Youth unemployment affects the world's largest economies (G20 countries) and, equally, Romania. Moreover, it is expected that the rate of youth unemployment will rise in the next 5 years.
In the most affected countries, the rate of youth unemployment has even exceeded 30%. According to The Economist the actual rate is much higher, estimating that worldwide there are more than 290 million young people neither working nor studying.
There are no solutions with overnight results, but great hope lies in entrepreneurs. Entrepreneurs and SMEs are the engines that generate significant employment and economic growth. According to the report Do SMEs create more and better jobs?, employees of SMEs (with fewer than 250 employees) represent, on average, two thirds of the number of employees in G20 countries. These firms create jobs at a double rate compared with larger companies and are more likely to recruit previously unemployed people.
In addition to supporting entrepreneurship as an engine for creating jobs, the more young people become entrepreneurs, the lower the rate of youth unemployment will be. Given the two levers that have to be activated to reduce unemployment, both based on entrepreneurs, providing the most appropriate tools and adequate help to entrepreneurs is critical in avoiding the sacrifice of the next generation of young people.
Entrepreneurs identified 5 key imperatives for action to support their work, according to the EY study Avoiding a lost generation, which surveyed 1,500 entrepreneurs from the G20 countries, of which 1,000 aged under 40:
1. Expand the choice of funding alternatives for entrepreneurs
2. Increase mentoring and broader support from experienced entrepreneurs
3. Change the culture to tolerate failure
4. Clearly target incentives
5. Reduce red tape and excessive taxation
Funding remains the biggest stumbling block for those looking to start their own business. 73% of entrepreneurs who answered the EY survey believe that access to funding remains difficult in their countries. This is especially true for companies seeking to develop a new type of product or service. Meanwhile, young entrepreneurs feel the need for more significant help in accessing funds through non-traditional schemes such as crowdfunding. The survey found that 49% of entrepreneurs think improved access to funding through new innovative platforms will have the greatest impact on accelerating entrepreneurship over the next few years.
The study shows that mentoring is effective in business development. 88% of entrepreneurs who have experienced entrepreneurs as mentors survive on the market.
50% of young entrepreneurs who answered the EY survey believe that governments should promote entrepreneurs as job creators, as this move would have a significant impact in supporting entrepreneurship in G20 countries over the next three years.
The new generationof entrepreneurs expects more support from their government. Young entrepreneurs report an urgent need for government-backed initiatives across areas such as funding and education. EY has identified across G20 more than 200 government-backed initiatives designed to boost the activity of SMEs.
Reducing bureaucracy is as often discussed when considering the support for start-ups and SMEs as the issue of funding. In order to succeed in greater numbers, young entrepreneurs need a simpler, friendlier business environment in terms of regulation and tax. More than 53% of the surveyed entrepreneurs believe that this simplification would crucially support their entrepreneurial efforts.
About Avoiding a lost generation report
The EY study Avoiding a lost generation was based on a survey of more than 1,500 entrepreneurs from across the G20 countries, a sample which included 1,000 entrepreneurs aged 40 and under. Released at the Young Entrepreneurs Alliance Summit in Moscow, held between 15-17 June 2013, this study is presented in advance of the new edition EY G20 Entrepreneurs Speak Out Barometer, released later this year.
