Young people in the European Union are having a crisis in confidence when it comes to start-ups
It can hardly be overstated the effect long-term youth unemployment can have on the economy. Globally, young people are three times more likely than adults to be unemployed; the proportion of young people in employment fell to 42.3% in 2013, down from 44.8% in 2007. Often entrepreneurship can be the engine driving us out of employment slumps and this is certainly beginning to have an effect but it seems not every region in the world has the same confidence in start-up opportunities. Surprisingly, despite having a long-established start-up tradition, it seems the European Union (EU) has the lowest confidence in the world, with scarcely more than one-in-four 20- to 30-year-olds seeing good opportunities to start a business in the next six months.
According to Generation Entrepreneur? – The state of global youth entrepreneurship, the latest research from the Prince’s Youth Business International and the Global Entrepreneurship Monitor, there is a significant disparity between the distribution of resources and finance and the confidence expressed in start-up opportunities.
The region with the most robust outlook is Sub-Saharan Africa with approximately two-thirds of 20- to 30-year-olds seeing opportunities to start a business within six months. This is followed by Latin America and the Caribbean at around 58% and the USA and the Middle-East both reasonably chipper with 45% of their youngsters feeling positive about start-up possibilities. In fact, the only developing economies that seem somewhat reserved in their entrepreneurial outlook were those of Asia-Pacific and South Asia, with roughly a third of 20- to 30-year-olds feeling optimistic about the opportunities on offer. However, this still beats Europe in the positivity stakes.
So, whilst it may be tempting to view this merely as a case of European pessimism, what exactly is going on here? Well, the Eurozone crisis has evidently had something of an impact on people’s perceptions, as the countries that have the least confidence in the entrepreneurial path are also those that have been hardest hit. The percentage of young people perceiving good business opportunities is 19.4% in Portugal, 16% in Spain and just 15% in Greece, showing the confidence levels of young people in these countries have been knocked.
But obviously this doesn’t explain away pessimism across the board, with countries such as the UK relatively unaffected by Eurozone fluctuations. Some further data does, however, offer some additional context.
When looking at how young people from these regions perceive their own readiness for business in terms of skills and knowledge, there is a noticeable correlation between the regions that feel they are ill-equipped to start their own business and those that perceive limited opportunities to start their own business. Roughly 38% of 20- to 30-year-olds in the EU feel they have the prerequisite skills to start their own business; by way of contrast, over 70% of the same age range from Sub-Saharan Africa felt they had the skills required to start up a business in their region.
Additionally, it seems we Europeans may just be a little more risk averse than our cousins further afield. Whilst regions like Latin America and the Caribbean and Sub-Saharan Africa are pretty bluff and bullish when it comes to throwing their all into a start-up, with just 28% and 25% of young people respectively citing fear of failure as preventing them from starting a business, this leaps to a marked 46% within the EU.
Andrew Devenport, CEO of Youth Business International, commented on the findings: “This report suggests that young people around the world have the will, but not the means, to become entrepreneurs. It’s worrying that whilst many young people do see good opportunities for starting up a business, most of those in Europe do not."
Fortunately, help is at hand, as this news comes at the opening of the organisation’s sixth annual Global Youth Entrepreneurship Summit. Needless to say, these findings are something Youth Business International is keen to address.
"[The Summit] enables countries from across the globe to learn from each other how young people can be enabled to become successful entrepreneurs. This is important if we are to be able to provide means for more potential young entrepreneurs to become successful entrepreneurs.”
It may be a knock to our pride, given our one-time status as a leading global economy, but it seems like we may have a lot to learn from other regions about the entrepreneurial spirit. However, if we’re quick to make use of the lessons they can teach us, we can really give our start-up community an extra shot in the arm.