The Benefit of Entrepreneurship Education on Youth Unemployment

Authors - Paolo Poggio, intern in the Regional & National Platforms department & Nicolò Florenzio, intern in the Financial Inclusion Department.

In September of this year, the United Nations Summit will be held from the 25th to 27th in New York as a high-level plenary meeting of the General Assembly to adopt the Sustainable Development Agenda. The sustainable development goals (SDGs) are a new, universal set of goals, targets and indicators that UN member states will use to frame their agendas and political policies over the next 15 years. These goals are complementary to the MDGs, identified at the beginning of the century in order to further the development efforts taking place on a global scale. Of the 17 goals, Goal 8 looks specifically at minimizing one of today’s most pressing issues: the rise of youth unemployment rates. Goal 8 aims to "promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all".

Child and Youth Finance International is committed to putting its effort towards the fight against youth unemployment, as 40% of the unemployed are youth, and the global youth unemployment rate is 12,6%, almost triple the rate of unemployed adults. Unfortunately, due to the financial crisis in 2009, “competition for jobs intensified and young people fell to the bottom of the pile".

The most recent data shows that while in the US the youth unemployment rate is settled around 17,1%, in the EU28, youth employment continues to hover at nearly 24%, with the lowest rate being in Germany (7,4%) and the highest peaks taking place in Spain and Greece (respectively 53,5% and 49,8%). Trying to define the situation, Nobel Peace Prize laureate Aung San Suu Kyi identified youth unemployment as “a time bomb” at a European Leaders summit in October 2013.

Entrepreneurship Education as a solution

In my opinion, for the young and unemployed who are turned away by companies due to their lack of experience, a potential opportunity could be self-employment. Becoming an entrepreneur is not an easy path, but it allows young individuals to let them define their own future, avoiding the unpleasant fate of being driven by others’ decisions and collecting refusals.

The entrepreneurial sector comprises, on average, around 11% and 13% of the working youth population in Western countries (in Europe and US, respectively). However, the actual Total Early-Stage Entrepreneurial Activity (TEA) - the main indicator used by Global Entrepreneurship Monitor to assess the percentage of the working age population both about to start an entrepreneurial activity, and that have started one from a maximum of 3.5 years) in Europe - is settled around half of that value, and in the United States the numbers are similar.

This friction could be explained in a plenty of ways. The Euro Barometer survey says that the majority of “would-be” entrepreneurs don't start a company because they are afraid of the consequences of bankruptcy.Moreover, the difference between those who consider entrepreneurship as a good career choice, and those who actually embark ventures varies across the globe, ranging from 3% in Italy to 22% in Brazil.

I would suggest that the most effective approach to get young people keen on the entering in to the entrepreneurial world is teaching and talking about it in schools, and the 8th SDG has the potential to influence implementation of entrepreneurial programs and curricular activities amongst youth. In my opinion, education can play a key role in opening up youngsters minds about business and entrepreneurship. In 2012, the EU report "Effects and impact of entrepreneurship programs in higher education” , showed that “entrepreneurship education has a positive impact on the entrepreneurial mindset of young people, their intentions towards entrepreneurship, their employability and finally on their role in society and the economy". Therefore, I feel that entrepreneurial skills and competences should start being developed at a young age. Entrepreneurship education should be considered a priority at early levels and should focus on soft skills, including entrepreneurship awareness and the development of entrepreneurial behaviors. For these reasons, it’s also important to implement entrepreneurial programs at secondary level, and at higher education levels. At university and college level, entrepreneurial programs have “generally started in business schools and met the needs of those students wanting to launch a business, rather than join an existing one"While this is beneficial for students, I believe entrepreneurship programs should be promoted both in and outside of the business school setting, giving a wider range of students exposure to entrepreneurial knowledge.

In relation to this, “a striking example of an entrepreneurship program comes from Denmark. The Danish Foundation for Entrepreneurship was established in 2009 by an inter-ministerial partnership between four ministries (Ministry of Education, Ministry of Science, Ministry of Economics and Business Affairs and Ministry of Culture). The foundation allocates funding for the further development of education, with a focus on innovation and entrepreneurship at all levels of the education system. This initiative has been having notable results. In 2013, 63% of primary school pupils who knew other self-employed people wanted to become an entrepreneur; in the same year, three times as many entrepreneurship students in higher education are involved in activities to start up a business.

In addition, the United States also has several strong programs to develop social entrepreneurship. In a recent article by Forbes, the Social Innovation Initiative (SII) at the Swearer Center at Brown University was highlighted for its efforts to provide support to students around SII’s “four pillars” - academic connections, extra-curricular experiences, job and internship opportunities, and network building. The initiative is “creating a broad based culture of social entrepreneurship on campus at Brown",allowing for entrepreneurial exposure both in and out of the classroom.

There are many similar programs in universities across Europe as well. For example, the Delft Technical University in the Netherlands is widely engaged in entrepreneurship activities with a wide range of entrepreneurship courses, awareness activities, an ideas incubator, an entrepreneurship centre, and three professors and several PhD students doing research in entrepreneurship. Another example, INSEAD International Centre for Entrepreneurshiphas a large entrepreneurship department with a coherent and extensive entrepreneurial team, comprising full-time tenure track professors, affiliate professors, star teachers and adjunct professors from the industry, imparting their own experiences in entrepreneurship. Drawing from these examples, I believe that entrepreneurship education could greatly support the 8th sustainable development goal to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. Entrepreneurship education has already proven to fight against youth unemployment, and has the potential to stop the “time bomb” affecting the lives of so many youth around the world.

This blog is the fourth in a series of summer blog articles related to the Post-2015 Sustainable Development Goals and are authored by youth interns at Child & Youth Finance International. Join the discussion on social media by following @ChildFinance and using the hashtag #cyfiyouth.

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Tuesday, 19 November 2019