Young people, women and seniors have fewer opportunities to transform their business ideas into reality, according to a new OECD report. They are faced with problems of access to finance, skills and networks that make it harder for them than for other groups in society to start-up their ventures. These “missing entrepreneurs” are costing economies ideas, innovation and jobs.
The new OECD-European Union report “The Missing Entrepreneurs 2021” shows there could be an additional nine million people starting and managing new business in the European Union (EU) – and 35 million across OECD countries – if everyone was as active in business creation as 30-49 year-old men.
This could translate into 50% more people engaged in early-stage entrepreneurship in the EU and 40% more in OECD countries. To help close that gap, the additional barriers faced by under-represented social groups need to be addressed. About three-quarters of these “missing” entrepreneurs are women, half are over 50 years old and one-in-eight are under 30 years old.
Youth create fewer businesses in the EU than those aged 50 and older. Nearly one-quarter of the 18 million people involved in starting or managing a new business in the EU in 2020 were more than 50 years old – a greater share than those who were between 18 and 30 years old. More needs to be done to support youth in realising their entrepreneurial potential. Surveys suggest nearly 45% of university students intend to start a business within five years of graduation, yet only 5% of people aged 18 to 30 are actively working on a start-up. This drop-off can be explained by several factors, including skills gaps. Those under 30 years old are only 85% as likely as those older than 50 years old to be confident in their skills and knowledge to create a business.
Women are less active than men in business creation. Over the period 2016-20, fewer than 5% of women in the EU were involved in creating a business or managing one less than 42 months old relative to 8% of men. A similar gap appears in OECD countries where 9% of women were starting and managing new businesses compared to 13% of men. These gender gaps are caused by several factors, including barriers in financial markets, skills gaps and institutional conditions that affect motivations. For example, women are about 75% as likely as men in OECD and EU countries to report having the skills needed to start a business. This gender gap represents a missed opportunity for economic growth.
OECD Deputy Secretary-General Yoshiki Takeuchi said: “A lack of diversity in entrepreneurship is a missed opportunity to create employment and growth in the wake of COVID-19. More funding, investment in skills and support for the diverse needs of different entrepreneurs are critical for creating equality of opportunity for those aspiring to run their own business.”