RENTRÉEECONOMIC OUTLOOK

September 2017

« TIGHTENING LABOUR MARKETCHALLENGES ECONOMIC GROWTH »

WORLD ECONOMYUNITED STATES STILL ON TRACKCONCERNS OVER CHINA, EMERGING COUNTRIES FOLLOWING IN ITS WAKEPOSITIVE SIGNS COMING FROM EUROPE

BELGIAN ECONOMYCONTINUING GDP-GROWTHCONFIDENCE INDICATORS AT A HIGH LEVELINCREASED DYNAMICS IN A TIGHTENING LABOUR MARKET

CONCLUDING REMARKS FOR FEDERGON MEMBERS

ECONOMIC OUTLOOK ‘RENTRÉE’

WORLD ECONOMY

IMF in its most recent study (July 2017)

“GLOBAL GROWTH IS PROJECTED TO GROW 3.5% IN 2017 & 3.6% IN 2018.”

“THE CYCLICAL RECOVERY CONTINUES.”

2016 2017 2018USA 1.7 2.0 1.9Euro Area 1.8 1.9 1.7Japan 1.0 1.3 0.6UK 1.8 1.7 1.5Russia -0.2 1.4 1.4China 6.7 6.7 6.4India 7.1 7.2 7.7World 3.2 3.5 3.6

MODERATE PREDICTIONS FOR GLOBAL GROWTH

Realised & estimated economic growth (in %) (IMF)

UNITED STATES: THE WORLD’S LEADING ECONOMY STILL ON TRACKMOST ECONOMIC INDICATORS ARE POSITIVE

U.S. GROWTH PROJECTIONS ARE A BIT LOWER THAN IN APRIL: primarily reflecting that the fiscal stimulus by president Trump will be less expansionary than announced.

FED LEAVES MONETARY POLICY STEADY: the FED considered near-term risks to the economic outlook as roughly balanced, but said it will closely monitor inflation.

The labour market has continued to strengthen and the economic activity has been rising moderately so far this year.

• solid job gains, • unemployment rate below the longer-term average, • household spending and business fixed investment have continued to expand.

So wages may rise.

GDP Growth:

+2.6% (Q2 yoy)

CHINA: GROWTH AT ITS STRONGEST LEVEL SINCE Q3 2015! INDUSTRIAL OUTPUT and RETAIL SALES (+11% yoy) picked up while FIXED-ASSET INVESTMENT remained strong.

GOVERNMENT SPENDING rose 15.8 percent in the first half of 2017 (yoy) in order to meet the target of doubling the 2010 real GDP by 2020.

EXPORTS increased by 11.3 percent year-on-year, supported by firmer global demand.

Regarding PROPERTY SECTORS, Beijing is trying to control debt and prevent a housing bubble with tough measures.

GDP Growth:

+6.9% (Q2 yoy)final consumption63%

investment33%

net exports4%

C O N T R I B U T I O N T O C H I N E S E G D P G R O W T H I N 1 S T H A L F O F 2 0 1 7

EUROPE: GROWTH FIGURES ARE BETTER THAN EXPECTEDGROWTH PROJECTIONS FOR 2017 REVISED UP e.g. in France, Germany, Italy and Spain reflecting stronger momentum in domestic demand than previously anticipated (especially boosted by fixed investmentand household consumption).

But: DIVERGING GROWTH FIGURES in the Member States (Q1 - 2017) (Q/Q-4)

BENEFITING from: cheap oil (once more)low inflationlow interest ratesan active ECB a strong domestic market (Consumption & Investment).

6,13,2

3,02,9

2,52,1

1,71,5

0,8

IrelandNetherlands

SpainGermany

AustriaItaly

BelgiumFranceGreece

GDP Growth:

+2,1% (Q2 yoy)

EUROPE: THE € EXCHANGE RATE !Compared to the $, the € has STRENGTHENED in real effective terms since March because of increased confidence in the euro area recovery and a decline in political risk.

As long as global growth remains solid, the impact of a stronger € on the exports is limited.

0,6

0,8

1

1,2

1,4

1,6

1€ = $ or £?

$

£

THE BRITISH RECRUITMENT & EMPLOYMENT CONFEDERATION (REC)

ON THE BREXITTHE LABOUR MARKET HEAVILY RELIES ON EU-NATIONALS …

The UK has labour, skill and talent shortages and the evidence points to the situation getting worse before it gets better.

