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Employment National.



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14 May 2002 19/2002

Employment National

Private and not-for profit employment service providers are set to take over the services currently operated by Employment National following the Government's decision to sell marketable parts of EN and wind up the remainder of the loss-making company, the Minister for Finance and Administration, Senator Nick Minchin, said today.

"The interests of EN's staff and customers, especially in regional and rural Australia, will be fully protected," said Senator Minchin.

"We can guarantee that Job Network members will be operating in all employment service areas from which EN has departed on the day after EN winds down on 30 June 2003."

Under the Government's Job Network, there are currently 200 operators providing employment assistance at over 2000 sites. Job Network has proved the success of a strong and competitive market operating through a diversity of players to help people find jobs. A Government-operated competitor in the employment services market is no longer needed in order to guarantee adequate service levels around Australia.

Having needed government support of $27 million in 2001-02, the loss-making EN would have required ongoing support to continue operating.

The Productivity Commission recently highlighted the negative market impact of continued government support for EN on other Job Network providers.

Ferrier Hodgson has provided advice to the government that EN should be wound up by June this year (summary attached). But the Government has decided to not wind the company up until June 2003 to ensure EN staff and clients, as well as other providers, have the maximum possible notice of this decision.

Accordingly the Government will sell the marketable parts of EN's business by October 2002. EN will continue to operate its remaining services in full until 30 June 2003, when the current Job Network contract period finishes. Job Network purchasing processes will ensure that alternative providers will be operating in all employment service areas from which EN has departed at the commencement of the next round of Job Network contracts on 1 July 2003.

Staff will be assisted during this process and will be encouraged to remain with the company until 30 June 2003. All staff entitlements will be met in full, including redundancy benefits.

"Many EN staff should have good prospects for employment with new owners of EN's businesses or with alternative providers. Outplacement services, career counselling and financial advisory services will also be available to all staff," Senator Minchin said.

"While I know EN staff will be disappointed with this decision, it would be irresponsible for the Government to continue to operate a loss-making business when other operators are able to provide high quality employment services to job seekers across Australia," Senator Minchin concluded.

 

Contact: David Wawn Senator Minchin’s office 02 6277 7400

 

 

Extracts from Ferrier Hodgson (NSW) Report to the Department of Finance and Administration

Media Release 19/02 - Employment National

http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=341 (1 of 2) [15/05/2002 8:57:07]

Executive Summary

Our engagement is to "Review financial and business information relating to Employment National Ltd and present a commercial judgement, based on the balance of risks, on whether or not the company should continue to operate beyond 30 June 2003".

Employment National Limited is a government business enterprise which provides employment and recruitment services. The enterprise is comprised of:-Employment National Limited ("ENL")

Employment National (Administration Pty Ltd ("ENA")

For the purpose of this report we will refer to the business entity as EN.

EN provides services pursuant to a Job Network contract ("JN2") with Department of Employment, Workplace Relations and Small Business (now known as the Department of Employment and Workplace Relations) ("DEWR"). In addition, EN provides apprenticeship services pursuant to a contract with the Department of Education, Science and Training ("DEST"), as well as commercial business lines under the OzJobs brand.

On a purely commercial basis, our recommendation is that the business does not continue to trade beyond the year ended 30 June 2002. The reasons for our recommendation and the analysis by which we arrived at that recommendation is set out in further detail in Parts 6,7,8 and 10 of this report.

Alternative Options

It is apparent that EN is unable to compete in the existing market place for job matching services without shareholder funding. This would appear to result from competitors being either:-Charity based Organisations - taking advantage of volunteer labour and/or donated goods and services;  

i.

Small scale, low overhead operations - taking advantage of lower cost structures; or   ii.

Medium sized concerns, which rely on a larger percentage of more profitable business lines. iii.

As a result, it would appear that any attempt to restructure EN would fail in matching these entities for price competitiveness.

Media Release 19/02 - Employment National

http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=341 (2 of 2) [15/05/2002 8:57:07]