CAPACITY BUILDING SEMINAR “Supporting youth in entrepreneurship” 22nd-23rd September 2014, Brussels

The aim of this Capacity Building Seminar is to have an international exchange of information on youth entrepreneurship actions across the European Union and on how the European Funds can be used to support actions that combine entrepreneurship promotion and youth employment policies. It will examine the how strategies for youth entrepreneurship can be designed and implemented. This event is part of a series of capacity building seminars by the OECD that are designed to:  Build a European network of senior policy makers and practitioners in the field of inclusive entrepreneurship and provide them access to European expertise in the field.  Promote entrepreneurship projects as schemes that can be supported by the European Funds.  Exchange good practices related to the planning, development and implementation of entrepreneurship strategies and projects.  Further develop capacities of senior policy makers in EU member states in this field. The event counted with the participation of representatives from the national Management Authorities for the European Social Fund (ESF) directly involved in the design of activities funded by EU Structural Funds for employment initiatives. The introduction to the seminar was carried out by Max Uebe, Head of Unit, Unit C2 – Sectorial Employment challenges, Youth Employment and Entrepreneurship, European Commission Presentation: “Developing youth entrepreneurship policies: importance and challenges”, Jonathan Potter, Senior Economist, Centre for Entrepreneurship, SMEs and Local Development, OECD:  All net job creation is currently coming from new enterprises  The 3 main barriers for entrepreneurship are: finance, skills & networking. Administrative burden are not considered among the main barriers for entrepreneurship  Youth unemployment rates in Europe are about twice of general unemployment figures and this is a long term persistent problem  Youth have a more positive approach to entrepreneurship than general population  One of the ESF thematic objectives is focused on “Promoting sustainable & quality employment & support labour mobility”  Important to analyse the possibilities that the “Youth Employment Initiative” could offer to practitioners across the EU: €3.2 bill budget that will need to be matched by an equivalent €3.2 bill ESF funding.  There is strong evidence that youth entrepreneurship initiatives can have very positive results (e.g. PSYBT initiatives; Garage initiative in Hamburg; NEETS initiative in Slovenia, etc.).

The keys to success for youth entrepreneurship initiatives can be summarised as follows:  Strong selection process to focus on the best projects that should be highly supported with finance and other parallel services.  Avoid known pitfalls: mature sectors, projects with small chance of success, reduce financial support, etc. Main conclusions:  Start-up support programmes are under-utilised in response to youth unemployment.  Start-up support programmes need to respond to market failures in accessing finance and developing entrepreneurship skills.  Well-designed youth entrepreneurship programmes can work well and have demonstrated success in the EU. OECD publications related with the topic:  “Policy brief on youth Entrepreneurship”  “The missing entrepreneurs” Available on: http://www.oecd.org/cfe/leed/inclusive-entrepreneurship.htm

Presentation: “Supporting youth entrepreneurship: ESF, YEI and the national youth guarantee schemes”, (Resa Koleva, Unit E1 – ESF Policy and Legislation, European Commission and Elisa Jungk, Unit C2 – Sectorial Employment challenges, Youth Employment and Entrepreneurship, European Commission) European Social Fund 2014-20 support to youth A dedicated investment priority for young people: Sustainable integration of young people in particular those not in employment, education or training, including young people at risk of social exclusion and young people from marginalised communities, into the labour market, including through the implementation of the Youth Guarantee. But also other investment priorities relevant for youth measures:  Reducing and preventing early school-leaving and promoting equal access to good quality early-childhood, primary and secondary education […];  Enhancing equal access to lifelong learning […], upgrading the knowledge, skills and competences of the workforce […]  Access to employment, active inclusion, etc. ESF remains the biggest EU fund to support human capital investment. Youth Employment Initiative (YEI) • New instrument established in the Multiannual Financial Framework (MFF 2014-20), integrated entirely into the ESF legal framework. • EUR 6 billion for the period 2014-2020: EUR 3 billion from the ESF + EUR 3 billion from a specific 'youth employment' budget line

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Open to all NUTS2 regions with levels of youth unemployment (15-24 age group) above 25% (in 2012) => 20 MS are eligible. In addition to ESF (European Social Fund) resources, which support youth employment in ALL MS and regions YEI will be spent faster than the ESF, until end-2018 (i.e. it is "frontloaded"). The aim is to address the problem quickly.