EU nationals= 7% of total UK labour forcemanufacturing (11%), retail and hospitality (9%) and construction (8%)

The proportion of EU workers is even higher in specific industries like food processing (33% of the workforce), domestic personnel (26%) warehousing (18%)

EU nationals make up 17% of the workforce in London. The financial & business service sector is the largest employer of EU nationals in the capital with 16% of the workforce (191,400 employees).

UK relies on people from abroad and needs an immigration system based on this reality.

COMMODITIES AND INFLATION

WHAT AND WHY?

OIL PRICES HAVE RECEDED AGAIN after a small rise in the beginning of the year, reflecting strong inventory levels in the United States and a pickup in supply.

HEADLINE INFLATION also generally softened as the impact of the commodity price rebound in the second half of 2016 faded, and remains at levels well below central bank targets in most advanced economies.

CORE INFLATION has remained broadly stable. It has largely been stable in emerging economies as well.

If cheap oil is caused by excess supply, like now, it is the equivalent of a tax cut for Western consumers.« »

RISKS FOR THE WORLD ECONOMYA MORE PROTRACTED PERIOD OF POLICY UNCERTAINTYLess election-related risks, but policy uncertainty remains at a high level and could well rise further, reflecting - for example - difficult-to-predict U.S. regulatory and fiscal policies, negotiations of post-Brexit arrangements, or geopolitical risks (the North-Korean crisis). This could harm confidence, deter private investment, and weaken growth.

FINANCIAL TENSIONSChina: failure to continue the recent focus on addressing financial sector risks and curb excessive credit growth could entail an abrupt growth slowdown.U.S.: a faster-than-expected monetary policy normalization in the U.S. could tighten global financial conditions and trigger reversals in capital flows to emerging economies.Europe: In some euro area countries, weak bank balance sheets and an unfavorable profitability outlook could interact with higher political risks to reignite financial stability concerns.

INWARD-LOOKING POLICIESOver the longer term: failure to lift potential growth and make growth more inclusive could fuel protectionism and hinder market-friendly reforms.

BELGIUMImproving economic indicators

BELGIAN ECONOMY: 17TH CONSECUTIVE QUARTER OF POSITIVE GROWTH

PREDICTIONS2017: 1.6% (revised upwards) 2018: 1.6% 2019: 1.5%

WHAT ARE THE MAIN DRIVERS OF THE ECONOMIC GROWTH? Growth will be driven by domestic demand in the coming

years due to:• higher labour income • lower personal income taxes (both resulting from the

tax shift operation)• the strong rise in dividends.

The growth is still supported to a significant degree – and more than in other countries – by the expansion of investment.

* Q3 ‘14/Q3 ‘13 = +0,9% | Source: NBB

0,2%

0,4% 0,4%

0,5%

0,4%

0,3% 0,3%

0,4%

0,6%

0,1%

0,5%

0,1%

0,5%

0,1%

0,4%

0,6%

0,4%

0,0%

0,1%

0,2%

0,3%

0,4%

0,5%

0,6%

0,7%

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

GDP(Chain linked - Q/Q-1)

0,4%

0,6%

0,0%

-0,1%

-6,6%

2,4%

1,3%

1,2%

1,1%

0,5%

-0,1%

-0,5%

GDP

Services

Industry except construction

Construction

Agriculture and forestry and fishing

Corporate investment

Imports

Public investment

Exports

Private consumption

Public consumption

Investment in housing

COMPONENTS OF BELGIAN GDP-GROWTH (Q/Q-1)

Source: NBB

Gro

ss v

alue

ad

ded

by

indu

stry

Mai

n ca

tego

ries

of e

xpen

ditu

re o

f G

DP

GDP

REGIONAL OUTLOOK

Source: www.plan.be

GDP GROWTH 2016-2018 2019-2022

BELGIUM +1.5% +1.5%

BRUSSELS +1.1% +1.3%

FLANDERS +1.7% +1.6%

WALLONIA +1.3% +1.3%

EMPLOYMENT 2014-2016 2019-2022

BELGIUM +1.2% +0.8%

BRUSSELS +1.0% +0.5%

FLANDERS +1.3% +0.9%

WALLONIA +1.0% +0.7%

ECONOMIC GROWTH PROJECTIONS FOR FLANDERS ARE SLIGHTLY HIGHER THAN FOR WALLONIA & BRUSSELS.

AS A RESULT NET JOB CREATION WILL BE BIGGER IN FLANDERS THAN IN THE OTHER REGIONS.

