To fight unemployment, teach people to be entrepreneurs

World Economic Forum

Originally published by the World Economic Forum on April 9, 2015. 

A year ago, in its Outlook on the Global Agenda, the World Economic Forum named “persistent structural unemployment” as one of its top 10 global trends to watch in 2014. In the third spot, unemployment was, according to Forum leaders, a more significant global trend than climate change or cybersecurity.

This year, “persistent jobless growth” moved up a spot to second overall, again ahead of issues including water stress, growing nationalism and extreme weather.

The outlook is confusing to observers because in some major economies, especially in the US, the employment picture is far rosier that it was last year. In 2013,American joblessness was above 7% in 11 of 12 months. In the year between the 2014 and 2015 conferences, the monthly US unemployment rate hasn’t been above 7% even once. And it’s been below 6% for six consecutive months. The unemployment rate is below 7% in 14 of the G20 nations.

So why – if the unemployment picture is improving in some areas – did Forum leaders name it a more pressing issue in 2015 than in 2014?

Simply because rebounding job growth in North America and Asia have clouded the fact that globally, unemployment is on the rise. The International Labour Organization (ILO) reported in January that, worldwide, by 2019, more than 212 million people will be out of work – a jump from 201 million now.

A worrying global trend

The financial slowdown, political unrest and growing income inequality are all contributing to the global trend. Areas including the Eurozone (Italy, 12% unemployment, Spain, 24%) and North Africa and the Middle East have been especially punished. Predictably, young people, those with fewer job skills or less education have also been particularly impacted.

Over the next 10 years or so, nearly every comparison of the number of projected open jobs with the size of the global workforce produces a severe jobs deficit. And that’s without counting the continued regional jobs regressions. The longer some regions stagnate or regress in joblessness, the more severe the long-term global outlook becomes.

It’s important, therefore, for observers and participants in business and economic trends to not be distracted by improving local job reports in the US and other places. While these reports are unquestionably good news, they don’t nearly reflect the totality of the crisis.

When the Outlook on the Global Agenda asked leaders what could be done to address, mitigate and solve the unemployment challenge, 18 responses were given (three each across six regions). “Job creation” (on the list in all six regions) and “improving education” and “fostering innovation” were the top three answers.

The private sector and job creation 

Many people may assume that massive undertakings such as job creation, improving education and fostering innovation are exclusively public-sector endeavours. And there are unresolved economic and political debates as to whether the private or public sector really drives job creation and to what extent innovation and education reinforce or spark or amplify those efforts.

Even so, there’s no denying that governments can and will play enormous roles in these areas. But, ironically, the improving and misleading jobs landscape in places such as the US and Japan are likely to turn government leaders away from making these investments – not towards them. Which means that the private sector is left to assume a continued and escalating role in addressing global unemployment. (I use the word “continued” on purpose because, in many ways, the private sector has been making progress in these areas for some time.)

And I have a somewhat unique view of these private sector efforts and the areas of job creation, improving education and fostering innovation because the organization I help run, Network for Teaching Entrepreneurship, is working in this exact area.

We’re a private sector player ourselves – an international non-profit based in the US. And we partner with an array of philanthropic and for-profit businesses and global brands to improve education by teaching entrepreneurship, which fosters innovation and, in turn, creates jobs.

An entrepreneurial mindset

Since 1987 we’ve been teaching young people in at-risk and under-resourced communities about entrepreneurship. In our programmes, they apply maths and communication skills to create a business plan and learn by doing. They build new products, buy and sell items, design marketing and branding campaigns.

Also key is the use of entrepreneurship to teach young people a set of cognitive and noncognitive skills such as the ability to identify opportunity, take safe risks and persist through failure. Researchers call these skills and behaviours the entrepreneurial mindset and it’s a key factor in innovation and business formation.

That’s important, of course, because research has also shown that just about all new jobs are created by young, new, start-up companies – not older established ventures. New companies equals new jobs.

While creating new jobs, the entrepreneurship mindset can also help fill jobs that are already open because the skills learned through entrepreneurship are 21st-century workforce skills. According to many major employer surveys and studies, young people who can collaborate, communicate clearly and confidently, demonstrate persistence and flexibility are in high demand.

The result is that, through private innovation and investment, schools that teach entrepreneurship are teaching young people a set of skills that encourage and reward innovation, leading to new job-creating ventures and more employable workers.

Whether it’s done through our network or another service, teaching entrepreneurship – showing young people how to think like entrepreneurs – is an idea that can scale globally.

To scale, substantial investment, most likely from the public sector, will be needed – in addition to the continued generosity of private sector leaders.

That’s absolutely possible. But it’s time to get into our schools and start changing the way our young people think about challenges and solutions. Let’s not wait until unemployment is the number one global trend by 2020 – which it very well could be unless we scale and deploy the solutions we have now.

The full report, Disrupting Unemployment: Business-led Solutions for Action, is available here.