“Australians graduating into a state and year with a 5% higher youth unemployment rate can expect to earn roughly 8% less in their first year of work and 3.5% less after five years,” Australian Treasury economists wrote in the working paper. It notes that the effective pay cut only “gradually fades” after a decade.
This paragraph in an article caught my eye. It shows that our young people’s future is in dire straits in times of recession and pandemic.
The Australian government forecasts suggest that circumstances will get worse before they get better. Unemployment is expected to continue rising until Christmas, with youth unemployment to lift higher still.
It’s a sobering indication of what the youngest generation will bear throughout the next decade.
The article has made a key assumption. That is, it assumes that young people can find a job in the first place.
The main problem, unfortunately, is that there is mass unemployment across the globe with millions of people — qualified and inexperienced — desperately looking for jobs.
The global job market has become a gloomy and crowded place for many job seekers including youth and young people. For many who are graduating from colleges and universities with vast amounts of study loan debts, the picture looks very gloomy indeed.
It is, therefore, not the ideal time for young people to enter the job market.
The unintended consequences of a global recession and run away pandemic have been and will be huge on our youth and young people.
They are competing with more qualified job seekers going after limited amounts of jobs. These qualified job seekers may even lower their salary expectations just to get a job. This will prevent young people from entering the job market altogether.
Many young people were already suffering in many ways before the pandemic crisis. There was already high unemployment for young people, high student debt levels, increasing cost of living, housing and medical, and a climate crisis.
So, what can we do to keep our young people engaged and productive?
Governments coming to the rescue, at least for the short-term
Governments can play their part in helping our young people.
Short-term financial options include:
- Higher education subsidy or loans to encourage young people to upskill or upgrade themselves further in specific in-demand future work skills. This will position them for the upturn when it happens.
- Pay temporary subsidy to businesses for keeping young people on the payroll. This will enable them to continue working or receiving an income with a payroll subsidy from the government. This will enable the financially distressed employer to continue paying wages. Australia’s Jobkeeper scheme is one such example.
- Offer low-interest loans to businesses to enable them to continue paying their employees. The US’s Paycheck Protection Program is one such example.
- Provide a guaranteed income via a universal basic income programme especially for the disadvantaged.
These short-term interventions are not financially sustainable within the context of falling tax revenues from individuals and businesses. Governments are already incurring record high levels of public debt just to respond to the pandemic.
A longer-term win-win solution needs to be found. This is where entrepreneurship comes in.
Most of us will generally earn an income either as employees or business owners. Some will be investors.
If being an employee can be super difficult due to high unemployment and lack of vacant job positions, there is no reason why young people can’t create their business opportunities as entrepreneurs. They may creatively find an unmet niche or solve a unique problem that will enable them to financially prosper from it.
An entrepreneur is someone who sets up a business or start-up, taking on risks, in the hope of profit or success. It could be as simple of drop-shipping via Amazon, starting a coaching business, developing a mobile application, developing websites, starting a home delivery or cleaning business, etc. The list is endless.
Benefits of entrepreneurship
Entrepreneurship is about much more than business. It teaches necessary life skills including communication, financial literacy, marketing skills and risk management. All these skills will help young people grow personally and professionally.
Entrepreneurs look for opportunities. They explore multiple solutions to problems.
In school, we were all taught that failure is bad. But in the entrepreneurial arena, failure can be a great thing. There are always positive lessons to be learned — good or bad.
The school system primarily prepares people to become good employees, unfortunately.
Napoleon Hill, author of Think And Grow Rich, states that, “Every failure carries with it a seed of equal or greater benefit.”
Here are a few vital reasons why entrepreneurship is important for your children and young people:
Encourages creative thinking
Recognising and nurturing entrepreneurship in young people gives them a chance to think creatively. It helps them gain self-confidence in their ideas and abilities.
When they do businesses on their own, they learn to try and get to see the measurable outcome of their efforts. They also learn that they will fail at times. And that is okay because it is a learning process.
Builds communication skills
We know that many people struggle to communicate well. The age of iPads and technology devices, human interactions have significantly been reduced.
Entrepreneurship is a good way for our children and young people to improve their communication skills. It places them in situations where they will need to deal with all types of people, not just to their peers. They need to work with customers, vendors, employees, and advisors regularly. This regular interaction helps them develop more confidence when communicating.
Problem solvers are in high demand.
Entrepreneurs learn to solve problems. In launching their business, they have to solve problems to get their businesses off the ground and keep their business running.
They have to deal with unhappy customers, late shipments, employees quitting, etc.
Builds leadership skills
Entrepreneurship builds excellent leadership skills.
An entrepreneur has to lead people. They have to get other people to buy their products or services.
