The Missing Entrepreneurs 2015 POLICIES FOR SELF-EMPLOYMENT AND ENTREPRENEURSHIP

Transcription

1 The Missing Entrepreneurs 2015 POLICIES FOR SELF-EMPLOYMENT AND ENTREPRENEURSHIP EXECUTIVE SUMMARY

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3 The Missing Entrepreneurs 2015 Policies for Self-employment and Entrepreneurship OECD/European Union 2015 The job creation challenge Executive Summary Despite some signs of recovery from the recent economic crisis, European labour markets continue to face many challenges. Unemployment continues to be one of the top political priorities of European governments and the question on everybody s mind is how can we create jobs?. The jobless recovery has made it very difficult for young people to enter the labour market for the first time and difficult for unemployed and inactive people to move into employment. This will have lasting effects, for both the individuals and for society. There is no silver bullet solution to solving this employment challenge. A multipronged approach will be needed that includes measures to improve the macroeconomic environment and stimulate investment as well as policy actions that address labour market challenges more specifically. Inclusive entrepreneurship policies can be part of this suite of policy actions. These policies aim to ensure that all groups of people, regardless of their background and personal characteristics have an opportunity to create businesses and work in self-employment. Entrepreneurship among under-represented and disadvantaged groups In 2014, there were 30.6 million self-employed people in the European Union. Of these, 24.5 million were women, youth (15-24 years old), seniors (50-64 years old), those who were unemployed in the previous year or were born outside of the European Union. Although this accounts for the majority of self-employment activities, people in these groups typically face greater barriers to business creation and to growing their business than those in the mainstream and more could be achieved if these barriers could be overcome. Furthermore, entrepreneurs and the self-employed from disadvantaged and under-represented groups tend to have lower quality businesses, for example in terms of income and revenue, and businesses that are more likely to be unsuccessful. Policies for inclusive entrepreneurship Growing businesses Inclusive entrepreneurship policies have an important role to play in helping overcome the barriers to quality business start-ups by under-represented and disadvantaged groups. They can focus on several areas: improving institutions (including culture) and regulations, access to finance and entrepreneurship skills. However, one area that is often overlooked is supporting business growth by improving the quality of start-ups. This and survival is one of the special focus areas this report. It is often assumed that the businesses of groups touched by social exclusion are single-person operations in low growth industries. The Missing Entrepreneurs 2015: Policies for Self-employment and Entrepreneurship OECD/European Union

4 Executive Summary This is, of course, not always the case. Women entrepreneurs, youth entrepreneurs, senior entrepreneurs and ethnic minority and migrant entrepreneurs are nearly as likely to have employees as core-age male (25-49 years old) entrepreneurs (27% vs. 29%). Moreover, many entrepreneurs from these groups seek high growth. For example, young entrepreneurs (18-30 years old) are 30% more likely than the overall population of entrepreneurs to expect to create at least 19 jobs in their business during the first 5 years of business operation. The policy role here is two-fold. First, more emphasis is needed in self-employment and startup advice, financing, consultancy, training on promoting and sustaining growth rather than promoting start-ups as an end in itself. Second, more people can be encourage to start growth-oriented enterprises, for example by actions to build self-confidence and stimulate motivation for growth. Schemes such as Going for Growth in Ireland motivate and support women who are growing their businesses with peer groups. This particular initiative is delivered at a relatively low cost EUR per participant while one cohort (60 women) of the 2013 programme cycle created 50 additional jobs in the following year. In addition to motivation, growing businesses need financing. Special funds such as the Seed Money Fund in the Province of Trento in Italy are effective at supporting innovative and growing businesses that are operated by entrepreneurs from outside of the mainstream. This Fund uses targeted calls to seek proposals for funding for innovative projects; these calls have been targeted at specific groups of entrepreneurs such as youth and women. In 2011, 40 businesses were financed with EUR 4.5 million. Coaching and mentoring One of the most effective ways of helping entrepreneurs acquire the necessary skills for success is through coaching and mentoring. Most public policy initiatives seek volunteer coaches and mentors from the local business community. To increase the chances of being effective, these initiatives should provide training to coaches and mentors and use a matching process that considers both individual and business characteristics. An example is the Ergani Center in Northern Greece. It was established in 1991 and offers women entrepreneurs mentoring programme using volunteer women from the local business communities. An alternative approach that has demonstrated success for entrepreneurs from outside of the mainstream is peer-coaching and mentoring. This can achieve a high take-up rate because participants are more likely to identify with their peers than professional coaches. It is particularly important for groups such as ethnic minority entrepreneurs who typically have low rates of participation in public sector support programmes. Key policy recommendations Support both business creation and business growth with inclusive entrepreneurship policy actions. Focus growth support on those individuals who are motivated for growth. Promote successful role models from all social groups involved in entrepreneurship, especially groups such as women, youth, seniors, people with disabilities and ethnic minority and migrant groups. Aim to inspire potential entrepreneurs and demonstrate that it is possible to start and grow businesses. Build the entrepreneurial networks of growth-oriented entrepreneurs from outside the mainstream to help fill gaps in their access to entrepreneurship skills and finance. Although developing networks within each social group can help create a supportive 4 The Missing Entrepreneurs 2015: Policies for Self-employment and Entrepreneurship OECD/European Union 2015

5 Executive Summary community, it is important also to build links to the mainstream business community so that the pool of potential knowledge and resources is maximised. Aim to deliver support for growing businesses through mainstream support channels. This will require the provision of targeted outreach and support to make initial contact with clients from under-represented and disadvantaged groups. Support the development of entrepreneurship skills and the development of selfconfidence with coaching and mentoring relationships. Use a matching process that adopts clearly defined criteria such as gender, ethnicity, and business sector. Limit coaching and mentoring relationships to periods of one or two years to discourage a relationship built on dependence. Provide training for coaches and mentors that includes sensitivity training to issues and challenges faced by disadvantaged entrepreneurs and aims to improve communication skills. Increase the use of robust evaluations to measure the impact of inclusive entrepreneurship schemes to build an evidence-base that can inform policy development. Such evaluations should not only examine efficiency and cost-effectiveness, but also deadweight (i.e. supporting an entrepreneur who would have behaved in the same way without support) and displacement effects (e.g. when supporting one entrepreneur puts another out of business). The Missing Entrepreneurs 2015: Policies for Self-employment and Entrepreneurship OECD/European Union

6 This is the executive summary of the publication The Missing Entrepreneurs 2015: Policies for self-employment and entrepreneurship. The full publication is available on the OECD ilibrary at