(E1915) State Of Industry

State of the Industry ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Economic Performance Global/Regional Sources: IHS Global Insights - Economic Outlook and Country Intelligence Reports (Oct 2008 - Jan 2009); “EU see recession being deep and long-lasting” Associated Press 1/18/09. Ongoing financial market turmoil continues to push the economy deeper into recession. Businesses and consumers are retrenching as falling confidence feeds the cycle of lower spending, tighter credit and fewer jobs. “ While most of the weakness has so far been concentrated in advanced economies, the emerging markets and developing economies are now being dragged down as well.” World Economic Outlook– Global Insights (1/26/09)

Projected Economic Growth Sources: IHS Global Insights - Economic Outlook and Country Intelligence Reports (Oct 2008 - Jan 2009); 2010 GDP growth estimate as of 12/09. Governments around the world have announced massive stimulus plans, injected billions into troubled financial institutions and slashed lending rates all aimed at restoring confidence and spending. While the impacts of these actions are expected to help the global economy regain footing later in the year, near-term growth projections continue to decline. World Economic Growth Real GDP (% Change) “ Despite its current weakness, we expect the world economy to stabilize during the second half of 2009…and shift into a higher gear by mid-2010.” World Economic Outlook - Global Insights (1/26/09)

Labor Market Trends – Regional Highlights Sources: IHS Global Insights - Economic Outlook and Country Intelligence Reports (Oct 2008 - Jan 2009); Bureau of Labor Statistics, 1/09; Statistics Canada (1/09); Economic conditions snapshot, McKinsey Global Survey (12/08) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],With the exception of the U.S., regional labor markets performed well throughout most of 2008, but will weaken as the global recession deepens. “ The share of executives saying their companies are planning to decrease the size of their workforces in the near term has risen from 35 percent to 44 percent in the past month.” Economic Conditions Snapshot, McKinsey Global Survey (12/08)

Labor Market Trends – Regional Highlights ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Sources: IHS Global Insights - Economic Outlook and Country Intelligence Reports (Oct 2008 - Jan 2009); “Crisis rattles Russia’s labor markets”: Associated Press Worldstream (10/30/08); Tight lending conditions, continued financial market volatility and sharply lower global demand will cause European labor markets to weaken over the coming months.

Labor Market Trends – Regional Highlights Sources: IHS Global Insight Country Reports (Oct 2008-Jan 2009); “Employers in China have issues shedding workers”: Workforce Management (12/29/08); “Employment situation worsening in China”: Sunday Business Post (12/14/08); “India Inc hiring temporary employees to cut costs”: The Economic Times India (12/30/08) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],A simultaneous slowing of demand across the U.S. and Europe is now impacting APAC’s labor markets.

Legislative Environment Japan: Government approved a bill to ban select “day labor” staffing practices and monitor safety conditions for temporary workers European Union: European Commission providing funds to EU member states to fight against illegal immigration Canada: Ontario introduced legislation designed to give temporary workers more rights United States: Incoming Obama administration expected to pursue several pro-worker legislative changes France: Effective Jan 2010, employers will no longer be permitted to force employees to retire at age 65 ,[object Object],[object Object],[object Object],China: Legal experts speculate economic slowdown may prompt government to loosen 2008 labor contract laws Korea: Seeking to double the length of time employers can use temporary employees before having to hire them permanently Malaysia: Banned hiring foreign workers in key industries w/employers forced to layoff foreign staff ahead of nationals to protect against downturn In response to deteriorating economic conditions, recent legislative activities are aimed at job preservation. Longer-term legislative actions remain focused on increasing labor market flexibility, attracting top talent and improving workers’ rights. Sources : “EU Governments to Receive European Commission Funds for Fight Against Illegal Immigration”, German Deputies Back Introduction of Minimum Wage in Several Sectors”, “Malaysian Government Bans Recruitment of Foreign Workers in Key Industries”: IHS Global Insight Country Intelligence (Oct 2008-Jan 2009); “More Labor for HR”: Workforce Management (1/19/09); Ontario announces legislation for temps; Staffing Industry Analysts (12/10/08); “UK’s opt-out from EU work directive is under threat”: The London times (11/6/08); “Ministers slammed for ‘tax on jobs’”: Financial Times (1/19/09); “Employers in China Have Issues Shedding Workers”: Workforce Management (12/29/08); “Job Contract of Temporary Workers to be Extended”: Korea Times (11/14/08); “Gov’t OK”s bill to ban dispatch of temp day workers”: Japan Economic Newswire (11/4/08); Monthly Legislative Update – Africa, the Middle East and Europe: Hewitt Associates (12/08) Germany: Introduced legislation that would make 6.5 million more workers (temporary and permanent) eligible for minimum wage

