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Recent Eurofound report (published at the end of April 2015)* has investigated successful initiatives that have been implemented in five countries in the following areas: fostering an entrepreneurial mindset and culture; removing perceived practical and logistical barriers; and providing information, advice, coaching and mentoring to young would‑be entrepreneurs.

It is seen that entrepreneurship is not a viable career path for all young people; only a friction of youth population (just a minority) is equipped with the right skills, incentives and proper attitudes. Hence peoples’ values shall be turned to future initiatives whereas public policies should focus on this target group of youth entrepreneurship to ensure the best use of available funds.  

However, research has shown that among young people the wish to become an entrepreneur, and their assessment of its feasibility, is lower in some EU member states compared to countries in the US and emerging economies.

Attention to youth entrepreneurship

It is apparent that only a fraction of young Europeans is interested in becoming entrepreneurs. Eurofound’s new report “Youth entrepreneurship in Europe: Values, attitudes, policies” looks at factors that could unlock this entrepreneurial potential, and influence young people’s decision to become self-employed. Public authorities in the EU states shall take a closer look at facilitating youth entrepreneurship.   

Fostering greater participation of young people in the labour market has become a priority in Europe, and there are a number of different strategies in place at national level to increase youth entrepreneurship. The report analyses selected policy measures aimed at fostering youth entrepreneurship, organised around three main support pillars: fostering an entrepreneurial mindset and culture among young people; providing the right information and support to young would-be entrepreneurs; and removing perceived practical and logistical barriers.

The Eurofound report shows that almost half of young Europeans are interested in becoming entrepreneurs, and over 40% believe it is feasible. However, only 6.5% of young people in work are self-employed, and there are significant national and gender differences in Europe when it comes to the amount of young people that actually set up their own business.

There are significant differences between EU Member States, and the share of youth self-employment varies from 15% or more in Italy and Greece to 3% or less in Germany and Denmark. Youth self-employment is also a predominantly male activity as just 33% of young self-employed people in the EU-28 in 2013 were women. There is also an issue with the overrepresentation of young self-employed people in sectors with low barriers to entry, such as construction, where there are issues with ‘bogus’ or false self-employment.

Although youth entrepreneurship is not a panacea for youth unemployment, a long-term strategy for supporting the creativity and ambition of Europe’s entrepreneurial minded young people can produce positive results. Tailoring policies and initiatives to those with the right skills, values and ideas, and encouraging the creativity and ambition of young people could significantly impact the economic and social landscape of Europe in the future.

Long-term strategy needed

The level of youth unemployment remains very high in several EU states, and there is increased awareness of the economic and social consequences associated with long-term disengagement from the labour market.

Entrepreneurs have high potential to create employment and ensure sustainable growth, while promoting youth entrepreneurship and making Europe more entrepreneur-friendly. It has recently become a priority on the EU policy agenda.

However, self-employment and entrepreneurship are not a panacea for solving the youth unemployment crisis, as only a minority of young people has the right skills, ideas and personality traits. However, making Europe more business-friendly and helping young people transform their creative ideas into successful business plans by removing the barriers to entrepreneurship has many potential benefits, including direct and indirect job creation and the development of human capital and new skills.

The Eurofound report provides an overview of youth entrepreneurship in the context of the European policy agenda and individual EU states. It looks at factors that influence the decision to become self-employed and examines the individual and social attitudes of young people towards entrepreneurship, comparing Europe with other comparable parts of the world. To identify the specific traits that characterise the ‘entrepreneurial personality’, it investigates work values and personality traits of young European entrepreneurs as compared with young employees. Finally, the report analyses selected policy measures aimed at fostering youth entrepreneurship in Finland, Hungary, Ireland, the Netherlands and Spain, organised around three main support pillars: fostering an entrepreneurial mindset and culture among young people; providing information, advice, coaching and mentoring to young would-be entrepreneurs; and removing perceived practical and logistical barriers.

History and policy context

Examples of relevant activities include the 2011 ‘Youth Opportunities Initiative’ and ‘Youth Employment Package’, which led to the introduction of a Youth Guarantee in all European Member States – adopted by the European Council in April 2013. The Commission subsequently launched the 2013 ‘Youth Employment Initiative’ and the Communication ‘Working together for Europe's young people – A call to action on youth unemployment’ in order to accelerate the implementation of the Youth Guarantee and the investment in young people.

