Entrepreneurship vs. Self-Employment: Toward an Inclusive Paradigm

This article is an opinion piece by Erin Lynn, a PhD. candidate at Monash University, who is representing Australia as a youth delegate to the 2015 Y20 Summit – the youth engagement platform of the G20 – in Turkey 16-21 August 2015. 

The names Bill Gates, Steve Jobs and Richard Branson are synonymous with entrepreneurship. These visionaries have disrupted industries from hardware to software, from airlines to music. In today’s world, their businesses and products pervade our everyday lives.

The extraordinary public profiles of leading entrepreneurs lead us to believe that self-employment is a high-risk but high-reward career path. One accessible only to the smartest, the connected, and importantly, with the inexplicable X-Factor.

One would be forgiven for believing that entrepreneurs must be pale, male and stale.

Entrepreneurship, however, has a long history of including the most vulnerable people as a grassroots development strategy. This is because entrepreneurship contributes to economic growth and reduces poverty. It is an inclusive policy proposition that mobilises women, immigrants, and other disadvantaged groups. In other words, entrepreneurship is an opportunity to achieve economic self-sufficiency.

The Group of Twenty (G20) Youth Summit (Y20) is fast approaching. Youth entrepreneurship is at the top of the agenda. Improving digital access and reducing structural barriers feature throughout country policy position papers. What is missing, however, is how we go about engaging the most disenfranchised young people. How we get them to the point where they believe that they too can become an ‘entrepreneur’.

First, let us unpack the problem.

The global labour market is increasingly precarious, characterised by unprecedented disruption. Governments worldwide are scrambling anxiously to reduce unacceptably high unemployment rates. These Governments include those countries in the Group of Twenty (G20), the international forum of the world’s most important economies.

The International Labour Organisation estimates that globally some 75 million young people are not in employment, education or training. Across the G20 countries, youth unemployment rates vary between 7 per cent in Germany and 50 per cent in South Africa. Consequently, a ‘one size fits all’ strategy has little prospect of universal success. The variance in social, economic and institutional environments of these nations is too great.

Domestically, youth unemployment figures appear modest by comparison, at 13.3 per cent. However, this figure is double Australia’s national unemployment rate (6 per cent). Teasing apart the macroeconomic numbers further, Australia has the highest rates of youth underemployment in more than 30 years. Such high underemployment rates mean that those lucky enough to secure work are crying out for additional hours. These figures illustrate a labour market environment where young people are simply unable to secure adequate employment.

It is little surprise that entrepreneurship is the turn-to policy for reducing youth unemployment.

In 2014, when Australia held the G20 Presidency, the Y20 gained significant traction in getting youth entrepreneurship on the agenda. The G20 Leaders’ Communiqué demonstrates the Y20’s success, which highlights entrepreneurship as critical to its employment plan. However, against this backdrop of increasing popularity among world leaders, it is difficult to build a convincing argument about the impact of entrepreneurship-enabling policies on youth unemployment.

There is an absence of empirical evidence because entrepreneurship is not a policy itself. What we mean is to create an enabling policy environment for entrepreneurship. And it is difficult to quantify siloed policies that must intersect to be effective. Despite this, we can point to some nationally specific best practice policies across a range of social, economic and political environments. This alone tells us that creating an enabling policy environment is worth pursuing.

Fast forward to 2015. Across the G20 engagement groups, enabling entrepreneurship has a strong presence. For example, the B20 has introduced an entrepreneurship and SME taskforce, The Y20 is pushing for digital technology accessibility for would-be entrepreneurs, and the C20 is grappling with how to ensure inclusivity and equality.

In Australia, we are witnessing a trickle-down effect. In Queensland’s 2015 budget, an inclusive entrepreneurship policy was debuted. The ‘entrepreneurs of tomorrow’ policy incentives stay-at-home parents with $5,000. The take-up of this incentive is yet to be known. But the logic is too good for it not to be. Stay-at-home parents struggle to fit the 9 to 5 model of traditional workplaces. Gen Y’s with young children want independence and freedom. And there is a scarcity of secure employment prospects.

However, the majority of under-25s are not yet parents. They are simply falling through the public policy cracks that fail to address the needs of young people.

What is missing is the connection between ‘entrepreneurial’ policies and young Australians themselves. When the entrepreneurship rhetoric illuminates images of Gates, Jobs and Branson in the imaginations of the under-25s, then we are failing at realising the potential of young people.

We need to move to a discourse of ‘self-employment’. This narrative removes privileged barriers that prevent young people and other disadvantaged groups from gaining economic self-sufficiency.

Now is the time for Australia to lead an inclusive self-employment paradigm.

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Erin Lynn, 29, is completing a PhD. at Monash University, focusing on women’s entrepreneurship in the Indian diaspora in Australia. Throughout her academic career she has been published in Australia, South Asia, and China, and over the last six years has been engaged as a labour market analyst and research assistant at Monash University, the United Nations Economic and Social Commission for Asia and the Pacific, and Swinburne University of Technology. This August, Erin will represent Australia at the 2015 Y20 Summit in Turkey on a full scholarship from Global Voices, a youth-led not-for-profit (globalvoices.org.au).

2 responses

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  1. avatar
    Dr. Roxanne Zolin

    Very interesting article! Thanks for kick-starting the dialogue.
    Researchers are starting to talk about the entrepreneurship ecosystem, i.e. the context for entrepreneurial ventures which provides the resources beneficial to starting a new enterprise.
    These requirements are very different between a developing economy and a developed economy. I find that the developed econonmy is more difficult. It is easier to start a new business in Africa than Australia!
    Governments in developed countries, such as Australia, seem to be investing in commercialising technology ventures, not providing entrepreneurshhip ecosystems for employment replacement enterprises. Technology ventures are high return but also high investment and high risk.
    It is hard to say which age group is the biggest problem for Australiam, Under 25’s or over 50’s. Under 25’s need jobs to get the skills for entrepreneurship and self employment, although I have run training for under 25’s and they were equally successful with the general population. Over 50’s that are pushed out of the labour force are going to be unemployed a long time and may never get another job, making entrepreneurship doubly important.
    Younger workers who want older workers to leave the workforce should realise they will be paying for that opportunity for a long time to come.
    Australia has a program to train long term unemployed that has been running for over 25 years. The NEIS progranm (New Enterprise Incentive Scheme) provides training and does not reduce unemployment payments for one year to allow the business to get started. 80% are self supporting in one year! Despite it’s huge success the Australian Government has been reducing the access to this over the years until it is virtually nonexistant and only remains in name, not in reality.
    This program could quickly and easily be ramped up with special cohorts for younger and older workers.
    I have been doing entrepreneurship training for 25 years and have my own businesses. Online information is no replacement for enterprise training and mentoring.
    If the Australian Government is serious about reducing unemployment in youth and mature workers investing in NEIS should be the first thing they do, not the last.

    • avatar
      Ms. Erin Watson Lynn

      Hi Dr. Roxanne,

      Thanks for your feedback.
      Having just returned from the G20 Youth Summit in Istanbul, I agree that the entrepreneurship ecosystem is critical for young people, in fact, this was one of the policy recommendations proposed by the Australians in the youth unemployment working group. Fortunately, it was received well across the spectrum of economic environments of member countries and this made it to the top of the final communique. You can read more about this in the G20 press release by following this link: https://g20.org/youth-20-summit-communique-calls-on-g20-leaders-to-set-a-concrete-target-to-reduce-youth-unemployment/

      Kindly,
      Erin Lynn

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