Investing in Youth as the Future of Innovation and Economic Growth
Last month, I attended the G20 Young Entrepreneurs’ Alliance (G20 YEA) Summit in Berlin. The mission of G20 YEA is to enhance the entrepreneur ecosystem, empowering youth to grow sustainable, job-creating businesses. Once a year, G20 YEA selects the top young entrepreneurs in each member state to meet in advance of the Group of 20 Summit (happening this week in Germany).
As a delegate, I represented young entrepreneurs in my country, Canada, and engaged in high-level discussions with world leaders to build policy recommendations for G20 governments, to address job creation and youth unemployment.
The role of young people in shaping the world's economy is clear: We are the largest generation of youth in history; and, worldwide, millennials make up almost 50 percent of the global workforce. Given this increasingly young labor force, there is a growing need to explore alternatives to traditional job-creation strategies.
The biggest reason is that the current labor market cannot absorb us, and that fact threatens to result in even more unemployment and pressing social challenges. A poll from the Canadian Imperial Bank of Commerce (CIBC) confirmed the obvious: that finding a well-paying job after graduation is a top concern for post-secondary students. Some 37 percent of those surveyed also said they didn't know how they would manage their finances after school.
So, with most of today’s economies unable to produce sufficient employment opportunities, youth-led entrepreneurship offers G20 governments a strategic solution.
That's important because given the dearth of job prospects, many young people are turning to entrepreneurship. An estimated 54 percent of millennials have either started a business or want to start a business in the future. Many are establishing corporate contacts and using them to kick-start their entrepreneurial journeys. And even if they don’t go all in and start businesses, roughly 90 percent of millennials surveyed said they think being an entrepreneur is more of a mindset than the act of starting a business itself.
So, what do young professionals need to succeed? At the G20 YEA summit, this year's theme was Digital Trends for Future Business, focusing on the challenges and opportunities of digital platforms, IoT, AI/VR and big data. At the end of the summit, delegates chose the following top three recommendations:
1. Ensure entrepreneur mobility through a G20 "entrepreneur visa" and administrative simplification.
To combat migration issues, the G20 YEA delegates declared that simplifying the migration process for young entrepreneurs could significantly motivate young people to grow their businesses internationally and promote the free flow of innovative talent across borders.
Toward this goal, the G20 YEA recommended a G20 Entrepreneur Visa program to provide, by 2020, short-term, multi-entry visas and administrative simplification for young entrepreneurs.
Already, a global approach to entrepreneurship is becoming a defining feature of some of the world’s most successful entrepreneurial endeavors. Consider, for example, Canada’s own Start-Up Visa program, an international, short-term, multi-entry visa. In working with many young entrepreneurs myself, I have found that going global tends to be more of a forethought than a startup strategy.
Even in my own ventures, I've held the misperception that international sales is a "later stage"consideration. Due to the diversity of cultures and economic circumstances throughout the world, however, international markets offer opportunities for entrepreneurs to find early adopters.
Why should entrepreneurs struggle to find product-market fit in their local region if the problem they are solving is more pressing and the demand higher in an international market? Though "going global" may not always be the first idea young entrepreneurs have, this may be the direction many should consider to get market traction and reach profitability faster.
Support from programs like the proposed G20 Entrepreneur Visa would encourage the free movement of innovation and technology, would make going global easier and would reduce struggles for market validation. .
2. Implement smart taxation schemes.
While taxes vary between G20 countries, the financial and administrative burdens they impose on businesses can curb growth for early-stage ventures and small-to-medium sized enterprises (SMEs).
In North America, SMEs dominate the business market, representing 99.8 percent of all business in Canada and 99.7 percent in the United States. Coupled with investment and funding difficulties, tax regulations in the G20 nations disproportionately affect SMEs, making scaling difficult at at best. As occurs in Canada, most startups in the EU consider taxation the most burdensome policy they face. Without a strong cash flow, taxation can easily cripple early-stage startups.
In response, the G20 YEA delegates recommended tax incentives and progressive policy measures that would allow SMEs to scale. An example of such policy would be a separate tax category for young entrepreneurs working in priority areas of innovation and social entrepreneurship. Harmonization of taxation schemes across the G20 nations was also encouraged.
3. Ensure quality education.
A strong, unified entrepreneur community starts with a quality education. The delegates recommended that the G20 nations review educational priorities to ensure young people access to the knowledge and skillsets vital to today’s technological and business realities. Listed were digital competencies, STEM education and venture-creation skills. It was also recommended that education systems be streamlined to reduce the fragmentation of knowledge in academic disciplines and emphasize ethical competency.
In other words, young people should be encouraged to develop business skills and entrepreneurial thinking, regardless of their field of study.
Despite a growing international interest in entrepreneurial endeavors, most education systems still refute the importance of values like entrepreneurship, creativity and innovation. Yet, business skills, more than ever, are essential tools for the future generation of young professionals.
With skyrocketing student loan debt rates, competence in financial planning and budgeting is beneficial for many students, not just those pursuing a career in accounting. Problem-solving and marketing skills in interviews were also dicussed.
The three recommendations of the G20 YEA comminiqué aim to grow, support and expand the entrepreneurial ecosystem for G20 nations: Adequate entrepreneurial education will foster a creative, innovative spirit among young people. A G20 YEA entrepreneurship visa will support those who pursue entrepreneurship to test, validate and scale their ideas faster. And smart taxation schemes will help millennial entrepreneur-owned businesses to alleviate barriers and achieve sustainability.