Employment Summary ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Bureau of Labor Statistics (1/9/09), Reuters/University of Michigan Survey of Consumers (12/08) ,[object Object],[object Object],Monthly Change In Non-Farm Employment (000’s) “ The appeal of lower prices…has been largely offset by widespread uncertainty among consumers about their future job and income prospects.” Richard Curtain– Director, Reuters/University of Michigan Surveys of Consumers – (12/08)

Labor Supply and Demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Sources: Help Wanted Online Data Series: The Conference Board (1/7/09); Bureau of Labor Statistics (1/9/09) Labor Supply vs. Labor Demand U.S. Seasonally Adjusted The gap between labor supply and demand continues to widen…

HR Spotlight Source: “Upgrading Talent” The McKinsey Quarterly (12/08); “Managing Recruiting During an Economic Downturn” ERE.net (10/20/08); “A leg up in down times” Workforce Management (1/19/09) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Re-thinking Talent Management in a Down Economy

Global Competitive Position * Privately held + Formerly Goodwill Group Note: Tempstaff-People Staff merger will create 2nd largest staffing company in Japan with approximately $2.4B USD in revenues (Source: 25th Service Industry Comprehensive Survey , Nikkei MJ, 7 Nov 2007). The merged entity will hold a 0.7% share of the global market. Japanese staffing market appears to be at the start of a consolidation phase. Note: Manpower includes $1.4B of revenue generated by franchise offices not included in MP Inc. consolidated sales. Global Competitive Position (based on 2007 Revenues) The global competitive landscape was transformed throughout 2008 as a result of several large acquisitions. The top 5 competitors represent just over one-fourth of the market, with Kelly ranked 4th globally. Acquisition activity during 2009 is expected to be more muted and targeted toward niche segments/markets in response to weaker economic conditions and tighter credit availability. Competitor Global Ranking 2007 Revenue ($B USD) 2007 Est. Market Share Adecco (SZ) 1 $28.9 8.7% Randstad/Vedior (NL) 2 $24.2 7.3% Manpower (US) 3 $21.9 6.6% Kelly (US) 4 $5.7 1.7% USG People (NL) 5 $5.3 1.6% Recruit/Staff Service (JP)* 6 $4.9 1.5% Hays (UK) 7 $4.6 1.4% Robert Half (US) 8 $4.6 1.4% Allegis (US)* 9 $4.4 1.3% Radia + (JP) 10 $3.5 1.0%

Industry Overview The global staffing market is estimated at $345B, with the top six markets representing nearly 80% of the total. The U.S. is the largest country while EMEA is the largest region. Commercial staffing represents more than 60% of global revenues, but growth is being outpaced by specialty staffing. Segment Distribution % of 2008 Global Market

Staffing Market Outlook ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Sources: IHS Global Insights - Economic Outlook and Country Intelligence Reports (Oct 2008 - Jan 2009); Staffing Indicator Report, BMO Capital Markets (1/5/09); European Staffing Report, Deutsche Bank (12/3/08); Staffing Industry Forecast, 2009 – The dark before the dawn (1/12/09); “Labor Forecast Predicts 21.2% decrease in demand for temporary workers in 2009 first quarter, representing eight consecutive quarter of declines” GlobeNewsrire (1/13/09); “National responses to a global crisis” Recruiter UK (1/21/09); “Japan 85,000 temporary workers to lose jobs due to economic crisis”, Thai Press Report (12/19/08); “India Inc hiring temporary employees to cut costs” The Economic Times India (12/30/08) Staffing industry performance is highly correlated with the general economy. The unexpectedly sharp fourth quarter downturn coupled with forecasts for outright contraction in the global economy during 2009 will weigh on the industry’s near-term outlook. The long-term industry outlook remains strong given the underlying demographic and labor market trends. “ Recruitment is a cyclical business. The global financial crisis and the resultant reduction in recruitment has hit agencies around the world” Recruiter (UK) – 1/21/09 “ temporary staffing represented an increasing number of total [U.S.] jobs lost, including nearly 25%...in the current recession. We believe this shows the industry’s role as a flexible labor supplier has become more apparent. “ BMO Capital Markets Staffing Indicator Report – 1/5/09

Staffing Market Trends Staffing firms must respond to changing demographic and legislative conditions, be capable of defining and delivering innovative client solutions and leverage new channels for finding and deploying talent in today’s marketplace. Trend Business Impact Kelly’s Response ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

(E1915) State Of Industry

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