Q G L O B A L E C O N O M I C & L A B O R M A R K E T S N A P S H O T 2017p. G l o b a l T a l e n t M a r k e t Q u a r t e r l y

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1 FIRST QUARTER 2017

2 Rate (2017p) Q Despite considerable uncertainty in the political environment worldwide, global economic and labor market growth is projected to strengthen in 2017 and 2018, led by key fundamentals including US expansion, dollar appreciation, and higher commodity prices. While the current outlook remains positive, risks also abound, as the world waits to see how the policies of a new presidential administration in the US, the beginning of the Brexit process in the UK, the implementation of the new Five-Year Plan in China, and significant elections across Europe play out. G L O B A L E C O N O M I C & L A B O R M A R K E T S N A P S H O T 2017p G D P G r o w t h WORLD Japan Mexico China US Russia UK Australia Germany 8% Canada WORLD India France 1 Brazil 1 1 8% (2017p) 2018p AMER EMEA 2019p APAC 2020p U n e m p l o y m e n t R a t e 2017p WORLD 2018p AMER EMEA 2019p APAC 2020p 8% Source: IHS Global Insight (February 2017). Annual average estimated/projected growth in real GDP and annual average estimated/projected unemployment rates.

3 M E X I C O U S B R A Z I L C A N A D A A M E R Americas regional economic growth is expected to accelerate in 2017 and 2018, driven by increased optimism, fiscal stimulus, and a pro-business environment in the US; strengthening in the oil and gas sector; and a slow recovery process in key South American markets. 11.7% % 1.9% 9.7% % 3.8% The economy is expected to stabilize as 2017 progresses, but activity, as well as business and consumer sentiment, remain poor. The labor market is similarly troubled, with the unemployment rate approaching 1 after massive job losses in % 4.1% % Mexico s economic outlook has diminished following the US election, as the new administration has raised the possibility of lower investment and protectionist measures against Mexico. Still, formal employment is expected to accelerate slightly in % % % 2. Although growth was somewhat subdued due to oil price issues in recent years, the Canadian economy is expected to strengthen in the short term. Employment gains also started to pick up in the second half of 2016, and are forecast to maintain momentum in % 4.1% % % 2.1% Numerous tailwinds are ushering the US economy into 2017, including a pickup in the energy sector, a strong housing market, and mild inflationary signals. Employers continue to add jobs at a brisk pace, but one that is slowing as labor market slack is absorbed. L E G I S L A T I V E H I G H L I G H T S U N I T E D S T A T E S An executive order signed in January 2017 gives instructions to the federal government to dismantle the Affordable Care Act (ACA) by taking steps to waive, defer, grant exemptions from or delay any taxes or penalties to the extent permitted by law. In order to repeal and/or replace the ACA further legislation must be passed by the Senate. U N I T E D S T A T E S Higher minimum wages went into effect in 19 states as of January 2017; Washington, D.C., Maryland, and Oregon and will see minimum wage increases in July. In addition, minimum wages will go up in at least 22 cities and four counties in C A N A D A The final Changing Workplaces Review report is expected by the end of February The report will have recommendations on amending Ontario s labor laws, with an aim to reflect contemporary issues such as non-standard employment. 3 Sources: IHS Global Insight (February 2017); 2017 Legal Calendar North America, SIA; Lexology.com

4 R U S S I A U K F R A N C E G E R M A N Y E M E A Western Europe is on a slow growth trajectory, with risks in 2017 coming from elections in Germany, France, and other countries, and the kick-off of the Brexit process in the UK. Growth in Emerging Europe and the Middle East is constrained by low regional demand and depressed oil prices. 9.8% % 1.1% A better-than-expected end to 2016 has raised France s growth prospects for 2017, although uncertainty over the spring presidential elections is dampening the outlook. Year-end employment figures also point to a labor market that continues to very gradually improve. 5.7% 0.8% 1.7% % 4.8% 2.1% 2.8% The fourth quarter saw a surprising uptick in GDP, but the Russian economy will still struggle to emerge from recession in 2017 as consumer and investment activity remains problematic. The labor market also faces issues, including a court order that blocked access to LinkedIn % 6.1% % 1.9% Germany s economy has been remarkably resilient, and will continue along in that vein in the near future. The unemployment rate is also forecast to remain near historic lows, as job creation continues and the flexible labor market absorbs the recent influx of immigrants % % % 1.8% Economic growth remains resilient in the UK, although the formal onset of the Brexit process in 2017 is likely to bring uncertainty and subsequent softness. The labor market is also holding up as of now, but unemployment is expected to edge up as the year and the uncertainty progress. L E G I S L A T I V E H I G H L I G H T S B E L G I U M A draft bill that proposes several structural reforms of the labor market has been approved by the Council of Ministers. Under the new reforms, indefinite temporary contracts would be permissible. The reforms also include measures surrounding leave policies, part time work, and provisions to increase flexibility for both workers and employers. The Bill will be submitted for approval to the Chamber of Representatives. G E R M A N Y A new wage agreement for the temporary employment sector was reached in November The new rate changes will take effect March with regular increases through the end of The new Temporary Employment Act (AÜG) also comes into force on April P O L A N D Under a new regulation, a mandatory minimum hourly wage for independent contractors is in effect as of January Sources: IHS Global Insight (February 2017); SIA Europe Legal Update, Q4 2016; SIA Daily News,

