainable and competitive recruitment environment through rationalisation of the contracted supply base, and by providing greater flexibility for business growth for the appointed providers
- Reducing provider and participating agency costs of engagement through agreed terms, centralised account management, and more effective secondary selection processes
- Increasing capability development for participating agencies to purchase talent acquisition services more effectively with guidance provided from the NZGP Centre of Expertise (CoE)
- Providing access to a range of spend and performance information in relation to government recruitment
- Providing opportunities to leverage common areas of need, including Broader Outcomes through a new and enhanced solution
Do you notice what’s missing from the above list?
Yes, the one objective you would hope is right near the top of that list, is completely absent; I respectfully suggest that a critical objective of the AoG (Gen Three) contract would be:
- Improving the performance of government services and departments through the effective recruitment of the most suitable workers for the roles available
Maybe the absence of such an objective makes the construction of the nonsensical new AoG contract easier for the responsible public servants to justify.
Imagine the ludicrous inefficiency of having a contractor start in a two-month role, which is then extended month by month, for, say nine months.
The recruiter need to set up the contractor on payroll, charge the client the two-month pro-rata fee (ie 1/6th of the contractor fixed fee for one of the two job families), then issue a monthly invoice (1/12th of the contractor fixed fee) for seven months in a row.
Under a normal contractor arrangement, there would be 48 weekly invoices for the client to pay for an 11-month assignment – straightforward stuff.
Under AoG (Gen three) there are not only 48 weekly invoices to pay there will be another ten invoices, covering the original contract fee and each monthly contract extension pro-rata fee, to pay – all for what benefit?
Surely any supposed government cost savings on markup will be dwarfed by the sheer administrative nightmare of receiving and paying, and dealing with follow-ups, coming from the 30% to 50% more invoices that will have to be generated under the new contract.
This is even before you consider how much this new system disincentivises recruiters from referring excellent candidates to government jobs.
Why would any recruiter send a candidate to a government job if they are easily placeable in a non-government job?
In an economy where the realities of demand and supply in the labour market mean that recruiters are receiving increases in revenue for delivering candidates that clients want, through percentages of rising salaries and hourly/daily rates, why would we chose to deal with a client who is offering us a contract more akin to market conditions under 13.3% unemployment, not 3.3% unemployment?
The Ministry of Business, Innovation and Employment in the New Zealand government has not only embarrassed itself with a document that would be graded a failure if it was submitted by a first-year business studies undergraduate (because it so patently ignores market conditions), it’s a complete insult to all the committed recruiters whose collective efforts have improved the standard of the public sector workforce over the life of the current contract.
This whole debacle is almost certainly going to end badly for all stakeholders.