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 SECOND QUARTER 2017

2 Rate (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 Q A wide variety of indicators are pointing towards solid global economic expansion in 2017, with worldwide GDP growth expected to reach 3.0% (up from 2.5% in 2016). The recovery process in Brazil and Russia, strength in APAC, and modest growth in the US and Eurozone will offset impacts from slowdowns in the UK and China. As economic growth spurs healthy employment trends, labor markets around the world continue to tighten, although in many markets the elevated demand for talent has yet to spur significant wage growth. 0% 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 2% 4% 6% Japan Mexico UK US Russia Australia Germany China 2018p AMER EMEA 2019p APAC 2020p 0% 2% 4% 6% 8% Canada France WORLD India U n e m p l o y m e n t R a t e 10% 2017p WORLD 12% Brazil 14% 0% 2% 4% 6% 8% (2017p) 2018p AMER EMEA 2019p APAC 2020p 0% 2% 4% 6% 8% 10% 12% 2 Source: IHS Global Insight (May 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 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 A M E R 2017 looks to be a good year for much of the Americas region, led by strengthening outlooks for Canada and the United States, and the beginnings of a recovery in Brazil. Downside risks include potential US policy actions targeting Mexico/NAFTA. 12.3% 0.6% 11.4% 2.0% 10.0% 8.8% 3.7% 3.9% After a protracted recession, Brazil s economy is forecast to stabilize in 2017 and return to growth in The unemployment rate has soared above 12%, doubling the rate seen as recently as Labor market recovery will lag that of the economy. 4.0% 4.1% 4.1% 4.0% 1.9% 2.0% 2.2% 2.4% Uncertainty about US trade and immigration policies and the future of NAFTA are keeping investment prospects, and Mexican economic expansion, in check. The increase in minimum wages as of January should help ameliorate rising inflation rates. 6.7% 6.6% 6.4% 6.4% 2.5% 2.4% 2.3% 2.0% With the rebound in oil prices and solid export and consumption trends, the Canadian economy is forecast to see healthy growth in Employment growth also remains strong, although earnings growth has not followed suit. 4.5% 4.2% 4.0% 4.1% 2.2% 2.7% 2.4% 2.2% Although GDP growth was muted in Q1 2017, the US economy is forecast to accelerate in the remainder of the year driven by both consumer and business confidence. The labor market continues to tighten, with unemployment reaching a nearly 10-year low. C O U N T R Y S P O T L I G H T V E N E Z U E L A 16.5% 15.7% 14.9% -6.6% -2.6% 12.7% 0.4% 0.2% Venezuela is a country facing significant and severe economic and political dysfunction: its GDP contracted by an estimated 15-20% in 2016, while inflation increases were in the % range (official data for 2016 have not been published). The outlook for 2017 is equally dismal, with the economy expected to shrink yet again and another five-fold inflation increase forecast. The unemployment rate is projected to surpass 16% in 2017, compared to 6.8% in A large tax increase in February will raise operational costs and could force the shuttering of many businesses in the country. The ruling party continues to make moves to consolidate power; its policies are not likely to help ease the crisis in the near term. 3 Sources: IHS Global Insight (May 2017)

