There seems to no end to bad news these days, be it new variants of the coronavirus, business closures or rising unemployment. A particular concern is youth unemployment. By November 2020, unemployment for 16-24 year olds in the UK had increased by 13% since the start of the pandemic. This amounted to 68,000 young people who wanted jobs but could not find one.
But there are many more young people who have lost jobs and may have stopped currently looking, as the number of people in employment fell by 231,000 between March and November 2020. While the figures are currently not as bad as during the 2009 financial crisis, this fall in employment has generated real fears that COVID-19 and its after-effects may lead to a lost generation. Previous research has shown that youth unemployment can lead to a long-term scarring on job prospects and earnings.
We know that even relatively short spells of unemployment lead to loss of self-esteem, confidence and increases in mental health problems, while longer spells have even more detrimental effects on mental health – and this is particularly true for young people.
In this light, any schemes that provide work experience, be it through apprenticeships or the Kickstart scheme, which provides funding to employers to create six-month job placements for 16-24 year olds on universal credit who are at risk of long-term unemployment, are critical. Job placements such as this allow young people to gain work experience, to improve their skills and confidence, but also help prevent poor mental health. From our perspective, government interventions to improve the employability of young people could be more effective by considering how to develop entrepreneurial competencies as well as offering work experience.
Entrepreneurial competencies are the knowledge, skills and attitudes that help a person start a company. These competencies encapsulate the mindset and know-how for identifying opportunities, creative problem solving, taking initiative, communicating, reflecting, adapting, and attitudes such as curiosity, open-mindedness, proactivity, flexibility, determination, and resilience. While some believe that entrepreneurs are born, there is robust evidence that such entrepreneurial competencies and “the entrepreneurial mindset” can be taught.
Not everyone wants to be an entrepreneur, but entrepreneurial competencies not only help people to start their own businesses, they help boost employability. Entrepreneurial competencies are transferable skills that help people succeed in diverse careers. They equip people to be proactive and to successfully navigate uncertainty and overcome resource constraints – all elements characteristic of businesses and organisations in the current environment.
Fostering the entrepreneurial mindset
First, it is important to offer work experience in small businesses, so it was good to see that the Kickstarter scheme was expanded in January and which makes it easier for small businesses to apply. This way young people while getting work experience also become familiar with the more flexible working environments of small firms that typically offer more complex and interesting tasks to work on, because work is much less centralised and compartmentalised than in large firms.
Second, existing schemes (Kickstarter, apprenticeships) could be complemented with dedicated interactive training modules to develop entrepreneurial competencies. These should not be centred on “starting a business” but rather on helping people to develop and sell their ideas, to understand entrepreneurship as a process and as an approach to problem-solving and making projects happen – competencies useful for all employment.
Third, an expansion of existing schemes is needed to recognise setting up one’s business or social enterprise as a valuable learning experience in its own right and to provide support to young people who have an idea they want to pursue. Before COVID, around 8% of 18-24 years olds in the UK were involved in setting up their own businesses and many more have start-up ideas that could offer learning opportunities. Indeed, young people who started entrepreneurial projects and businesses during the pandemic say it gave them a sense of control and helped with their mental health.
Inspiration on how to design such a “start-up apprenticeship” scheme could be drawn from start-up visas, the government scheme that allows people with innovative start-up ideas with the potential for growth to be granted UK visas, which has a model of timings and mechanisms of accountability for projects.
We are not arguing that everyone should become an entrepreneur and create their own job. The evidence indicates that pushing unemployed people to start businesses often results in low-quality start-ups and many young people would also benefit from work experience before starting a business. Yet there is a potentially large upside to equipping many more young people with entrepreneurial competencies: enabling them to lead potentially more fulfilled work-lives; providing a larger supply of desirable talent to businesses and organisations, and the potential for the creation of new jobs when those equipped with entrepreneurial competencies feel inclined to try out setting up their own organisation or business.
Yet the biggest upside is the avoidance of a lost generation and of limiting suffering from mental health problems – unemployment, even short spells, at a young age is not just an economic concern, it is a public health issue too.
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