Avoiding a lost generation – ten recommendations for the G20 on tackling youth unemployment through entrepreneurship
Johannesburg, 22 July
- There’s no one-size-fits-all solution to youth unemployment
- Our detailed analysis of existing schemes suggests that ten key principles could make a tangible difference
EY has today released Avoiding a lost generation – ten key recommendations to support youth entrepreneurship across the G20. The report, put together in collaboration with the G20 YEA, identifies and analyses the different youth unemployment issues faced by countries across the G20 and seeks to offer actionable recommendations, as well as providing examples of successful entrepreneurship schemes and policies already in place. The G20 YEA summit will feed recommendations into the G20 Leaders’ Summit taking place in Brisbane in November, which has a clear focus on global employment.
Youth unemployment remains high, at 16% across the G20 nations. Encouraging entrepreneurship is widely seen as one of the solutions to the problem, thanks to the jobs a vibrant entrepreneurial organization can create. Indeed, recent EY studies show that entrepreneur-led businesses will create more jobs than large corporates over the coming year – with 76% of entrepreneurs saying they’ll expand their workforces in 2014 compared to 31% of senior executives at large corporates [see notes to editors that follow].
Maria Pinelli, EY’s Global Vice Chair of Strategic Growth Markets, said:
“Youth unemployment is a persistent issue across the world and, despite improving economic conditions, it remains stubbornly high. 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.”
Recognising that there is no one-size-fits-all solution is key to the report’s findings, which analyzes the different challenges faced by G20 countries using a new methodology which helps countries identify where to look amongst fellow G20 members for the right solutions to the issues they face.
Pinelli continues:“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 includes analysis of schemes currently in place across the G20 and beyond to develop 10 key recommendations for action that will be presented to the G20 YEA Summit, these are:
- Create funding mechanisms, either government run or government backed, that make mentorship and financial education a condition of funding.
- Create strong relationships, and provide incentives, with venture capitalists, incubators and business angels to develop or create initiatives that enable alternative sources of capital.
- Sponsor start-up growth with low-cost funding for targeted groups.
- Create a new class of loan for small businesses and young entrepreneurial firms that offer targeted funding to meet expansion capital needs.
- Encourage investment in start-ups by offering tax benefits.
- Encourage top international talent by changing visa rules and offering funding support.
- Simplify and streamline tax administration to ease administrative burdens on young entrepreneurs.
- Create a positive narrative around entrepreneurship to help engage young people from an early age.
- Encourage and foster hubs, incubators, accelerators and networks to bring relevant talent together.
- Create the foundation for a regional entrepreneurial ecosystem to flourish.
Pinelli concludes: “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. There are a number of very successful schemes across the G20 that are to be commended.”
Sugan Palanee, Markets Leader at EY Africa, says: “Governments have a vital role to play in facilitating and encouraging entrepreneurial development and a funding ecosystem. In doing so, they will make it more likely that new businesses will take root, delivering the sustainable jobs and growth so vital for accelerated development, and helping to build a better working world.”
Notes to editors
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About EY’s Strategic Growth Markets Network
EY’s worldwide Strategic Growth Markets Network is dedicated to serving the changing needs of rapid-growth companies. For more than 30 years, we’ve helped many of the world’s most dynamic and ambitious companies grow into market leaders. Whether working with international mid-cap companies or early stage venture-backed businesses, our professionals draw upon their extensive experience, insight and global resources to help your business achieve its potential. It’s how EY makes a difference.
About research into recruitment plans of entrepreneurs and large corporates
The EY Global job creation survey is the third annual survey into the views of previous finalists of the EY World Entrepreneur Of The YearTM program that started in 2000. For this survey, 243 entrepreneurs were surveyed in April 2014 and were asked whether they planned to expand their workforce in the coming year. In addition, the EY Capital Confidence Barometer is a survey of 1,600 senior executives from large companies around the world and across industry sectors. The objective of the Barometer is to gauge corporate confidence in the economic outlook, to understand boardroom priorities in the next 12 months and to identify the emerging capital practices that will distinguish those companies that will build competitive advantage as the global economy continues to evolve. This is the 10th bi-annual Barometer in the series, which began in November 2009.
About G20 YEA
The G20 Young Entrepreneurs’ Alliance (G20 YEA) is a collective of leading entrepreneurially-minded organizations representing the G20 countries who seek to promote youth entrepreneurship as a powerful driver of economic renewal, job creation, innovation and social change.