SUPPORTING YOUTH IN ENTREPRENEURSHIP

LEED Trento Centre 28 September 2015

David HalabiskyLocal Economic and Employment Development ProgrammeOECDdavid.halabisky@oecd.org

Agenda

1. Work programme on Inclusive Entrepreneurshipa. Objectivesb. Outputsc. Ongoing work

2. Youth entrepreneurship in numbersa. The challengeb. Interestc. Activity levelsd. Barriers

3. Key action areas for public policya. Build a supportive institutional environmentb. Improve entrepreneurship skillsc. Facilitate access to financed. Developing strategies and co-ordination

4. Principles for youth entrepreneurship support

Inclusive entrepreneurship

Objectives:1. Present data on the state of self-employment and

entrepreneurship activities by under-represented social groups (e.g. women, youth, seniors, the unemployed, migrants, people with disabilities).

2. Examine existing policies, recent developments and areas for improvement.

3. Build capacities of policy makers at national and local levels for policy designs and implementation.

Outputs to date:• 9 Policy briefs• 2 Annual reports (2015 forthcoming)• 3 Capacity building seminars

Inclusive entrepreneurship

Policy briefs

http://www.oecd.org/cfe/leed/inclusive-entrepreneurship.htm

Annual reports: The Missing Entrepreneurs

The Missing Entrepreneurs 2015 will be available on 23 November

1. Youth entrepreneurship reviews:– 3 national case study projects in Italy, Lithuania and

Spain

2. Rapid policy assessments:– Latvia, Poland, Slovenia, Netherlands, Hungary,

Germany, Belgium, Finland, Portugal

3. Compendium of good practices:– 20 in-depth good practices– Identify key principles of good policy design– Published early 2016

Ongoing work

Youth entrepreneurship in numbers

The challenge: Unemployment rates, 2014

• Youth unemployment rates are double the rate for adults in most Member States.

Source: Eurostat LFS

German

y

Austri

a

Nether

landsMalt

a

Denmar

k

Estonia

Czech

Rep

ublic

United

King

dom

Lithua

niaLatv

ia

Sloven

ia

Hunga

ry

Finlan

dEU28

Luxem

bour

g

Sweden

Belgium

Franc

e

Bulgar

ia

Irelan

d

Poland

Roman

ia

Slovak

ia

Portug

al

Cypru

sIta

ly

Croati

a

Greec

eSpa

in0

10

20

30

40

50

60Adults (15-64 years old) Youth (15-24 years old)%

Perceptions and feasibility, 2012

• 45% of youth have a preference for self-employment and 41% believe that it is feasible to be self-employed in the next 5 years.

Source: EC (2013), “Entrepreneurship in the EU and Beyond”, Flash Eurobarometer No. 354.

Total Youth0

10

20

30

40

50

60Preference for self-employment Feasibility of self-employment in next 5 years%

New business ownership rates, 2009-13

Source: Special tabulations of the GEM adult population survey, 2009-13.

• But few youth are successful in creating sustainable businesses.

Italy

France

Belgium

Germany

Croatia

DenmarkSp

ain

Sweden

Slove

nia

Luxe

mbourgEU-25

Finland

Austria

Ireland

Czech Republic

Romania

Hungary

Greece

Portugal

United Kingdom

Poland

Netherlands

Slova

k Republic

Latvi

a

Estonia

Lithuania

0

1

2

3

4

5

6

7

8Total (18-64 years old) Youth (18-30 years old)%

Barriers to self-employment, 2012

Source: EC (2013), “Entrepreneurship in the EU and Beyond”, Flash Eurobarometer No. 354.

• Youth most often identify finance and skills as barriers.