Flanders: +211.000 (cumulated for 2016-2022)

Wallonia: +75.000 (cumulated for 2016-2022)

Brussels: +36.000 (cumulated for 2016-2022)

http://www.plan.be/

0,50

1,00

1,50

2,00

2,50

3,00

3,50

%

consumption index health index

INFLATION RATE: IMPORTANT DOWNWARD REVISION

NO FURTHER IMPACT ON WAGES IN 2017 AND 2018?

The pivotal index was crossed in May 2017. According to the monthly

forecasts for the 'health price index', the pivotal index for public

wages and social benefits should not be exceeded by the ‘smoothed

health index’ in 2017 or in 2018.

INFLATION PROJECTIONS JULY ’17

The strong downward revision of inflation forecasts in 2018 is due

to the withdrawal of the ‘contribution to the Energy Fund’ (*) in

the Flemish Region from January 2018 onwards. Possible

replacement measures are not taken into account at this stage.

The average consumer price index: 2.0% in 2017 and 1.2% in 2018

The average 'health price index’(**): 1.7% in 2017 and 1.1% in 2018

(*) the so-called ‘Turtel-taks’

(**) used for the automatic indexation of wages, social benefits and house-rent

Source: Planbureau

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

1 |

2007

3 |

2007

5 |

2007

7 |

2007

9 |

2007

11 |

200

71

| 20

083

| 20

085

| 20

087

| 20

089

| 20

0811

| 2

008

1 |

2009

3 |

2009

5 |

2009

7 |

2009

9 |

2009

11 |

200

91

| 20

103

| 20

105

| 20

107

| 20

109

| 20

1011

| 2

010

1 |

2011

3 |

2011

5 |

2011

7 |

2011

9 |

2011

11 |

201

11

| 20

123

| 20

125

| 20

127

| 20

129

| 20

1211

| 2

012

1 |

2013

3 |

2013

5 |

2013

7 |

2013

9 |

2013

11 |

201

31

| 20

143

| 20

145

| 20

147

| 20

149

| 20

1411

| 2

014

1 |

2015

3 |

2015

5 |

2015

7 |

2015

9 |

2015

11 |

201

51

| 20

163

| 20

165

| 20

167

| 20

169

| 20

1611

| 2

016

1 |

2017

3 |

2017

5 |

2017

7 |

2017

Consumentenvertrouwen | La confiance des consommateurs | Consumer ConfidenceOndernemersvertrouwen | La confiance des chefs d'entreprise | Business Confidence

Since the beginning of this year, Belgian business and consumer confidence have both been close to or at their highest level in six years, and well above the long-term average.

THE CONFIDENCE INDICATORS STABILISE IN 2017

Source: NBB

SMALL BUT CONTINUING INCREASE OF EMPLOYMENT0,

5%0,

4%0,

5%0,

0%-0

,3%

-0,3

%-0

,1%

0,2%

0,1%

0,3%

0,4%

0,3%

0,4%

0,4%

0,2%

0,1%

0,1%

0,1%

0,0%

-0,1

%-0

,2%

-0,2

%0,

1% 0,1

%0,

1%0,

2%0,

1%0,

3%0,

2%0,

3%0,

3%0,

2% 0,3%

0,5%

0,5%

0,1%

0,3%

0,2%

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

2014

Q3

2015

Q1

2015

Q3

2016

Q1

2016

Q3

2017

Q1

Employment (total growth (Q/(Q-1))

Source: NBB

0,2%

-0,5%

-0,2%

-0,2%

-0,1%

0,0%

0,1%

0,2%

0,5%

0,6%

0,7%

0,8%

Total economy

Agriculture

Information & communication

Financial & insurance

Public & Education

Wholesale & retail trade,…

Industry

Construction

Entertainment & recreation

Human Health & social work

Real estate

Science, tech & administration

Employment growth Q2 2017 (Q/(Q-1))

JOB CREATION IN BELGIUM SINCE 2008 EMPLOYMENT IN BELGIUM HAS NEVER BEEN AS HIGH AS TODAY, BUTSITUATION DIFFERS BETWEEN SECTORS!

Source: NBB

84889296

100104108112116120124128132136

Agriculture and forestry and fishing Industry Construction Wholesale and retail trade, transportInformation and communication Financial & insurance Real estate Science, tech & administrationPublic & Education Human health and social work Entertainment and recreation

Source: Hoge Raad voor de Werkgelegenheid - Conseil supérieur de l'emploi

HIGH EMPLOYMENT INTENSITY OF GROWTH

Increase to 0.66 on average between 2011 and 2016: a y-o-y GDP-growth of

1% leads to a 0.66% rise in employment.

