Entrepreneurs Key to Tackling Youth Unemployment - Report

Fostering a vibrant entrepreneurial ecosystem is one of the best ways to deal with youth unemployment, a new report released by Ernst and Young for the G20 Young Entrepreneurs’ Alliance (YEA) summit has shown.

The report called Avoiding a lost generation – ten key recommendations to support youth entrepreneurship across the G20, identifies and analyses the different youth unemployment issues faced by countries across the G20 and offers recommendations and examples of successful entrepreneurship schemes and policies already in place.

According to EY, the G20 YEA Summit, held in Sydney, will feed the recommendations into the G20 Leaders’ Summit in November in Brisbane.

The report shows that youth unemployment is 16 per cent across the G20 nations. It said encouraging entrepreneurship was widely seen as one of the solutions to the problem, thanks to the jobs a vibrant entrepreneurial organisation could create.

EY surveys, Global job creation surveys and the EY Capital Confidence Barometer showed that entrepreneur-led businesses would create more jobs than large corporates over the coming year – with 76 per cent of entrepreneurs saying they would expand their workforces in 2014 compared to 31 per cent of senior executives at large corporates.

“Youth unemployment is a persistent issue across the world and, despite improving economic conditions, it remains stubbornly high,” Maria Pinelli, EY’s Global Vice Chair of Strategic Growth Markets said.

“This is not only a tragedy for the young people affected, but it is a huge wasted opportunity for governments across the globe.

“Fostering a vibrant entrepreneurial ecosystem is one of the best ways to deal with youth unemployment, thanks to the large number of jobs that entrepreneurs create and the path to employment and fulfillment that starting a business can offer young people.

“Governments around the world are determined to encourage greater levels of entrepreneurship and have developed a range of very successful schemes and interventions to do this, whether it’s encouraging and targeting funding where it is most effective, reducing tax liabilities on start-ups, or creating innovation hubs. All are to be commended when in the right context.”

The report’s 10 key recommendations for action are:

1. Create funding mechanisms, either government run or government backed, that make mentorship and financial education a condition of funding;

2. Create strong relationships, and provide incentives, with venture capitalists, incubators and business angels to develop or create initiatives that enable alternative sources of capital;

3. Sponsor start-up growth with low-cost funding for targeted groups;

4. Create a new class of loan for small businesses and young entrepreneurial firms that offer targeted funding to meet expansion capital needs;

5. Encourage investment in start-ups by offering tax benefits;

6. Encourage top international talent by changing visa rules and offering funding support;

7. Simplify and streamline tax administration to ease administrative burdens on young entrepreneurs;

8. Create a positive narrative around entrepreneurship to help engage young people from an early age;

9. Encourage and foster hubs, incubators, accelerators and networks to bring relevant talent together;

10. Create the foundation for a regional entrepreneurial ecosystem to flourish.

Pinelli said while the solutions to promoting entrepreneurship vary by country, our experience is that there are some key principles that all countries should follow, these include tying funding to mentorship, which helps to ensure that government money and support is not wasted.

“We’re also seeing great success in countries where governments have worked with business and academia to create entrepreneurial hubs and run initiatives to encourage a broader acceptance and celebration of entrepreneurial spirit and endeavor,” she said.

“There are a number of very successful schemes across the G20 that are to be commended.”

The G20 Youth Entrepreneurship summit is being held in Sydney between July 18 and 21.

To view the report, click here.