Youth entrepreneurship: an economic model for job creation by youth, for youth

Globally rampant rates of youth unemployment is one of the most challenging contemporary issues for today's young people as future employees, employers, decision makers, and Australian and global citizens.

In 2013, 13.1% of global youth, people aged 15 to 24 years, were not employed. This was triple the rate of adult unemployment. According to the Brotherhood of St Laurence, the rate in Australia rose to 12.2%, more than double the national aggregate rate. Such data shows that during times of economic insecurity young people are at the greatest risk.

With a lack of employment, it is widely documented that serious flow-on effects endanger health, create long-term income gaps, lend to the depreciation of skills and knowledge, and even increase the chances of intergenerational poverty and social exclusion.

These impacts are exacerbated for young people, as they find themselves out of work during a critical period of personal, professional, and social development. In the words of former UN Secretary-General Kofi Annan, "Youth unemployment will create serious problems around the world unless we do something about it".

As a global problem, cooperation is required to generate and share solutions. During the April World Bank and International Monetary Fund Spring Meetings in Washington, D.C., the IMF highlighted the need for governments to increase their focus and broaden its approaches to this issue. Employment is essentially reliant on a strong macroeconomic environment, which is one core area of operation for the IMF. The IMF specifically encouraged Australia to promote job creation and to address economic stability through policy and fiscal reform.

So what exactly can be done?

Employment is linked to economic progress, with research demonstrating clear links between innovation, entrepreneurship, and growth. Youth entrepreneurship is thus increasingly perceived as an effective economic tool to assist young people themselves to become catalysts of change.

Entrepreneurship harnesses the innovation, tech-savvy knowledge and potential of youth to create individualised businesses, products, services and enterprises with specificity to the consumers, demand, economic environment and geographical variances of distinct communities. So, theoretically, clever and targeted entrepreneurship will tap into local and niche needs, promote local economic growth, and ultimately local job creation. According to Ernst and Young, entrepreneurs account for two-thirds of employment in the G20 states, and entrepreneurs are more likely to hire previously unemployed individuals.

Resource access is crucial to sustainable entrepreneurship. Providing young people with appropriate tools and encouragement therefore may be critical in re-imagining the economy, promoting entrepreneurship, stimulating employment opportunities and reducing social and economic risks to youth. The improvement of education and provision of greater access to funding and financial support and literacy are the two most integral factors to nurture young entrepreneurs effectively.

Firstly, knowledge and skill development will create innovative, business-minded and tech-savvy youth. Introducing entrepreneurial education that values real-life and industry-based experiences will enhance the knowledge, skills and capability of young people to start-up local enterprise. The promotion of skillsets such as leadership, teamwork and creativity is essential in creating an innovative culture among young people. Also key is instilling knowledge of business-management, technology and sustainability in order to ensure a sustainable and effective business.

To foster creative, entrepreneurial prospects in youth it is recommended that the Australian government implements broad education and vocational training curriculum that supports entrepreneurial knowledge and skillsets such as leadership, teamwork and creativity, business-management through non-traditional or industry-based means.

Secondly, start-up costs of local enterprise closely correlate with employment rates. High taxes and administration costs are seen to reduce potential entrepreneur activity and consequently dampen the environment for local job creation. Further, financial support for youth entrepreneurs is generally quite difficult to secure, with private sector loans stringently limited to young, inexperienced people. Expanding funding and business incentives from the private to the public sector is one alternative. In Canada for instance, the government's Youth Business Foundation has delivered financial and business support to 5600 young entrepreneurs and correspondingly created 23,000 jobs by youth for youth.

To reduce the barriers of business start-up and increase the number of young people considering entrepreneurial work, the Australian government must reduce administrative burdens and taxes for early-stage businesses founded by youth. While simultaneously expanding business funding from the private sector to the public sector for young entrepreneurs with promising local business models.

Taking all of this into account, Australia must play an active role in promoting entrepreneurship in the youth sector by removing barriers to accessing finance and information. Through this resource and tool provision, youth can utilize their innovation, creativity and drive to raise themselves out of unemployment, by creating local enterprise and jobs for youth by youth.