Employment As A Pathway To Entrepreneurship
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From the United Nations Sustainable Development Goals (SDGs), to municipal government policies, youth employment is recognized as one of the most pressing issues facing the Middle East and North Africa (MENA) today. With a youth unemployment rate of 30%, the MENA region continues to be the hardest place in the world for young people to land a job. Nearly 60% of the region is under 30 years old, and governments face certain social and economic crisis if they fail to generate economic opportunities. There is an equally dramatic potential upside, too, if youth are enabled to contribute to economic growth and stability in the region. If the region can grow employment by just half a percent, real GDP growth would accelerate to 5.5% per year, and real per capita income would rise annually by 3.8%, according to the IMF.
With 5.5 million young people entering the labor market annually in a region that creates only 3.6 million jobs each year, many posit entrepreneurship and self-employment as an antidote to the current and growing youth employment crisis facing MENA. The International Monetary Fund (IMF) estimates that 27 million new workers will enter the labor force over the next five years. With public payrolls decreasing, and low levels of investments creating new jobs, it is natural to look to entrepreneurship to create employment opportunities that currently do not exist. After all, in most developed economies the majority of new jobs are created by small business. In the United States, for example, 64% of new jobs were created by small businesses over the last decade, with most jobs added by firms with fewer than 20 employees. A report by Endeavor Insight posited that for every ten successful new enterprises, more than 2,500 jobs are directly created. So, the question becomes: how do we equip the MENA’s tremendous youth population to succeed in becoming job creators?
Barriers to entrepreneurship in the MENA region
There is little doubt that entrepreneurship is on the rise in the MENA region. Programs to support the development of entrepreneurs and teach entrepreneurial thinking are common, yet they have mixed results. While many success stories exist, a number of obstacles to reach the scale of entrepreneurial growth desired in the MENA region remain. In many MENA countries, aspiring entrepreneurs contend with challenged such as insufficient access to financing and financial services, entrenched incumbents that stifle competition, onerous business registration procedures, policies that disincentive hiring full-time employees, and other persistent bureaucratic barriers to start up and operate. Many obstacles go beyond policy and competitive environment, and they are rooted in culture and traditional orientations towards risk-taking. In much of the region, failure in business leaves a social stigma on an individual and their family.
Real or perceived, fear of failure prevents many from considering entrepreneurship as a pathway. With entrepreneurship still nascent in the region, another challenge that many young entrepreneurs face, especially those outside of urban areas, is a lack of a supportive network. What’s more, few youth are exposed to professional work environments early in their lives. They miss out on opportunities to develop critical soft skills such as collaboration and teamwork, communication, conflict resolution, and critical thinking. This can be especially true for women, who tend to have more constrained professional exposure in many countries in the region, leaving them with smaller networks and less professional experience to draw upon. Additionally, the lack of opportunities for apprenticeships, internships, or mentorship makes it harder for young people to develop a holistic understand- ing of how sectors and industries operate, making it difficult to craft effective startup business models that compete with major plays or disrupt established ways of doing business. So, how can MENA’s youth overcome these obstacles?
Employment as a pathway to entrepreneurship
The experience one gains in a first job can be a critical factor in success or failure in starting a business. Entrepreneurship and employment are most often considered as two separate pathways to economic opportunity. Governments and the private sector are given the responsibility of creating jobs, while entrepreneurship is often perceived as an individual opportunity within a broader business ecosystem. Programs are designed to support one or the other. However, a strong case can be built for the role of employment, and in particular one’s first job, as a breeding ground of future entrepreneurs. This is particularly crucial in the MENA region. Therefore, this is not a question of either/or, rather it is and/and.
A first job may provide one of the strongest tools to spur youth entrepreneurship, and overcome many of the cultural barriers described above. A first job provides youth with valuable knowledge of a sector, and a network of resources and contacts to draw upon. This is particularly important for aspiring young professionals who may be from less advantaged backgrounds, and lack family and social connections that can support them in their entrepreneurial journey. A first job can also help to build the confidence required to launch an entrepreneurial activity, and overcome the fear of failure. The confidence that comes from seeing first-hand how a business operates, or identifying an opportunity can help to counterbalance the perception of risk that often dampens entrepreneurial appetite.
Finally, a first job provides the opportunity to develop essential skills required to succeed as an entrepreneur, including collaboration, communication, and innovative and critical thinking. As an employee, young professionals learn how to set and meet deadlines, and hold themselves, and their teammates, accountable. Testing these skills as an employee can help potential founders to adopt a more mature and empathetic management style as they select and grow teams. Employment exposes potential entrepreneurs to industry standards, familiarizes them with business practices, and enables them to develop both the hard and soft skills that prepare them for success. If we want to catalyze entrepreneurship in MENA, we need to acknowledge the role that first jobs play in paving the path for founder success.