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Pathways to support young people into self-employment


The Peer Review papers focus on two examples of measures adopted in Spain to tackle youth employment, either by encouraging young jobseekers to become self-employed or by providing incentives for employers to hire young people.

In the context of the economic downturn, measures to foster youth employment have acquired a crucial importance across Europe, as young people have hard hit by unemployment. As part of the Mutual Learning Programme, a number of Peer Review papers on Pathways to support young people into self-employment were prepared in the autumn of 2011.

The Peer Review papers focus on two examples of specific measures adopted in Spain, one of the countries where the labour market has deteriorated most dramatically since the beginning of the recession and where the issue of youth unemployment is most acute. In addition to an independent review of the Spanish measures (see Host Country Paper), Peer Country papers were prepared by independent experts from Cyprus, Czech Republic, Estonia, Germany, Greece, Iceland, Portugal, Romania, Serbia, Slovakia, Slovenia and United Kingdom.

One of the measures taken by the Spanish government aims to encourage young jobseekers to become self-employed through a modification in the unemployment benefit capitalisation regime. Young unemployed persons who want to start their own business can receive 80 % of their total unemployment benefit entitlement in one single payment. To qualify, they must prepare a detailed business plan and initiate their business activity within one month. The impact of this measure appears to be mixed, as the number of self-employed (including young people) increased recently but the number of beneficiaries of the unemployment benefit capitalisation regime declined. A key challenge identified in Spain was that overall, jobseekers are not frequently stimulated to become self-employed and a comprehensive supportive environment, meeting the needs of potential entrepreneurs, is still missing. This challenge is also common to other European countries: specific assistance is needed as support from unemployment benefits is insufficient to start a business.

The second example reviewed in Spain is a temporary measure targeting both young and long-term unemployed people. On the one hand, employers offering part-time contracts (50-75 % of full-time working hours) are exempted from social security contributions for a certain period. On the other hand, this measure is combined with incentives for employers to transform temporary contracts to open-ended contracts. While it is too early to draw firm conclusions on the outcomes of this recent measure, its impact in terms of net employment growth may be limited. It has also been noted that this measure implies a risk of increasing atypical work and gender segregation on the labour market, as part-time jobs are most common among female workers. The existence of mechanisms to control the use of such incentives is therefore important, as noted by Peer Country papers.

The Host and Peer Country Papers have been complemented by an Analytical Report that provides a review of current policies and practices in the promotion of self-employment among young people and identifies key elements to be considered when setting-up comprehensive support programmes for young people.

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