4 R U S S I A U K F R A N C E G E R M A N Y 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 E M E A The outlook for EMEA is generally positive, but the growth trends in key individual markets represent a mixed picture: Germany remains strong, France s outlook is encouraging but fragile, and Russia has just begun to rebound from recession. The uncertainties of Brexit (along with upcoming elections in the UK, Germany, and Italy) are casting a shadow; still, most labor markets across the region remain resilient. 9.7% 9.5% 9.4% 9.3% 5.7% 5.7% 5.8% 5.7% C O U N T R Y S P O T L I G H T S W I T Z E R L A N D 1.3% 1.4% 1.3% 1.3% 2.0% 2.0% 1.5% 1.3% Newly elected French president Emmanuel Macron is expected to prioritize pro-business economic policies and measures that introduce more flexibility in the labor market. The declining unemployment rate fell to a five-year low in Q % 1.1% 4.9% 4.9% 4.8% 1.9% 2.0% 2.6% Russia s economy returned to growth at the end of 2016 as commodity prices rebounded, but sluggish growth is projected for Inflation is abating, helping the consumer outlook, but wage growth is modest and underemployment reportedly rampant. The German economy is maintaining momentum in 2017, supported by strong domestic demand and export activity. Job growth has likewise remained robust and the unemployment rate low despite the recent refugee influx. 4.9% 1.7% 5.4% 5.7% 5.6% 1.2% 1.5% 1.9% Following the onset of the Brexit process in March, the UK economy is forecast to slow in amid heightened business and consumer uncertainty. The labor market remained healthy in Q1 2017, but is likely to show dampening effects before long. 3.2% 3.0% 2.9% 2.8% 1.9% 1.8% 1.4% 1.2% The Swiss economy has recovered nicely from the 2015 decision by the Swiss National Bank to decouple the franc from the euro. The outlook for Switzerland s economy is strong in 2017, driven by domestic demand and a brightening export picture, but a slight deceleration is predicted in the following years as ripples from the Brexit process reach the Swiss market. Switzerland s labor market is characterized by low unemployment rates, although joblessness did climb somewhat following the Swiss franc shock in early The latest data suggest that the unemployment rate will continue to fall, albeit at a moderate pace, and will dip below 3% by late Sources: IHS Global Insight (May 2017)

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 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 A P A C Propped up by the growth engines of China and India, APAC still leads regional growth trends but the outlook varies considerably among major markets. A slight slowdown is predicted for China and Japan in the coming years, while modest acceleration is on tap in Australia and Japan. The positive economic forecast is expected to keep labor market performances relatively healthy across the region. 5.8% 5.7% 5.6% 5.5% 6.6% 6.3% 6.1% 6.0% 4.1% 4.1% 4.0% 4.0% C O U N T R Y S P O T L I G H T S O U T H K O R E A 2.6% 2.4% 3.0% 2.8% The outlook for Australia s economy is largely positive, as new LNG and other resource projects reach production and exporting phases. The unemployment rate is expected to remain just below 6%, as growth spurs higher labor force participation. 8.6% 7.9% 7.8% 7.7% 7.3% 7.4% 7.6% 7.6% Robust economic growth is forecast for India, driven by private consumption, although the new goods and services tax coming in summer 2017 may have a temporary impact. A new task force has been set up to generate timely and reliable labor force data. China s economy is expected to continue to cool in 2017; despite stimulus efforts, the government s reshuffling in the fall likely will usher in some instability. Officials noted that urban job growth was up 5% in the first four months of 2017 vs % 2.9% 2.9% 3.0% 1.3% 1.0% 0.7% 0.2% Stimulus plans passed at the end of 2016 are helping to prop up economic growth in Japan. The labor market remains extremely tight, with unemployment at historic lows; despite the high demand for workers, wage growth also remains sluggish. 3.6% 3.5% 3.6% 3.9% 2.6% 2.7% 2.7% 2.6% The economy of South Korea can be vulnerable to its often unpredictable neighbors, but the current outlook is calm. The decades-long tension with North Korea has reached a relative level of stability, although the ramifications of its nuclear testing program remain to be seen. The slowdown in China, which is a key trade partner of South Korea, is expected to have limited impact on the South Korean market. Balanced and stable economic growth is predicted for South Korea in the short term, driven by healthy consumer and business spending, and rising exports. The labor market is likewise projected to remain healthy as it transitions from manufacturing-centered employment to more service-based jobs. 5 Sources: IHS Global Insight (May 2017); SIA Daily News, ; Mint,