YEI: target group and examples of types of actions:  YEI will target individuals only (not systems reforms).  Target group: NEETs aged up to 25, or optionally for MS – up to 30 years, who must be residing in the eligible regions and can be: - inactive or unemployed (including long-term) - registered or not as job seekers  Possible actions: provision of traineeships and apprenticeships; first job experience; hiring incentives for employers to recruit youngsters (e.g. limited subsidising of the salary or social security contribution); job and training mobility measures; start-up support for young entrepreneurs; vocational education and training leading to a qualification; where relevant for early school leavers - second chance programmes. Aim: deliver these actions as part of integrated pathways and based on the individuals' needs/ individual actions plans. State of play ESF/YEI programming  187 ESF/YEI OPs expected; 183 officially submitted, incl. 34 OPs covering YEI  6 OPs adopted (incl. 3 YEI-relevant OPs representing EUR 1.6 bn)  EUR 6.4 bn of YEI resources programmed  Additionally, at least EUR 4 bn of other ESF resources programmed under investment priority on sustainable integration of young people into the labour market.  Most youth-related OPs envisage self-employment/entrepreneurship measures, both on employment and education side

Presentation: Promotion of entrepreneurship with a focus on youth under the European Globalisation Fund (EGF), Marta Alvarez Marquina, Unit C2 – Sectorial Employment challenges, Youth Employment and Entrepreneurship, European Commission So what are the key problems of young people on the labour markets? • Young people dropping out of education or work; these low skilled youth are most at risk of unemployment and exclusion in the long-term  Here, the Youth Guarantee schemes can help,  Often young people encounter difficult school-to-work transitions:  Here, an increase in the supply of high-quality traineeships and apprenticeships is needed and schools and employers need to adapt better to deliver the right skills sets.

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Again a problem of skills sets: There is a growing skills mismatch, as well as geographical mismatches. What does that mean? People are acquiring skills that are not adapted to the needs of the labour market and moreover are often not located where the job vacancies are available. This leads to a great paradox; at a time of dramatic unemployment we also have more than 2 million vacancies across the EU with employers desperately looking for people to fill the jobs they have on offer…  The Commission is therefore seeking to enhance the labour mobility of young people in particular.

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And last but not least, transitions are much more difficult in countries with segmented labour markets  Here we have a need for Reforms in labour market regulation

Our agenda for the past 1.5 years was drawn up by the Youth Employment Package (YEP) of December 2012. The YEP included a 1) COM proposal for a CR on a Youth Guarantee 2) Announced the launch of a EU Alliance for Apprenticeships 3) Launched a social partner consultation on a Quality Framework for Traineeships 4) Announced measures to enhance youth mobility The Youth Guarantee can help to make an economic recovery job-rich and it makes a systemic difference in improving school-to-work transitions. However, in the absence of overall economic growth, it would be impossible for any employment reform to solve the unemployment crisis. In other words, the Youth Guarantee is no substitute for macroeconomic instruments. Youth unemployment is more sensitive to the economic cycle than overall unemployment as young people are less experienced, more easily laid off and they are also more concentrated in economic sectors more exposed to economic downturns, such as manufacturing, construction, retail or the hospitality sector. Evidence from the past 15-20 years shows that the overall unemployment rate in the EU can only be expected to fall if annual GDP grows by more than 1.5 per cent on average. Reduction in the youth unemployment rate normally requires even slightly higher GDP growth rates. On the contrary, if economic growth remains below 1.5% per year, youth unemployment rates tend to rise faster than overall the unemployment rate. According to the International Monetary Fund (IMF), cyclical factors explain about 50 per cent of the changes in youth unemployment rates across Europe and 70 per cent in stressed euro area countries. However, the levels of youth unemployment are also influenced by structural characteristics of labour markets, such as hiring costs or investment in active labour market policies, as well as by the quality of education and training systems. This is where a comprehensive Youth Guarantee can make a big difference, ultimately leading to a decrease in the wide gap between youth unemployment and overall unemployment rates. International Monetary Fund, 'Youth Unemployment in Europe: Okun’s Law and Beyond' in IMF Country Report No. 14/199, 'Euro Area Policies 2014 Article IV Consultation, Selected Issues', July 2014 The Youth Guarantee is the major element of the YEP (kind of an umbrella that covers all other initiatives too). The Council agreed upon the Recommendation on Establishing a Youth Guarantee on 28 February last year (2013) (and it was officially adopted in April 2013 – BTW a record time for such a political process).