In this framework, youth entrepreneurship has become a very high priority in the EU debate due to its potential for job creation and human capital development. For example, in 2013 the European Commission published a Communication on the Entrepreneurship 2020 Action Plan. This document proposed decisive actions to unleash the European entrepreneurial potential and to remove existing obstacles to entrepreneurship.

However, it is still a very difficult task presently for young people in Europe to find their place in the world of work. Fostering greater participation of young people in the labour market has therefore become a policy priority.

Report’s key findings

Despite the high policy interest in youth entrepreneurship, only a very small minority of young people in work opted for self-employment in 2013 (6.5% of young people between the ages of 15 and 29; in total about 2, 7 million people). There are significant differences between the EU states, and the share of youth self-employment varies from 15% or more in Italy and Greece to 3% or less in Germany and Denmark. This diversity may reflect existing national differences in terms of barriers/opportunities to set up new businesses, as well as different labour market conditions.

Youth self-employment is a predominantly male activity: just 33% of young self-employed people in the EU-28 in 2013 were women. Of additional concern is the overrepresentation of young self-employed people in sectors with low barriers to entry, such as construction, where the problem of ‘bogus’ or false self-employment is significant.

The decision to become self-employed is complex and determined by different micro and macro factors. Furthermore, social and individual attitudes shape the perception and feasibility of entrepreneurship as a career option. Despite the low share of young self-employed generally, young people in Europe are quite interested in setting up as entrepreneurs: 48% of this group find this employment form desirable and 41% view it as feasible. While these shares are considerably higher than the share of young self-employed people, they are considerably lower than those recorded in other parts of the world such as Brazil, China, India and the United States.

By comparing the work and human values of young self-employed people with those of young employees, this report shows that the entrepreneurial personality has specific value preferences which affect social behavior.

Significant differences between the two groups emerge. In particular, among young people self-employment is positively associated with self-direction and stimulation, and negatively related to tradition, conformity and security. These results suggest that it is important for young self-employed people to be free and creative, to try different things in life and take risks; this group is less inclined to follow tradition and to prioritise having a secure and stable environment.

Openness to change is a specific behavioral characteristic of young self-employed people, while conformity is clearly associated with employees.

The report examines 15 selected policy measures and initiatives that foster youth entrepreneurship in the five selected EU Member States. Eight policy measures have been identified in relation to policy pillar 1: Fostering an entrepreneurial mindset, attitudes and culture among young people. Some policy measures recognise the important role that teachers play in these processes (‘train-the-trainers’) and the initiatives, usually offered within the education system, tailor the goals and tools according to the levels and age of students.

Seven policy measures were identified in relation to policy pillar 2: Providing information, advice, coaching and mentoring. These help young entrepreneurs to overcome gaps in their work/business-related knowledge and experience via different support tools.

Finally, seven policy measures were found regarding policy pillar 3: Removing perceived practical barriers and easing access to credit. These deal with the lack of initial capital and difficulties in obtaining external finance that especially affect young entrepreneurs, as well as with finding a premises and physical infrastructure to develop their businesses.

Policy pointers

Policies and initiatives to promote youth entrepreneurship should be targeted at those with the right skills, values and ideas to maximise the results of public investment. While the promotion of youth entrepreneurship is primarily the responsibility of public authorities, private and/or civil society organisations can play a very important role, especially where the public initiative is weak.

EU member states can learn from one another’s experiences, especially in countries where developing an entrepreneurship culture among young people is at an embryonic stage. Youth entrepreneurship support needs to be understood as a long-term strategy: the policies put in place are more likely to produce both tangible (new companies) and intangible results (changes in the general attitude of the young towards self-employment) in the medium to long term.

Support programs for youth entrepreneurs are especially effective when they provide a balanced, comprehensive range of support, as the difficulties encountered are often interrelated and require a combined approach. This support must be spread over a relatively long time span to be fully effective, as the first years of any enterprise are usually the most crucial. The quality of the teachers and mentors/counselors is key for the success of the initiatives. Young entrepreneurs value in particular the experience and know-how of more experienced entrepreneurs.  

Reference:

http://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef1507en1_0.pdf

*) Youth entrepreneurship in Europe: Values, attitudes, policies/Eurofound Report-2015

European Foundation for the Improvement of Living and Working Conditions, at:

http://www.eurofound.europa.eu/publications/report/2015/labourmarket/youth-entrepreneurship