Human Capital: regional challengesa Central European perspective

Edwin De Boeck

Chief Economist KBC Group

KBC in Central Europewell-defined core markets to access ‘new growth’ in Europe

BE¹ CZ SK HU BG

Loans and deposits

Investment funds

Life insurance

Non-life insurance

1. Excluding Centea and Fidea2. Including 55% of the joint venture with CMSS

MARKET SHARE, AS OF END 2012

BELGIUM

CZECH REPSLOVAKIA

HUNGARY

KBC Group’s core marketsBelgium and CEE-4

220% 20%10% 8% 2%

BULGARIA

20%8%30%35%

8%17%

13%3%5%

11%

4%3%6%

9%

Consumer confidence

producer confidence OECD- leading indicators

Central Europegrowth supported by global economic recovery

real GDP (2000 = 100)

Source: Eurostat Source: Eurostat

GDP per capita (PPS, in % of EU1-average)

regional challenges but macro-economic ‘convergence’ has been stalling

employment rate (employed in % of 20-64 years old)

employment rate by age category (employed in % of age group)

Source: Eurostat Source: Eurostat

regional challenges How to increase labour market participation ?

population at active age(20-64 years old, 2000 = 100)

Source: Eurostat Source: Eurostat

old-age dependency ratio (65+ years old as a % of 20-64)

regional challenges ageing will reduce the labour force

keep human capital (longer) at work… effective retirement age (in years)

…and keep it productive (‘employable’) participation to life-long learning

(in % of 20-64 years old)

Source: Eurostat Source: Eurostat

regional challenges keeping human capital at work …and productive

school expectancyexpected years of education over a lifetime

Source: Eurostat Source: Eurostat

regional challengeseducation, education, education…

tertiary education: graduates in maths, science and technology

(in % of all fields)

tax wedge: labour taxes in % of average wage (single individuals)

Source: OECD

regional challengeswatch out for excessive taxes on labour income

OECD (2010):«Cutting the ’tax wedge’ to the OECD-average could raise Hungary’s employment rate by about 4 %-point over a 10-year horizon»

expenditures on R &D(in % of GDP)

net foreign direct investments (in % of GDP)

Source: World Bank Source: Eurostat

regional challenges(re-)activate knowledge transfer through FDI’s

WEF global competitiveness index(ranking on 148 countries)

IMD global competitiveness index(ranking on 60 countries)

regional challengesinternational competitiveness rankings

regional challengesconclusion

Best way to ‘preserve human capital in CE’ is to restore macro-economic convergence of the region by growth supportive economic policies

increase labour participation

watch out for excessive labour taxation (tax wedge)

invest in education and life-long learning

stimulate knowledge transfer and investments in R&D, a.o.through FDI’s

13

awards:Best Bank in Hungary in 2013 Euromoney Awards for Excellence

Bank of the Year in 2008 and 2011

Best Foreign Bank in 2009 and 2010

Best Trade Finance Bankin 2010 and 2011

K&H Bank – overview

KBC is an active professional 100% shareholder of K&H Bank providing stability, liquidity and strong capital base

K&H is one of the market leaders on the Hungarian corporate banking market

universal banking services

country-wide retail and corporate branch network

pioneer in Treasury, Cash management, Trade finance and agricultural solutions, providing tailor-made products

attracting young talentnearly 700 participants in 4 K&H Student Cups

160+ student internships

300+ applicants for the K&H Young Graduate Program

K&H is attractive to talent

external recruitmentavg. 20+ applicants per vacancy

Most attractive employerfor graduates Figyelő Hewitt TOP302010

Most attractive employerfor graduates Figyelő Hewitt TOP302010

fostering internal career moves

about 10% (400) rotates per year

50% vertical

70+% of people management vacancies filled internally

K&H participates in the KBC Top Talent Program

avg. 9 days of training per employee each year, above 95% satisfaction

K&H fosters and develops talents

Best Talent Mentoring System in Hungary2012

Best Talent Mentoring System in Hungary2012

Diversity and family friendlyemployer2013

Diversity and family friendlyemployer2013