The Recommendation on the Youth Guarantee calls on Member States to ensure that all young people up to 25 receive a good quality offer of a job, continued education, apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed. To be clear: it is NOT a job guarantee (that would be impossible), but the objective is to ensure that no young person is left alone, and MS are to provide support to avoid becoming a NEET. We kept the four months for an offer under the Youth Guarantee. This is because every month counts: Young unemployed face higher risks of future unemployment, lower earnings, and health problems. We also insisted that a Youth Guarantee applies to ALL young people, not only those that register at the employment services. The most vulnerable young persons will only be reached by proactive work from social workers and youth organisations. The Recommendations thus calls for strong partnerships with all concerned, in particular employment services, education and training institutions, career guidance services and other specialised youth services (non-governmental organisations, youth centres and associations). Member States can decide with the Commission on the exact set up of the schemes and partnerships, so that they make sense to the needs of different regions and respect the diversity of young people. Measures could include direct support for high quality internships and apprenticeships, providing first job experience and reducing nonwage labour costs, plus mobility help to bring skills and jobs together. What matters is to implement a "Youth Guarantee scheme", including new partnerships, early intervention and active labour market integration. The Youth Guarantees have a cost, but they have to be considered as an investment. The costs of having 14 million NEETs (taking into account social transfers + foregone earnings), as estimated by Eurofound in 2012, make up 1.21% of the EU GDP = That is a collective annual loss of €153 billion to the Member States! And this estimation does not take into account further long term costs like increased crime or social unrest. In comparison the Costs of a Youth Guarantee are relatively small. The International Labour Organization made an estimation of Youth Guarantee costs – these are much less (figures for the Eurozone were once estimated to be around 21 billion euros) (that said, of course these costs vary from one Member State to the other). Self-employment under the Youth Guarantee  Self-employment is a valid offer under Youth Guarantee, if appropriate and if it is likely to lead to sustainable labour market participation  the quality element  The Council Recommendation mentions incentives for self-employment and start-ups among the measures that can make the Youth Guarantee schemes a success. The Council Recommendation on establishing a Youth Guarantee rightly attaches much weight to the promotion of entrepreneurship among the young.  14 Member States – entrepreneurship integrated into the YG schemes: CY, EE, EL, ES, FI, FR, HR, IE, LT, MT, PL, PT, SE, SI  7 Member States – no explicit mentioning of youth entrepreneurship as part of their YG schemes: AT, BE, BG, DK, LU, NL, SK  7 Member States – very limited mentioning of entrepreneurship in their YGIPs: CZ, DE, HU, IT, LV, RO, UK