(> than the European average and the 3 neighbour countries)

Explanations?

• Slowdown of the productivity gains

• Gradual shift towards a service economy which is characterized by a

lower productivity and an higher employment intensity than the

industry.

• Job creation supported by a wage restraint policy and structural

reforms that increase labour supply. 0,05 0,09

0,26

0,53

0,66

1971-1980 1981-1990 1991-2000 2001-2010 2011-2016

Employment intensity of growth =

𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑒𝑒𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝐺𝐺𝐺𝐺𝐺𝐺 𝑔𝑔𝑔𝑔𝑒𝑒𝑔𝑔𝑒𝑒𝑔

GROWING IMPACT OF WAGE MODERATION BYGOVERNMENT

The Belgian Government continues in its efforts to lower the cost of labour

Apparently, our labour cost isn’t growing as fast as in our neighbour countries

Source: Eurostat

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1

Labour cost index % change Q/Q-4

Euro area (19 countries) EU (28 countries) Belgium GermanyFrance Netherlands United Kingdom

STRONG RISE IN JOB OFFERS BUT NOT IN BRUSSELS(PLACED IN PES)

Source: RVA

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

2007

/Q1

2007

/Q2

2007

/Q3

2007

/Q4

2008

/Q1

2008

/Q2

2008

/Q3

2008

/Q4

2009

/Q1

2009

/Q2

2009

/Q3

2009

/Q4

2010

/Q1

2010

/Q2

2010

/Q3

2010

/Q4

2011

/Q1

2011

/Q2

2011

/Q3

2011

/Q4

2012

/Q1

2012

/Q2

2012

/Q3

2012

/Q4

2013

/Q1

2013

/Q2

2013

/Q3

2013

/Q4

2014

/Q1

2014

/Q2

2014

/Q3

2014

/Q4

2015

/Q1

2015

/Q2

2015

/Q3

2015

/Q4

2016

/Q1

2016

/Q2

2016

/Q3

2016

/Q4

2017

/Q1

2017

/Q2

Flanders Wallonia Brussels+14.1% +19.5% -4,9%Q/Q-4:

1,9%

3,3%3,1%

2,7% 2,7% 2,6%2,4% 2,3% 2,2% 2,2% 2,1% 2,1% 2,0%

1,8%1,6% 1,6% 1,5%

1,3% 1,2% 1,2%1,0% 1,0% 1,0% 1,0%

0,9%0,8%

EU (2

8 co

untr

ies)

Belg

ium

Czec

h Re

publ

icFi

nlan

dSw

eden

Germ

any

Uni

ted

King

dom

Net

herla

nds

Croa

tiaAu

stria

Slov

enia

Nor

way

Esto

nia

Latv

iaLi

thua

nia

Form

er…

Luxe

mbo

urg

Rom

ania

Cypr

usSw

itzer

land

Bulg

aria

Irela

ndGr

eece

Slov

akia

Port

ugal

Spai

n

Source: NBB

JOB VACANCY RATE REFLECTS MALFUNCTIONING & TIGHTENING OF THE BELGIAN LABOUR MARKET

IT REFLECTS THE UNMET DEMAND FOR LABOUR, AS WELL AS POTENTIAL

MISMATCHES BETWEEN THE SKILLS AND AVAILABILITY OF THOSE WHO ARE

UNEMPLOYED AND THOSE SOUGHT BY EMPLOYERS.

Source: Eurostat

1,9

3,3

Evolution of the job vacancy rate

European Union (28 countries) Belgium

Job vacancy rate = 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑝𝑝𝑝𝑝𝑝𝑝𝑣𝑣𝑝𝑝𝑝𝑝𝑣𝑣𝑣𝑣𝑜𝑜𝑝𝑝𝑜𝑜𝑜𝑜𝑜𝑜+𝑜𝑜𝑣𝑣𝑝𝑝𝑣𝑣𝑣𝑣𝑜𝑜𝑝𝑝𝑜𝑜𝑜𝑜𝑜𝑜 𝑝𝑝𝑝𝑝𝑝𝑝𝑣𝑣𝑝𝑝

Source: NBB

SCARCITY: JOB VACANCY RATE BY NACE (BELGIUM – Q2 2017)

