ManpowerGroup 2012 Annual Report Download - page 48

LEGAL REGULATIONS
The workforce solutions and services industry is closely regulated in all of the major markets in which we operate except
the United States and Canada. Many countries impose licensing or registration requirements and substantive restrictions
on employment services, either on the provider of recruitment services or the ultimate client company, or minimum benefits
to be paid to the temporary employee either during or following the temporary assignment. Regulations also may restrict
the length of assignments, the type of work permitted or the occasions on which contingent workers may be used.
Changes in applicable laws or regulations have occurred in the past and are expected in the future to affect the extent to
which workforce solutions and services firms may operate. These changes could impose additional costs, taxes, record
keeping or reporting requirements; restrict the tasks to which contingent workers may be assigned; limit the duration of or
otherwise impose restrictions on the nature of the relationship (with us or the client); or otherwise adversely affect the
industry. All of our other service lines are currently not regulated.
In many markets, the existence or absence of collective bargaining agreements with labor organizations has a significant
impact on our operations and the ability of clients to utilize our services. In some markets, labor agreements are structured
on a national or industry-wide (rather than a company-by-company) basis. Changes in these collective bargaining
agreements have occurred in the past, are expected to occur in the future, and may have a material impact on the
operations of workforce solutions and services firms, including us.
In Germany, six labor unions representing approximately two-thirds of the market for temporary workers entered into new
Collective Labor Agreements with the temporary help industry. Two of these new agreements became effective in November
of 2012 and the others will become effective in January–May of 2013. We expect additional unions representing temporary
workers to negotiate similar arrangements. These agreements will require, among other things, higher wages to temporary
employees. Our intention is to pass these higher wage rates on to clients, but at this stage we are unable to assess the
success of this effort or the impact these higher costs could have on market demand. We expect this could have an
unfavorable impact on our gross profit margin percent in Germany, as we may not be able to pass on these additional
costs with a mark-up. However, we currently do not expect a significant impact on our consolidated or Northern Europe
financial results.
In July 2011, the French Social Security Act FY11 was passed by the French government, which requires French companies
to pay a bonus to all employees when dividends paid to shareholders have increased compared to the average dividend
paid over the previous two fiscal years. We currently do not expect the legislation to have a material impact on our financial
results in the near term.
The Agency Workers Directive (“AWD”) impacts all EU member states and was passed to ensure “equal treatment” for
agency (temporary) workers. It also requires all member states to review and address unnecessary prohibitions and
restrictions on the use of agency workers. Equal treatment has been in place by law in many countries; therefore, we have
not seen any significant changes. The United Kingdom, however, was the least regulated staffing market in Europe and put
various regulations into effect in October 2011 as a result of AWD. We have seen a decline in gross profit margin, as cost
increases could not always be passed on with a normal mark-up, but no other significant impact on our business from
these changes.
The French government announced proposed legislation in 2012 to drive investment in further employment opportunities
by giving tax credits to most French and foreign enterprises subject to corporate tax in France. This proposed law, Credit
d’Impôt pour la Compétitivité et l’Emploi (“CICE”), would provide income tax credits based on a percentage of wages
paid to employees receiving less than two and a half times the French minimum wage. The tax credit would be 4% of
eligible wages in 2013 and would increase to 6% of eligible wages in 2014, and would be used to reinvest in employment
and any other investment to improve the competitiveness of the Company. Any amounts not creditable against our current
income taxes payable would be refunded after three years. The CICE is expected to be passed in the first quarter of 2013
and would become effective as of January 1, 2013. We are currently assessing the impact the CICE may have on our
financial results.
RECENTLY ISSUED ACCOUNTING STANDARDS
In May 2011, the FASB issued new accounting guidance on fair value measurement. The new guidance clarifies some
existing concepts, eliminates wording differences between United States Generally Accepted Accounting Principles
(“GAAP”) and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to
achieve convergence between United States GAAP and IFRS. The new guidance results in a consistent definition of fair
value and common requirements for measurement of and disclosure about fair value between United States GAAP and
IFRS. It also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level
3) inputs. We adopted this guidance effective January 1, 2012. There was no impact of this adoption on our Consolidated
Financial Statements.
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations
ManpowerGroup 2012 Annual Report Management’s Discussion & Analysis
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