Promising example from Estonia: Entrepreneurship education is already embedded into school system. Promising example from Lithuania: Entrepreneurship education will be provided as continued education. YGIP provides a list of initiatives to develop a network of vocational guidance services in a real and virtual environment, to organise entrepreneurship promotion events and to disseminate information about the YG. Promising example from Finland: Measures include supporting and developing new forms of entrepreneurship through training, guidance and start up grants, which have already been piloted by regional authorities. Promising example from France: Entrepreneurship are envisaged to be a part of school programmes. PEPITES are partnership programmes between secondary and higher education. Common programmes between PEPITE and "missions locales" aim to increase access to entrepreneurship for low qualified young people. Promising example from Slovenia: Entrepreneurship education is integrated at all levels of education. YGIP identifies a need for the entrepreneurial training of teachers which will help to ensure that entrepreneurship education is embedded into the curriculum. There is a one-stop-shop for young entrepreneurs for training, advice and assistance. Promising example from the UK: Support to entrepreneurs is provided through the New Enterprise Allowance providing access to business mentoring and offering financial support to unemployed people aged 18 and over who want to start their own business. Start Up Loans scheme supports entrepreneurship. It provides applicants with a mentor, access to resources (including free accounting software) and a loan. Entrepreneurship included in schools' careers advice.Support for entrepreneurship as a career is provided, both financially and through 'enterprise clubs' which encourage the exchange of support and advice. Entrepreneurship is being supported through start up loans and allowances. Nevertheless, the Commission has spotted a lack of strategic approach to entrepreneurship within some of the YG schemes… In general, Good Practices have the following characteristics:  Enhancing skills to facilitate labour market integration through integration of entrepreneurship education into schools/higher education/vocational training centres  Active role for employment services to promote and provide continued guidance and courses on entrepreneurship and self-employment  Ensure greater availability of start-up support services Case studies of implementation of ESF funds were presented during the last part of the 1 st Day sessions: Case study: “A training, coaching and mentoring programme for youth entrepreneurs”, Staša Baloh-Plahutnik, Regional Development Centre, Slovenia. Case study: “The key ingredients of training, coaching and mentoring for youth entrepreneurs”, Professor Robert Blackburn, Director of the Small Business Research Centre, Kingston Business School

Main conclusions: • Need to identify specific requirements of youth entrepreneurs • Tailor programmes according to – Needs within a context (eg. current labour mkt position) – Outcomes of intervention • Encourage use of real examples from peers – Curriculum content; method of delivery – But link with learning theories and prior experiences • Monitoring and evaluation – Ongoing – Reflective • Feed into new programmes to increase efficacy Case study: “A finance-based youth entrepreneurship scheme”, Ludo Moyersoen, Microstart, Belgium Case study: A youth entrepreneurship support programme based on microfranchising, Emmanuelle Daviau, ADIE, France Presentation: “The key ingredients of financial supports for youth entrepreneurs”, Professor Klaas Molenaar, The Hague University of Applied Sciences • What are the key issues in improving access to finance for youth entrepreneurs? • What are the main approaches? Some approaches and lessons to learn: • Primary school – Wijzer met geld zaken – financial education • Primary schools - Aflatoun and Child and youth International – appreciation of savings for investment • Secondary / vocational level – Jong ondernemen, mentoring and mini business exercise • Vocational – preparing for employment and self-employment : basic Business course san BDS referrals - important factor Age… example of BEST - Ethiopia with job placement programme • Higher education • University level – technology development , incubators - example Caballero factory – business centre – linking to informal investors – jong Ondernemen • Unemployed youths –special programmes , key element the selection , coaching and linking – Dream start Case study: An initiative helping young people develop entrepreneurial attitudes and networks, Virginie Samyn, Ashoka, Belgium Presentation: "The key ingredients of schemes fostering enterpreneurs' networks", David Halabisky, Economist, Centre for Entrepreneurship, SMEs and Local Development, OECD

• What are the key issues in building entrepreneurial networks? 1. Ensure that networks are well-linked with the wider business community. 2. Balance the provision of targeted networking initiatives against the creation of an overabundance of competing networks. 3. Transfer ownership of the network to members. • Some examples of the main policy approaches were provided during the final part of the event.