LAB Meeting Poland 2016
In February 2016, a second LAB meeting took place in Cracow. In the group of invited experts there were representatives of the Voivodship Labour Office in Cracow, Lewiatan (Association of entrepreneurs), County Labour Office in Tarnow, Advisory group ‘Project’, ‘Inret’ Culture and Leisure Industries Cluster and researchers from the Cracow University of Economics.
To introduce the discussion at the beginning of the meeting the main objectives of the project, were outlined. It was followed by a more thorough presentation of WP7. The main areas of the discussion covered the effectiveness of policies dedicated to young unemployed activated by self-employment opportunities. Main features of a successful young entrepreneur were identified, among the others: a family background, passion as a source of the business idea, and a length of experience on labour market.
The main conclusion concerning young self-employed was that there is a need for flexibility when it comes to their support. Nevertheless, more attention should be given and appropriate solutions should be delivered in pre-self-employment stage so the business ideas could be appraised and verified.
Main issues of debate
Main policies to support young self-employed
Policies which are executed in Poland are created mainly by the European Union Commission. The main source of funding for activities undertaken in order to decrease youth unemployment or prevent it come from European Social Found. Also, national funds are involved in the activities. Mostly public. However when it comes to self-employed private funds like ‘business angels’ support entrepreneurs. This depends on a business idea innovativeness.
There is a set of public institutions which are involved in national policies dedicated to young unemployed creation. The most important one is the Ministry of Family, Labour and Social Policy former Ministry of Labour and Social Affairs, where the frames for the national policies are created. The ministry cooperates with other ministries responsible for education, science, economy and finance. The main legal act which regulates public activities aimed at decreasing unemployment is the legislation on employment promotion and labour market institutions (Dz.U. 2015 poz. 149). What is important to notice is that there is a visible shift of policy of self-employment support in Poland. Additionally, the support is more willingly given to unemployed then to these who work and want to start up their own business. Accordingly to actual regulations public support can be given only to those who are under 30 years old and unemployed. Groups which are favoured are women and long-term unemployed. For a while there was also an idea to support only these who are long-term unemployed. There are also other public institutions which not only create policies but also perform support activities for unemployed. These are voivodship labour offices and county labour offices. Additionally there are various organizations, mostly NGOs, which are specialized in supporting young unemployed or act against unemployment.
At present there is one major policy performed in Poland dedicated to young unemployed in the last few years. The program is named, Wiedza-Edukacja-Rozwój (knowledge-education-development) shortly called POWER where funds are sourced from ESF. The program is mostly dedicated to young unemployed (under 30). Various tools are used to activate young unemployed, such as: vouchers for internship, for mobility, trainings, and loans for business start-ups. The funds however are mainly distributed via public labour market institutions. The program is perceived as a successor of previous one named Kapitał Ludzki (human capital). The main difference between these two programs is that the main accent is put on competences development. Not only these who are unemployed but also employees of small and medium enterprises are able to apply for the support, so the level of their competitiveness on the labour market will increase.
Key success factors of young entrepreneurs
Participants of the LAB meeting pointed out a set of theKnowledge and Skills Framework (KSF) of young entrepreneurs. These were:
• Psychological features;
• Family background – these who are able to learn from their parents (close family) on how to run a business have higher probability to be successful;
• Passion can also guarantee a success. Young people who open their businesses in connection with their passion (hobby) know market context and there are more dedicated to their business and so their chances to be successful are higher;
• Experience. These who have never worked, have no labour market experience but their expectations are very high. In fact the level of their employability, also as self-employed, is quite low. Some work experience is needed in order to be successful entrepreneur. The experience allows young people to adjust to reality of both the labour and business market.
• Age. ‘Young is not equal to young’. These who have longer labour market experience are more successful then these who have none or little. Work experience can be acquired also during the process of education (internships).
• Internal motivation.
• Social competences. In order to be successful nowadays social networking becomes crucial.
• Business idea. Its’ innovativeness’ (niche).
Challenges of policies already
There are two major challenges connected with the realisation of policies supporting young unemployed with the use of loans for business start-ups. The first one is that the group of youth in Poland is diverse and second that effectiveness of the policies is measured against quantitative not qualitative indicators. Regarding the diverse community of young self-employed: those who have no experience and no social capital should be ‘activated’ by tools which allow them to get the necessary experience. These who have the experience might be activated by loans for start-ups.
Another issue is the measurement of different support tools. The loans are mostly given to start-ups which are perceived as less risky. Innovative ideas of start-ups are rarely financed by public money. It is mainly due to the fact that institutions that implement policies, both public and private, need to indicate high effectiveness of their activities. And so the ‘survival of a business’ indicator is commonly used. The indicator is measured after more than three months from the start-up date. Most of the times the indicator is identified after 12 months. However, public institutions are required to monitor the effectiveness of policies up to three years.
Recommendations for the self-employment support
The major recommendation from the LAB meeting is that there is the need for visible support of business start-ups in their pre-incubator stage. The support should be concentrated on business consultancy rather than financial support. Young entrepreneurs should have mentors who advise them on how to run a business. A lot of entrepreneurs with innovative ideas fail due to the lack of business competences. More broadly, in Poland there should be a clear system for start-ups created which would guide an entrepreneur, also young ones, on which steps should be taken in order to start a business. Additionally, along the way there should be institutions (stakeholders) pointed out who can support an entrepreneur while the business creation process.
Cracow University of Economics
Professor Aleksy Pocztowski, dr. Beata Buchelt, dr. Urban Pauli, dr. Ewa Ślęzak.
Wojewódzki Urząd Pracy w Krakowie, Voivodship Labour Office in Cracow
Justyna Zapała – Więch
Lewiatan (Association of entrepreneurs)
Kamila Banasik – Brudny
Powiatowy Urząd Pracy w Tarnowie, County Labour Office in Tarnow
Advisory group ‘Project’.
‘Inret’ Culture and Leisure Industries Cluster
The first Polish LAB meeting is reported here: https://www.style-research.eu/2015/04/lab-meeting-cracow/