Cautious Optimism – Youth Unemployment and Global Entrepreneurship Week 2015
Those of us working in youth economic opportunities have been reading about the increasingly alarming statistics on youth unemployment and underemployment. The headlines talk about the “global unemployment crisis facing youth” and articles warn of the “tsunami of youth unemployment” and its “scarring” effects. (1) Nobel laureate Aung San Suu Kyi once told European trade leaders “Youth unemployment is a time bomb.” (2) Is this exaggeration or an appropriate forecast of what’s to come? Here are some facts:
- 75 million young people in the developing world are unemployed and hundreds of millions more are underemployed
- Every year, 20 million young people enter the labour force in Africa and Asia alone
- In the Middle East and North Africa, 80 percent of young workers work in the informal sector
- Youth are three times more likely than adults to be unemployed
- One in four young people cannot find work for more than US$1.25 a day. (3)
Yet global economic growth and poverty reduction over the next 15 years will have to be driven by today’s youth. How do we address these staggering numbers to support this population bulge in becoming economic drivers of success for tomorrow?
Is entrepreneurship the answer?
Unsurprisingly, given these daunting numbers, there is a lot of optimism around the promise of youth entrepreneurship. The logic behind this is that even with combined and concerted effort, the public and private sectors cannot create enough jobs for the huge influx of young people who are entering the labour market in the coming months and years. The reality is that many youth will need to create their own opportunities.
Though there are many barriers to successful entrepreneurship, there are also many advantages, both for youth and for their communities. A successful enterprise provides the opportunity to build a sustainable livelihood and to strengthen ties to the community. Self-employment can offer greater flexibility, allowing time for ongoing school attendance, family responsibilities and other commitments. Youth hire youth: research indicates that young entrepreneurs are more likely to hire young employees. (4)
Youth tend to be early adopters of new technologies and practices, and may be at an advantage in responding to market needs in growth industries. Finally, skills learned in the course of starting and running a business are extremely transferrable. Having an ‘entrepreneurial mindset’ allows people to recognize opportunities, innovate, make decisions and work well with others, either as entrepreneurs or employees. Entrepreneurship support for young people is a promising part of the solution – but only one part. Not everyone is well-suited to entrepreneurship, but for some, self-employment is an opportunity to gain a degree of control over their future.
Global Entrepreneurship Week 2015
This week, Chemonics is hosting several online events, with participation from organizations and agencies leading innovation on youth entrepreneurship - MEDA, Vital Voices, Hub 387 and Wade Channell from USAID - will share their experiences and perspectives on this topic in celebration of GEW 2015. We look forward to participating.
In anticipation of these stimulating discussions, I want to close with some questions:
- What is success when supporting entrepreneurs on a project?
- Is scale the primary indicator of success or are there other dimensions of success that we can measure?
- How can we reduce risk for young entrepreneurs?
- Failure in business can be a valuable learning opportunity, but going into debt or defaulting on a loan can have long-term implications for young people.
- Do so-called necessity entrepreneurs need different types of support than opportunity entrepreneurs?
- In economies with high unemployment rates, there is a greater proportion of necessity entrepreneurs. Though they may be less likely to grow their businesses, they may have greater longevity in the market. (5)
2. Rosen, Amy. The Entrepreneurship Answer to Youth Unemployment. Forbes.
3. Statistics from The World Bank, and Global Entrepreneurship Monitor and Youth Business International’s “Generation Entrepreneur? The state of global youth entrepreneurship.”
4. Global Entrepreneurship Monitor and Youth Business International’s “Generation Entrepreneur? The state of global youth entrepreneurship.”
5. Poschke, Markus. “Entrepreneurs out of necessity”: a snapshot. McGill University, Montreal, Canada. August 2012.