4 ASX-listed recruitment companies that are benefitting from the closed borders!

1 June 2021

Where are all the workers? Enter the recruitment companies

Australia has a massive shortage of workers. According to the AFR article on 6 April 2021, the number of jobs advertised in Australia has hit a 12-year high, 23% higher than before COVID-19. This follows closely with the Australian Bureau of Statistics, who recorded job vacancies at 26.8% higher levels than pre-COVID-19.

What’s unusual about the employment situation is that the rural hospitality industry can find staff, according to Australian Hotels Association boss Stephen Ferguson. The lack of staff mainly seems to be an issue in the capital cities of Australia, where migrants will often wind up. Warren Pearce, the head of the Association of Mining and Exploration Companies, stated that the mining industry has not seen issues hiring new staff, but is expecting shortages to arise soon.

Clearly, despite the end of JobKeeper, employers are still having serious difficulty in finding staff. And based on the Coalition’s recent budget commentary regarding international travel, or rather the lack thereof, it seems likely this situation will continue to worsen until at least the middle of 2022.

A win for recruiters

While this is bad for Australia, it is certainly positive for a company like People Infrastructure (ASX: PPE). Founded in 1996 and headquartered in Albion Queensland, People Infrastructure is a workforce management and staffing company with offices across Australia and New Zealand. The company has a bit of a niche, focusing primarily on healthcare and information technology. However, the company also has a robust general job division, generating 37% of FY19’s (pre-COVID-19) profit. The company’s stock has rallied hard recently. In fact, prior to April 2021 it had never climbed above $4.00 per share.

For investors looking to invest in this trend, here are a few other companies we believe are positioned to take advantage. The first one is Seek (ASX: SEK), the Melbourne-based online job advertising company. In fact, we have a report in our archive you can look at here. Another recruitment and training company is The Go2 People (ASX: GO2) and IT and telecommunications recruitment specalists the HiTech Group Australia (ASX: HIT).

There may be more in store for Australia’s recruiters, because we believe the market may be underestimating the impact of the borders remaining shut for at least 12 more months will have on companies needing staff during FY22 and FY23.

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