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EACEA National Policies Platform: Youthwiki


3. Employment & Entrepreneurship

3.11 Current debates and reforms

Youth face barriers to entrepreneurship in the areas of social attitudes, lack of skills, lack of work experience, under-capitalisation, lack of networks, and market barriers.

Lack of role models: Young people are influenced by important role models such as their parents and teachers, but often they are not very aware of the requirements and opportunities of entrepreneurship. This lack of awareness among role models results in a lack of encouragement and support for entrepreneurship (OECD, 2015)

Lack of experience: A major determinant of business start-up and entrepreneurship performance for youth is prior work experience. However, youth typically lack the necessary human, financial and social capital to successfully start and run a new business. Moreover, relative to older people, youth are much less likely to have managerial or specialised industrial knowledge that would help them in self-employment  (OECD, 2015).

Under-capitalisation: Youth tend to have low levels of personal savings and have more difficulty than adults in obtaining external finance  (OECD, 2015). Banks and other financiers typically consider credit history, past business performance and collateral when evaluating potential loans. Youth-owned firms are less likely to score well according to such measures  (OECD, 2015).

Market barriers: Youth entrepreneurs may face “discrimination” from customers who are sceptical about the reliability or quality of their products or services. Similarly, youth entrepreneurs are more likely to enter industries where barriers to entry are low but competition is very strong. It is important to recognise that each of these areas is inter-related  (OECD, 2015).