5 I N D I A J A P A N A U S T R A L I A C H I N A A P A C APAC is still the regional growth leader, although both China and India have seen somewhat slower growth than usual in China s gradual cooling is predicted to continue, while other Asian economies are forecast to see a slight uptick, leading to a stable regional outlook. 5.7% % 5.5% 4.1% 4.1% L E G I S L A T I V E H I G H L I G H T S 2.5% 2.5% 2.9% 2.8% The forecast calls for moderate economic growth in the short term, driven by growth in exports and improvements in private consumption and investment. is expected to be similarly stable, hovering in the 5.7%-5.5% range over the next couple of years % 7.9% 7.7% 7.1% % 7.7% The government s demonetization policy dented growth in 2016, but the economy is expected to bounce back above 7% in 2017 helped by a fiscal stimulus plan. Likewise, hiring plans are becoming more positive and unemployment is forecast to fall. 6.5% % 6.1% China s economic growth is expected to continue to slow modestly over the next few years as the housing market and other issues both domestic and international pose challenges. The State Council aims to add more than 50 million new jobs in urban areas from 2016 to % % 0.9% 0.7% 0. Modest growth is forecast for Japan, driven by domestic demand but constrained by uncertainties over the global economy and volatile foreign-exchange rates. The labor market remains extremely tight, with the job openings to applicants ratio at a more than 25-year high. C H I N A Three new regulations for enforcing labor laws have come into place in Provisions include a new ranking system for companies based on their labor law compliance history; public announcements of severe labor law infractions; and random inspections of companies employment information/ practices. I N D I A The government has proposed to streamline 44 labor laws into five new comprehensive laws: The Labour Code on Industrial Relations, The Labour Code on Wages, Industry and Safety Welfare Code, Social Security Code, and Small Factories Code. The Labour Code on Industrial Relations and the Labour Code on Wages are expected to be introduced during the 2017 winter session of Parliament. J A P A N Several new regulations that provide expanded and more flexible child and family leave take effect in Sources: IHS Global Insight (February 2017); SIA APAC Legal Update, Q4 2016; 2017 Asia Employment Law Forecast, DLA Piper; Reuters, ; Economic Times,

6 W O R L D G L O B A L T A L E N T S P O T L I G H T : T H E P R O D U C T I V I T Y P A R A D O X P R O D U C T I V I T Y G R O W T H S L U M P S T U M P S E X P E R T S Growth in worker productivity defined as the amount of output (GDP) per hour worked has been slowing in many major economies in recent (and not so recent) years. Although productivity growth rates remain below pre-recession levels in many countries, research from the OECD shows that the slowdown began well before the crisis in developed economies ranging from Canada to Japan to France and Germany. This slowdown is occurring at the same time as several phenomena that traditionally have accelerated productivity significant technological change, increasing globalization of firms and countries, and rising education levels in the labor force causing economists to look closely for the reasons behind the productivity paradox. Many theories have been posed, ranging from potential lagged effects of new technologies, a slowdown of innovation, or a breakdown in the diffusion of technologies, to questions about how productivity is measured. Another debate: whether the productivity declines are more structural or cyclical in nature. So far, no definitive conclusions have been reached, but solving the dilemma behind the deceleration may lead to a greater understanding of how to raise productivity in the future. G7 T R E N D I N W O R K E R P R O D U C T I V I T Y G R O W T H, G 7 C O U N T R I E S Trendline - Australia - Canada 8% - W O R K E R P R O D U C T I V I T Y, G 7 C O U N T R I E S US France Germany Australia Canada UK Japan France $40 $49 $48 $53 $63 $61 $59 GDP per hour worked in USD, constant prices, 2010 PPPs Trendline Trendline Trendline 6 Germany - - Japan United Kingdom United States 1 8% Trendline Trendline Trendline 5% -5% - - Source: OECD Compendium of Productivity Indicators 2016 and Productivity Database. Productivity data is GDP per hour worked in USD, constant prices, 2010 PPPs - Trendline

7 I N D U S T R Y W O R K F O R C E S O L U T I O N S S P O T L I G H T : V A L U E - A D D E D R P O S T E P P I N G U P T H E V A L U E O F R P O With labor markets around the globe tightening and the war for talent intensifying, organizations are increasingly looking for additional expertise when it comes to attracting and hiring talent and optimizing their workforces. As a result, more and more companies are turning to their RPO providers for more sophisticated processes, targeted talent offerings, and innovative techniques. According to Everest, more than half of RPO contracts now include employer branding and talent community responsibilities, and nearly thee quarters of all RPO deals include talent assessment. And Nelson Hall reports that specialty RPO service offerings targeting specific worker populations, such as campus recruiting and diversity hiring, also continue to gain traction. The benefits of higher-level RPO can be significant, ranging from broader talent access to lower attrition rates to greater alignment with business strategies. Seasonal Hiring Campus Recruiting TARGETED RPO SERVICE OFFERINGS Diversity Hiring Provided to ~35% of RPO clients Veteran/ Military Hiring Provided to ~6 of RPO clients, up from ~4 45% Employer Branding I N C L U S I O N O F V A L U E - A D D E D P R O C E S S E S I N R P O D E A L S 5 51% 4 Talent Communities Workforce Planning 6 7 Assessment B E N E F I T S O F V A L U E - A D D E D R P O S E R V I C E S Employer Branding Talent Communities Workforce Planning Assessment Improve quality of hire Better access to scarce talent Reduce time to hire Reduce new hire attrition Optimize internal resources Alignment to organizational strategy 7 Sources: RPO Annual Report 2016, Everest Group; Targeting RPO, Nelson Hall, 2016

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