Not enough capital

Current eco-nomic climate

is not good for start-ups

Not enough skills to be

self-employed

No business idea

Difficult to reconcile with family com-

mitments

Risk of failures and its legal and social

consequences are too big

Adminis-trative dif -

ficulties

0

5

10

15

20

25

30

Reasons that self-employment is not feasible in the next 5 yearsAll adults Youth%

Key action areas for public policy

1. Build a supportive institutional environment

1. Ensure that the regulatory environment does not discriminate or provide disincentives– Be supportive in welfare, tax and regulatory systems– Ensure that bankruptcy laws do not prevent second chances

2. Promote positive image of entrepreneurship– Inform youth and society about the potential of youth

entrepreneurs– Celebrate young entrepreneurs as role models

3. Ensure that youth can access information– Provide ready information on how to start up– Make business start-up support easily accessible to youth

Technology InQbator, Poland• Target group: Students and graduates• Objectives:

– To support new entrepreneurs in new technology fields and promote entreprenuership

• Overview: – Provide standard incubator services: office space, consulting, training,

networking– But also unique approaches to promoting entrepreneurship more

broadly:1. “Wheel of Fortune” radio weekly programme2. Poznan Days of Academic Entrepreneurship3. “On the Wings of Business” TV programme

– Financed by Ministry of Science and Higher Education; National Research and Development Centre; Municipal government

• Impact:– >4000 participants at Poznan Days of Academic Entrepreneurship– Radio show since 2006; has expanded to other cities

2. Improve entrepreneurship skills

1. Provide entrepreneurship education at all levels– Develop entrepreneurial mindsets as well as new

ventures– Provide opportunities to learn through experience– Include low educational achievers

2. Provide coaching and mentoring– Use an appropriate matching mechanism to ensure a

good fit between coachee/mentee and coach/mentor

3. Encourage networking– Create links with other young entrepreneurs, senior

entrepreneurs, investors and partners

DreamStart, Brussels

• Target group: Unemployed youth (18 – 30 years old)• Objectives:

– To support development of business idea and preparation of business plan• Overview:

– Business plan development course – Participants are selected through in-take interviews that assess their

business ideas, drive and chances of success– 3 full days per week to study and interact with entrepreneurs and experts

for 2 months– Microcredit is often accessed through MicroStart, a sister organisation– Funded by Public funding (42%), private sector donations (7%) and in-kind

contributions (51%)• Impact:

– 60% start a business within a year; 30% of these worked full-time in their business and 60% combined their business start-up with paid employment

– Budget is EUR 72 000 (excludes EUR 70 000 in-kind contributions), or EUR 1950 per participant

• Target group: Unemployed university graduates under the age of 35• Objectives:

– Reduce the unemployment among young graduates• Overview:

– Training modules (4 months): business plan development; business financing; commercial law; human resources; accounting; marketing; sales; ICT; networking

– Selected participants hired by a Regional Development Agency during training

– National conference to facilitate networking and collaboration – Following training, 1 year of coaching and advisory services – Funded by European Social Fund (85%) and Slovenian Ministry of

Labour, Family, Social Affairs and Equal Opportunities (15%)• Impact:

– 2013: 1246 applicants and 250 participants; 134 set up business or found employment

– Budget was EUR 3.89 million, or EUR 15 500 per participant

Entrepreneurially into the World of Business, Slovenia

18

3. Facilitate access to finance

1. Provide financial literacy education to all youth

2. Ensure youth can access loans and microfinance– Use grants when loans are not feasible

3. Encourage alternative financing mechanisms such as guarantees, crowdfunding, peer-to-peer lending, business angel investment

4. Complement financial support with business training and mentoring

• Target group: Non-bankable young people aged 18 to 25 years• Objectives:

– Provide micro-finance and access to business development support• Overview:

– Funded by Scottish government, Scottish Enterprise and European Regional Development Fund

– Provision of a conditional startup grants of GBP 1 000 (approx. EUR 1 170)

– Also offers three categories of loans of up to GBP 30 000 (approx. EUR 35 040)

– Finance is complemented with training, coaching and mentoring provided by more than 650 volunteers from local business communities

• Impact:– 2004-2005: 155 additional start-ups were launched (controlling for

deadweight and displacement) and 416 started sooner or on a larger scale

– In 2011, 620 young people started 581 businesses– For every GBP 1 spent, generated GBP 17 of additional net sales

