Not exactly a comfy life for labour brokers like Workforce
Intense hostility from unions has forced the company to diversify from recruitment into healthcare and training
Faced with hostility to its recruitment and staffing activities – both from organised labour and elements within the government – Workforce Holdings has diversified its activities to incorporate healthcare, training and financial services in addition to recruitment.
Like all so-called labour brokers, it has had to contend with opposition from unions, fearful that such services pose a threat to jobs. This agenda is regrettable – with an official unemployment rate of over 27% (narrowly defined) and a more broadly defined figure of almost 40%, one would expect political and labour bodies to welcome companies that can reduce these appalling jobs levels.
The outcome of Workforce’s diversification strategy is that more profits are being generated from its various segments, reducing its reliance on income from staffing and recruitment.
In SA, the electricity crisis is providing an opportunity, and Workforce has already established a presence in the solar energy industry, predominantly in the northern Cape. It offers a fully integrated approach to staffing, training and healthcare solutions.
The Workforce share price has been a serial underperformer since it listed on the JSE in November 2006 at 14c. It peaked at R2.45 in late January 2017 but has now fallen back to R1.75.
On a price:earnings ratio of 3.4 times, the share seems seductively cheap, though it must be remembered that it is very tightly held and thus not easily traded. Collectively just four entities own over 90% of equity, including CEO Ronny Katz’s company with 27%.