6 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 L E G I S L A T I O N Brazil and Belgium recently passed laws that encourage the greater use of flexible and outsourced work arrangements, while in Hong Kong, the new Code of Practice (CoP) seeks to define and promote standards for the industry. In Qatar and Saudi Arabia, new legislation concerning expatriate employees has recently been enacted. B R A Z I L A new law signed in March 2017 allows unrestricted outsourcing and subcontracting of work. It also extends the maximum duration of temporary work contracts from three months to nine months. P U E R T O R I C O A new equal pay act passed in March 2017 prohibits salary discrimination based on gender in jobs that have equal skill and responsibility levels, and that are performed under similar working conditions. It also prohibits employers from inquiring into an applicant's salary history. M E X I C O New amendments to the federal labor law include a provision to abolish the conciliation/arbitration boards that solved conflicts between workers and employers. Instead, conflicts will be resolved by the federal and state labor courts. Other changes aim to strengthen the right to collective bargaining. B E L G I U M The Flexible and Workable Work Act (FWWA) came into effect in February It encourages flexible work by permitting unlimited duration temporary work contracts, among other provisions. In addition, the government in Flanders approved a draft decree to authorize the use of temporary agency workers in the Flemish public sector. Q A T A R A new law requires all employment relationships between companies and expatriate workers in Qatar to be governed by standard electronic employment contracts (e-contracts). In addition, Qatar has become the first Gulf Cooperation Council state to implement a data protection law for electronic data. S A U D I A R A B I A New legislation will impose monthly fees on private sector companies that employ expatriates. Implementation will begin in January 2018, and will be phased in over the course of 3 years. H O N G K O N G In January 2017, the Labor Department enacted the Code of Practice (CoP) for employment agencies, aimed at promoting the professionalism and service quality of the industry. The CoP details the requirements and standards for licensed employment agencies; an amendment bill that provides for the enforcement of the CoP is expected to be introduced later this year. S I N G A P O R E The newly-passed Retirement and Re-employment Bill improves the rights of older workers, including making it unlawful for employers to arbitrarily reduce the salary of workers who reach the age of 60. T A I W A N Several amendments to the Labor Standards Act took effect in January 2017, including the implementation of a five-day work week and changes to the regulations surrounding annual leave, holidays, and rest times. 6 Sources: SIA North America Legal Update, Q1 2017; SIA Latin America Legal Update, Q1 2017; SIA Europe Legal Update, Q1 2017; SIA MEA Legal Update, Q1 2017; SIA APAC Legal Update, Q1 2017

7 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 T A L E N T G L O B A L T A L E N T S P O T L I G H T : W O M E N A T W O R K 7 W O M E N S C H O I C E S A N D C H A L L E N G E S A comprehensive new survey from the ILO found that while half of women worldwide are not in the labor force, many do want to work. The survey, which covered 142 countries, showed that only 27% of women globally say they do not want to work at any kind of paid job. Younger women were more likely to say that they would prefer to work in some capacity. For women who are in the workforce, many challenges exist with work/ family balance at or near the top of the list in every region. At the same time, other top concerns such as lack of affordable care, unequal pay, and unfair treatment at work vary by geography. World by Age By Region Northern America N,S,W Europe Latin Am/ Carib Eastern Europe Eastern Asia SE Asia/ Pacific Southern Asia W O M E N S W O R K P R E F E R E N C E S TOTAL 18% 21% 28% 27% 29% 25% 29% 30% 26% Work at Paid Job Both Stay at Home 33% 46% 26% 38% 45% 41% 59% 43% 43% 55% 44% 60% 76% World 50% B I G G E S T C H A L L E N G E S F O R W O R K I N G W O M E N Top 3 responses by region 68% 56% Northern America EASTERN ASIA 1. Affordable care SE ASIA/ PACIFIC NORTH AMERICA 1. Unequal pay 2. Work/family balance 3. Lack of flexible hours 2. Unfair treatment 64% N,S,W Europe 3. Lack good paying jobs Selected Regions: Northern America: US, Canada; NSW Europe: Albania, Austria, Belgium, Bosnia/ Herzegovina, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Kosovo, Latvia, Lithuania, Luxembourg, FYR Macedonia, Malta, Montenegro, Netherlands, Norway, Portugal, Serbia, Slovenia, Spain, Sweden, Switzerland, UK; Latin Am/ Carib: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela; Eastern Europe: Poland, Hungary, Czech Republic, Republic of Moldova, Ukraine, Bulgaria, Slovakia, Romania, Belarus, Russia; Eastern Asia: China, Hong Kong, Japan, Mongolia, Republic of Korea, Taiwan; SE Asia/Pacific: Australia, Cambodia, Indonesia, Myanmar, New Zealand, Philippines, Singapore, Thailand, Viet Nam; Southern Asia: Afghanistan, Bangladesh, India, Islamic Republic of Iran, Nepal, Pakistan 24% 42% 33% 27% 26% 21% 25% 26% 23% 25% 23% 13% L A B O R F O R C E P A R T I C I P A T I O N R A T E 78% 2. Work/family balance 3. Unfair treatment 68% 51% 53% 53% Latin Am/ Carib Eastern Europe WORLD 2. Affordable care 3. Unfair treatment SOUTHERN ASIA N, S, AND W EUROPE 2. Unequal pay 2. Lack of flexible hours 3. Affordable care 77% Eastern Asia 3. Unfair treatment Men 81% 79% 62% 59% SE Asia/ Pacific EASTERN EUROPE 2. Lack good-paying jobs 3. Lack of flexible hours LATIN AMER/ CARIB 2. Unfair treatment 3. Unequal pay Women 28% Southern Asia Source: Towards a Better Future for Women and Work: Voices of Women and Men, ILO, 2017