Source: Eurostat

1,3%1,8%

2,4%2,4%

2,6%2,6%

2,9%3,0%

3,3%3,3%

3,4%3,5%3,5%

4,1%4,7%

5,7%6,8%

8,2%

P - EducationQ - Human health and social work activities

K - Financial and insurance activitiesD - Electricity, gas, steam and air conditioning supply

O - Public administration and defence; compulsory social securityS - Other service activities

L - Real estate activitiesE - Water supply; sewerage, waste management and remediation activities

G - Wholesale and retail trade; repair of motor vehicles and motorcyclesH - Transportation and storage

C - ManufacturingR - Arts, entertainment and recreation

I - Accommodation and food service activitiesN - Administrative and support service activities

B - Mining and quarryingF - Construction

J - Information and communicationM - Professional, scientific and technical activities

… and the HR service providers ?

THE FEDERGON TAW-INDEX INCREASES STEADILY

264,1

241,1

274,9

01-0

7

04-0

7

07-0

7

10-0

7

01-0

8

04-0

8

07-0

8

10-0

8

01-0

9

04-0

9

07-0

9

10-0

9

01-1

0

04-1

0

07-1

0

10-1

0

01-1

1

04-1

1

07-1

1

10-1

1

01-1

2

04-1

2

07-1

2

10-1

2

01-1

3

04-1

3

07-1

3

10-1

3

01-1

4

04-1

4

07-1

4

10-1

4

01-1

5

04-1

5

07-1

5

10-1

5

01-1

6

04-1

6

07-1

6

10-1

6

01-1

7

04-1

7

07-1

7

Source: NBB

OTHER FEDERGON-SECTORS

Activity Evolution first half of 2017Services to individuals Worked hours +2.4%

Projectsourcing Worked hours +7.7%

Interim Management Assignments -0,6%

Training & Development Turnover -2.2%

Recruitment, Search & Selection

Turnover +6.2%

Outplacement Guidances -6.0%

Temporary agency work Worked hours +4.7%

Meer infoPlus d’infos

http://federgonbe.webhosting.be/sites/default/files/custom/uploads/kwartaalrapport_q2_2017.pdfhttp://federgonbe.webhosting.be/sites/default/files/custom/uploads/rapport_trimestriel_q2_2017.pdf

THE CONTINUING BUT MODERATE ECONOMIC GROWTH, CHARACTERIZED BY A QUITE HIGHJOB INTENSITY, RESULTS IN A STEADY NET EMPLOYMENT GROWTH, ESPECIALLY IN PROFITMAKING SECTORS. MOREOVER, THE DEMOGRAPHIC PRESSURE DRIVES THE REPLACEMENTDEMAND IN A LOT OF COMPANIES AND SECTORS.

THE MISMATCH PROBLEM AND LABOUR SHORTAGES ARE BACK IN THE FOREFRONT, TOSUCH AN EXTENT THAT THE ECONOMIC GROWTH REMAINS BELOW ITS POTENTIAL. THISALSO APPLIES TO THE GROWTH IN THE FEDERGON-SECTORS, WHICH IS INCREASINGLYCHALLENGED BY THE TIGHTENING LABOUR MARKET, THE IMPACT OF WHICH DIFFERS,NEVERTHELESS, BETWEEN GEOGRAPHIC AREAS AND JOB FUNCTIONS.

THE ECONOMIC OUTLOOK IN THE SHORT & MEDIUM TERM REMAINS POSITIVE. THECHALLENGE IS STILL TO FIND CREATIVE AND INNOVATIVE SOLUTIONS FOR HR PROBLEMS INCLIENT COMPANIES. ANYHOW, THE PUBLIC AUTHORITIES CAN PLAY A FACILITATING ROLE,NAMELY CONTINUE THE FOCUS ON ACTIVATION OF THE LABOUR RESERVE THROUGH ACLOSER CONTROL OF THE AVAILABILITY OF THE UNEMPLOYED AND RELENTLESS EFFORTS INTRAINING AND GUIDANCE.

CONCLUDING REMARKS

RESEARCH & ECONOMIC AFFAIRS DEPARTMENT

PAUL VERSCHUEREN / FREDERIEK DE KIMPE

Havenlaan 86c/302 - 1000 BrusselAvenue du Port 86c/302 - 1000 BruxellesTel: 02/203 38 03 Fax: 02/203 42 68

stat@federgon.be

CONTACT

mailto:stat@federgon.be

Slide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21Slide Number 22Slide Number 23Slide Number 24… and the HR service providers ?Slide Number 26Slide Number 27Slide Number 28Slide Number 29