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SMEs and entrepreneurship

Launch of the Missing Entrepreneurs 2017 - Policies for Inclusive Entrepreneurship

 

Encouraging business creation among disadvantaged populations can create jobs and alleviate social exclusion

5 December 2017

The Missing Entrepreneurs 2017a new joint report by the OECD and European Commission, looks at “inclusive entrepreneurship” policies, which contribute to social inclusion by providing opportunities for self-employment and business creation for people in disadvantaged and under-represented groups in entrepreneurship. This includes women, youth, seniors, the unemployed, and immigrants.

Main findings

The report shows that:

  • Women have been less active in self-employment than men over the last decade. In 2016, there were 9.6 million self-employed women in the European Union, representing 9.9% of working women. This was below the proportion of men in self-employment in 2016 (17.5%).
  • Youth indicate a high level of interest in self-employment but only 4.1% of working youth (15-24 years old) in the European Union were self-employed in 2016.
  • 3.2% of those who were unemployed (634 800 people) in 2015 moved into self-employment in 2016. This is below the proportion of unemployed people that moved into self-employment at the onset of the economic crisis in 2007 (3.9%).
  • Key barriers are faced by these groups in the areas of accessing finance, acquiring entrepreneurship skills, fear of failure and building entrepreneurial networks.

Quality of self-employment

The report includes an assessment of whether self-employment can be considered “quality work”. It finds that many self-employed women, youth, seniors, immigrants and the formerly unemployed generate less income than mainstream entrepreneurs. Moreover, this income is less secure since businesses operated by people from under-represented and disadvantaged target groups typically have lower survival rates than those started by the mainstream population. Public policy can improve the quality of these businesses by offering entrepreneurship training, coaching and mentoring, facilitating access to finance, and by helping these entrepreneurs build networks.

Policy makers are also increasingly concerned with new forms of self-employment, notably work organised through online platforms, mobile applications, and the “gig” economy. Some of these self-employment opportunities are “dependent” self-employment (i.e. those with one client) and “false” self-employment (i.e. those who effectively work as employees despite being registered as self-employed). These are typically low-quality work opportunities so policy makers should use a range of measures including removing tax incentives for false self-employment, improving access to social security for the self-employed, and improving the incentives to hire employees.

Business creation and large-scale redundancies

The report also examines the role of inclusive entrepreneurship policy in addressing redundancies that result from large-scale corporate restructuring. Citing data from Eurofound, the report notes that there were 88 cases of large-scale restructuring in the European Union in 2016 that resulted in more than 1 000 jobs lost in each case. Recent examples of large-scale restructuring indicate that 2% - 5% of displaced workers typically return to work by starting a business. Case studies presented in the report point to four key success factors in helping displaced workers successfully create their own businesses: effective partnerships between all actors involved providing support measures (e.g. government, public employment services, the restructuring company, unions); timely policy interventions; leadership from the local government; and developing a suite of well-designed interventions such as entrepreneurship training, coaching and mentoring, and access to finance that match the context and needs of the displaced workers.

The Missing Entrepreneurs 2017 also highlights many of the new inclusive entrepreneurship policies and programmes that have been recently introduced in EU Member States. Examples include the SELFIEmployment initiative for youth entrepreneurs in Italy, which provides training and coaching on business plan development, followed by credit and mentoring in a second phase.

In Germany, the project Business Creation for Female Migrants (Migrantinnen gründen - Existenzgründung von Migrantinnen) was launched in 2015. Funded by the Ministry for Family Affairs, Senior Citizens, Women and Youth, it supports women from all ethnic backgrounds with mentoring, as well as individual business consultations, workshops, and networking activities.

In Greece, there have been efforts to improve access to credit. The European Investment Fund and the Co-operative Bank of Karditsa signed the first guarantee agreement aimed at supporting micro-enterprises in 2016 under the EU Programme for Employment and Social Innovation (EaSI). The EaSI agreement signed with Co-operative Bank of Karditsa will cover a loan portfolio of EUR 5 million for over 300 micro-borrowers targeting mainly farmers, young unemployed borrowers, co-operatives and social enterprises, as well as micro businesses active in the green economy.

See also: 

Disadvantaged groups in the labour market: OECD/EU report marks added value of entrepreneurship

 

Background

The Missing Entrepreneurs 2017 is part of an ongoing co-operation between the OECD and the European Commission. Other outputs include three previous editions of The Missing Entrepreneurs, ten policy briefs (Youth entrepreneurship; Senior entrepreneurship; Social entrepreneurship; Evaluating inclusive entrepreneurship programmes; Financing inclusive entrepreneurship; Entrepreneurship among people with disabilities; Expanding networks; Informal entrepreneurship; Sustaining self-employment; Women’s entrepreneurship), youth entrepreneurship policy reviews, “rapid assessments” of inclusive entrepreneurship policies and programmes, and Inclusive Business Creation: good practice compendium. Inclusive entrepreneurship is an activity of the LEED Programme, served by the OECD Centre for Entrepreneurship, SMEs, Local Development and Tourism.

Further reading:

CONTACT

For further information or comment, please contact:

Journalists should contact the OECD's Media Relations Division at (33) 1 45 24 97 00 or news.contact@oecd.org.

 

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