8 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 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 : T H E H U M A N C L O U D D E M Y S T I F Y I N G T H E H U M A N C L O U D The human cloud is a popular buzzword these days, but what does it really mean for talent and talent managers? While much of the talk about the human cloud focuses on ride-sharing platforms such as Uber & Lyft, it is far more extensive than these popular apps. According to Staffing Industry Analysts, the Human Cloud can be broken down into three primary business models: Online staffing platforms, where the outcome of the transaction is typically a direct legal relationship between manager and worker. Online work services, where the platform provides a product or service, with the platform organizing and managing a freelance workforce to deliver the product or service (includes Uber and Uber-like models). Crowdsourcing, where firms specialize in micro-tasks and contest/ bidbased work performed by a crowd of workers, each working independently. As free agent talent of all kinds becomes more important to employers, knowing how best to find, engage, and manage that talent is becoming more imperative. As a result, both awareness and usage of online staffing models continue to grow rapidly. A crowd How the work is organized Individual worker(s) Mechanical Turk Gigwalk CROWDSOURCING Crowdflower Applause LionsBridge 99Designs Fiverr Freelancer Upwork Work Market MBA&Co Field Nation UpCounsel OnForce Shiftgig Hourly Nerd/ Catalant Labor relationship Uber Lyft Visual.ly LiveOps ONLINE STAFFING PLATFORMS What the client gets T H E H U M A N C L O U D F R A M E W O R K ONLINE WORK SERVICES Service outcome C O N T I N G E N T S H A R E O F W O R K F O R C E C O N T I N G E N T B U Y E R S A N D O N L I N E S T A F F I N G S E R V I C E S Median Average 22% 20% 18% 18% 18% 16% 15% 14% 15% 15% 15% 12% 10% 10% 10% 10% % familiar with online staffing services 65% 72% 50% 41% 20% % using/considering online staffing services Currently use Considering within 2 years 19% 5% 1% 3% 10% 12% 13% 3% 2% 4% Large (1000+ employees) contingent workforce buyers in North America Sources: The Gig Economy and Human Cloud: 2016 Update, Staffing Industry Analysts; Contingent Buyers Survey, Staffing Industry Analysts

9 ABOUT KELLY SERVICES As a global leader in providing workforce solutions, Kelly Services, Inc. (Nasdaq: KELYA, KELYB) and its subsidiaries offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Kelly directly employs nearly 500,000 people around the world in addition to having a role in connecting thousands more with work through its global network of talent suppliers and partners. Revenue in 2016 was $5.3 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter. A KELLY SERVICES REPORT All trademarks are property of their respective owners. An Equal Opportunity Employer Kelly Services, Inc Kelly Services Inc. makes no representation or warranty with respect to the material contained within this report. kellyservices.com