The Prince’s Scottish Youth Business Trust, UK

20

Entrepreneurship Promotion Fund, Lithuania

• Target group: National programme but priority access is given to some population groups, including youth (under 29 years old)

• Objectives: – Increase business creation and self-employment in Lithuania for all

• Overview: – Established by the Ministry of Social Security and Labour, the Ministry of

Finance and INVEGA– Co-operation with the Lithuania Central Credit Union (LCCU), which acts

as the financial intermediary– Provides microcredit, up to a maximum of EUR 25 000– Free training, business counselling and additional financial support

through interest rate subsidies and partial employee subsidies– Also offers guarantees of up to 80% of the value of the loan

• Impact:– 4 205 people have attended training and 4 117 completed it– 1 017 loans issued, of which 479 were to priority groups (47%)– Loan recipients have created 1 758 new jobs

Entrepreneurship Promotion Fund, Lithuania

Registration for EPF• By phone• By internet• At Credit Union

General Training• “Basics of

entrepreneurship” (8 hours)

Entrepreneurship Training

• “Business plan training” (16 hours)

• “Accounting and tax basic” (16 hours)

• “Business and labour law basics”(8 hours)

• “Business management basics” (8 hours)

• “Marketing basics” (8 hours)

• “Staff management in business” (8 hours)

Consultations• Individual counselling on

business plans provides training service providers

LendingLoan manager:• Helps complete

application for a loan of EPF

• Verifies SME status declaration and admissibility of documents

• Appeals to INVEGA for a specific borrower on a de minimis

• Helps to complete application, collection and submission of required documents for INVEGA guarantees

• Starts the debtor files and credit contract

• Consults on the development and implementation of business plan

LendingCU Board:• Business plan analysis and

evaluation

• Decision making on loan agreement

A loan is issued:• Without INVEGA’s

guarantee in 4-6 weeks

• With INVEGA’s guarantee in 8 weeks

4. Developing strategies and co-ordination

1. Develop a vision for youth entrepreneurship support– Embed entrepreneurship promotion and support within

youth employment strategies

2. Communicate the objectives of youth entrepreneurship policies and programmes to youth, youth organisations and the community

3. Government actors and other stakeholders have defined, complementary roles in supporting youth entrepreneurship

Co-ordinating youth entrepreneurship, Lithuania

Commission for Youth Sport Affairs of Seimas

Ministry of Social Security and Labour and other ministries

Department of Youth Affairs

Council of Youth Affairs

LiJOT

Youth Organisations

Agency of International Youth

Co-operation

National Youth Affairs Co-ordinator

Association

Co-ordinating youth entrepreneurship, Lithuania

Municipal Council and Municipal Committees

Administration (regional

departments)

Municipal youth council Regional

LiJOT

Youth organisation

s

Business sector

Regional institutions

National and regional youth

initiatives

Implementation in partnership

The National Youth Affair Co-ordinator Association

General principles

Good practice principles

1. Select beneficiaries carefully and tailor the support provision to the needs of youth– Extensive support should be low cost and offered widely– Intensive support should be competitive or filtered to select

recipients that are motivated and most likely to succeed

2. Promote creativity and innovation– Seek (even low level) innovation in supported business projects

3. Recognise that different policy interventions complement and reinforce each other– Offer combined access to finance, training, mentoring, and

networking– Ensure education, economic and labour policies are co-

ordinated and complementary– Identify gaps and synergies across stakeholders

Good practice principles, con’t.

4. Consider adapting mainstream programmes as an alternative to youth-specific actions

5. Engage youth and youth organisations in the design and implementation– Communicate with youth through appropriate channels– Consult youth organisations in policy design– Leverage stakeholder knowledge and experience

6. Appraise and evaluate, make adjustments when design or implementation can be improved– Identify intervention needs, targets and expected impacts– Evaluate results and adjust the approach– Seek employability as well as venture creation outcomes– Measure long-term as well as short-term impacts

Thank you!