Creating value for others
Value creation is one of the key success factors for me, whether you are an employee or a business owner.
The entrepreneur must be able to create value. They have to build a better offering or unique product or service that people are willing to pay for. With that comes a personal sense of worth.
Learning to sell better
From selling products and services to customers to raising capital from investors, selling skill is vital to the success of any business.
Selling is involved in every part of life. This one ability will last a lifetime.
Businesses are not created in a vacuum.
Entrepreneurs (and employees) need networks of friends, colleagues and influencers to succeed and thrive.
Cultivating a better work ethic
Entrepreneurs quickly understand the value of hard work. They will develop a positive work ethic, treating hard work as a normal state of affairs.
Stronger appreciation for money
Making money involves work. People will always appreciate the money that they have worked hard for more than the money that they were given without any effort.
Entrepreneurship enables stronger respect and appreciation for money. If people want something, they have to learn to get busy and figure out how to do it for themselves.
Setting better goals
In today’s world, the average child gets bored and loses his or her sense of purpose easily. Kids are notorious for starting something and then moving on without finishing it.
Entrepreneurship helps people to draw connections between their current behaviours and future goals.
A crisis is a catalyst for entrepreneurship
Dropbox, WhatsApp, Groupon and Pinterest were all founded during or just after the global financial crisis. Alibaba’s Taobao was founded during the SARS outbreak in China in 2003.
There are opportunities for entrepreneurs, especially in times of crisis. They could even innovate as start-ups to introduce telemedicine, remote personal care, medical equipment, home delivery, food processing, teleworking, online education, or even contact tracing.
Incentivising our young people to take action for themselves
Governments can help young entrepreneurs by:
- Providing short-term financial or seed funding and support for start-ups — e.g., loan guarantees, direct lending, grants and subsidies.
- Raise awareness and advice about existing measures and support initiatives that guide start-ups.
- Support R&D and prizes for radical innovations that help tackle the health crisis and support the adaption of products and services.
- Provide entrepreneurship training and education, and upskilling opportunities.
- Facilitate (un)employment-to-entrepreneurship or university-to-entrepreneurship transitions.
- Reduce administrative and regulatory burdens for start-ups.
- Promote industry collaborations to facilitate applications of innovation.
- Promote network developments including those linking job seekers and start-ups and those facilitating access to international and local markets.
- Maintain investments in the start-up ecosystem. Notably, to ensure that incubators and accelerators continue to play an important medium-term role. They can provide guidance, coaching and mentoring to potential entrepreneurs and existing start-ups.
Benefits for young people
- Do not need to compete with skilled job seekers going after the same job openings. Instead, they can create their jobs using growth mindsets and strategies. (This is what I tell my mentees to do! Forget about competing in a crowded job market. Create your opportunities.)
- Ability to work on something that they are passionate about without being limited by existing business structures and arrangements. A crisis can stimulate and accelerate innovation and creative thinking.
- Keeping young people actively engaged in innovative and productive work. There is a longer-term aim of sustaining themselves especially when their businesses are sustainable. Their business could be as simple as on-line selling on Amazon. Or it could be innovating a new product, and manufacturing and selling it to a global marketplace. Opportunities are plentiful. All they need is some guidance.
- Acquire real-world business and life skills and experience that would be useful for the future. Even if their innovation or business venture fail to materialise, there are lots of learning opportunities. It is a real-world practical learning environment. For me, any learning is good learning, regardless of whether it is good or bad.
Benefits for governments
- When businesses become successful, they can stimulate the economy and create jobs.
- Public funds can be targetted specifically for entrepreneurship activities. It can be effectively utilised for stimulating the economy, encouraging innovation and keeping young people engaged in productive work and purposeful education and training.
- When individuals are financially independent, they are less reliant on government handouts and support.
Benefits for consumers
- Entrepreneurs can find creative solutions to an unmet need. They can solve problems for customers or consumers. When there is value created, entrepreneurs will get paid for their efforts.
- There will be a wider choice when more entrepreneurs provide variations of a similar solution.
The bottom line
Entrepreneurship would be an ideal solution to keep our young people engaged and productive during a recession and pandemic. It is about finding the path of least resistance and taking advantage of their competitive advantage.
Given that adolescents and young adults take more risks than any other age group, it is best to channel their propensity to take risk into positive risk-taking by supporting them to be an entrepreneur and starting their businesses.
Governments throwing money to prop-up the economy can only go so far. Ultimately, each one of us has to be responsible for ourselves, minding our business. This includes finding a sustainable source of income, whether through employment or entrepreneurship.
When finding a job can be so challenging in today’s crowded job market, entrepreneurship may be a better option for many young people at this moment.