Where is Europe’s Mark Zuckerberg? While half of young people strive for and want a career as an entrepreneur, research shows that only 6.5% of young people in Europe opt for self‑employment. Is entrepreneurship a viable career path for everybody and is Europe a business-friendly environment for youth?
The latest Eurofound report enables us to answer these questions by investigating the characteristics, values and attitudes of young entrepreneurs and by reviewing recent initiatives among EU member states aimed at helping young people to turn their creative ideas into successful business plans.
Youth Entrepreneurship In Europe
Given Europe’s continuing high youth unemployment rate, unlocking young people’s entrepreneurial potential and making Europe more entrepreneur‑friendly has become a recent priority on the EU policy agenda. However, despite significant efforts by the European Commission (EC) to foster youth creativity and promote an entrepreneurial spirit, the number of young people starting a business remains very small and most of the newly created companies are small-scale. The share of young self-employed in the 15-29 age bracket varies greatly among Member States, from around 3% in Denmark and Luxembourg to 15% or more in Italy and Greece. Very few of these self-employed have employees and, while the proportion of the self-employed increases with age and education, there is an important gender divide: only one third of young self-employed are women.
Attitudes Toward Entrepreneurship
The decision to become self-employed is not only affected by micro and macro determinants, such as age, education or the macroeconomic cycle, but is also shaped by individual and societal attitudes towards entrepreneurship. An analysis of 2012 Eurobarometer data reveals that, while around half of young Europeans are interested in and enthusiastic about becoming entrepreneurs, only 40% regard this option as feasible. However, as shown in Figure 1, a comparison with findings from other economies, such as the BRIC countries (Brazil, Russia, India and China) reveals that the proportion of European young people who view a career as an entrepreneur attractive is lower than in these and the entrepreneurship option is perceived to be less feasible. Moreover, the proportion of young people regarding entrepreneurs as positive role models is lower, and those who cite access to finance and complex administrative procedures as the main barriers to entrepreneurship higher in Europe. This would indicate that young people view Europe as a less favourable and friendly environment for entrepreneurship to flourish.
Figure 2: Attitudes and barriers to entrepreneurship, 15–34 year olds – source: Eurobarometer 2012
The Importance Of The Entrepreneurial Personality
Easing access to funding and removing barriers to entrepreneurship by making Europe a more business‑friendly environment has lots of potential benefits, including direct and indirect job creation and the development of human capital and new skills. However, only a minority of young people will have the right skills and mindset to become entrepreneurs. Data reveals that the ‘entrepreneurial personality’ seems to be characterised by stronger creativity and innovative tendencies, relatively low risk aversion and more freedom and independence and autonomy. This indicates that policies and initiatives to promote youth entrepreneurship should be targeted from the outset at those with the right skills, values and ideas in order to reap the greatest benefit from any public investment. Entrepreneurial education should be provided from a very early stage to equip youth with the right entrepreneurial mindset and skills.
Way Forward: Designing Policies To Foster Youth Entrepreneurship
In order to promote youth entrepreneurship and make Europe a more business-friendly environment for youth, this has to be seen as a medium- to long‑term policy strategy and not a a short-term fix for youth unemployment. So it is very unlikely that programmes to foster youth entrepreneurship will have sustainable effects immediately. Under youth guarantee programmes, the promotion of entrepreneurship is likely to have substantial effects over the medium to long term, with both tangible – new rapid‑growth companies – and intangible – changes in the attitude of young people towards self‑employment and entrepreneurship – emerging gradually.
Moreover, youth entrepreneurship policies are most beneficial when they bring together different labour market actors: public authorities, youth business organisations, entrepreneurs, education centres, financial institutions, individual companies and their representative organisations, NGOs involved in the topic and chambers of commerce. The participation of diverse stakeholders will allow synergies to grow, multiplying the results and facilitating their dissemination. This is especially true for entrepreneurial education where the involvement of business organisations and entrepreneurs may be very beneficial as quality of teaching is crucial for ensuring programmes are effective.
Support programmes for youth entrepreneurs are especially effective when they provide a balanced, comprehensive range of support modalities, such as training/skills development, mentoring and counselling, access to networking, dedicated funding or easier access to finance. Furthermore, it is equally important that the support is extended over a relatively long period to be fully effective, as the first years of any enterprise are usually critical for its future survival, especially for those set up by young entrepreneurs who often lack the right experience of the labour market.
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Finally, specific attention should be paid to the promotion of ‘entrepreneurship’ from a gender equality perspective, in light of the relatively small presence of young women. This imbalance should be targeted and addressed promptly.
Co-author of the report is Martina Bisello, Research Officer. Download the full report here.