Earlier this year, I was asked to outline 10 steps that providers and users of labour hire services could take to prepare for the anti-competitive labour hire licensing schemes that were about to start in South Australia and Queensland (and more recently, Victoria).
It now looks like step #9 – Anticipate and adjust to changes in the market – may prove especially important if the ACCC’s plan to grant a class exemption allowing agribusinesses to negotiate collectively with their suppliers goes ahead.
Step #9 highlighted the importance of appreciating that:
- not everyone would get a licence;
- this would leave gaps in the market, especially in regional areas, that would require new networked services supply models; and
- consolidation and rationalisation would occur around licensed providers, giving them increased market power and a significant market advantage over licence applicants, many of whose applications are still pending.
The ACCC’s plan to allow a collective bargaining class exemption would “provide a ‘safe harbour’, so businesses that qualify can collectively bargain without the risk of breaching competition law”.
That would significantly offset any increase in market power or competitive advantage that a licenced provider might obtain.
Buyers and sellers of labour hire services should now be thinking strategically about how that offset could be harvested to best advantage to produce service and pricing models, which do not simply drive prices down again to levels that compromise the ability of reputable labour hire providers to meet safety net, decent work, and accommodation standards.
The relationship between sustainable business modelling, bargaining, and labour exploitation was beginning to be explored in the Fels Wage Fairness Panel Inquiry into the 7-Eleven Franchise.
Although there is still much work to be done, the ACCC’s plan is likely to advance the discussion of that relationship … but only if labour hire, contracting, and staffing services providers join the debate.
The ACCC is inviting submissions on its proposed plan by 21 September 2018.
Andrew C. Wood