Young people are one of the most vulnerable groups when it comes to the job market. They tend to look for work for a longer period of time, start at a lower position with less salary and, according to Global Employment Trends for Youth 2013, are fired more often than adults.
“Young people, after ending school, remain stuck in categories of economic activity marked by informality, uncertainty and working poverty,” says the report. Many turn to part-time work or remain unemployed. In addition, the recent financial crisis has forced young people to choose jobs which do not correspond to their skills and education.
We see economists working as administrators or in fast-food restaurants, and those without higher education taking on managerial roles.
In Kazakhstan, there were 132,700 young people out of work last year. Although the unemployment rate is decreasing year by year, there is still higher unemployment among females than males, and many young people are forced to accept a position they would not describe as a “good job”.
Young people are the future of our country, which is why their lack of employment is a big problem. They are our future politicians, business executives, doctors and scientists. They will govern the country and deal with public affairs on the local and international level; they should be able to start contributing to the economy as soon as they reach employable age.
So what is the solution? The problem is complex, but entrepreneurship is a part of it.
Entrepreneurship creates new products and services for customers, as well as new places of work for the unemployed. It introduces innovation and generates money for the economy. Entrepreneurship is for people who have an imagination, a reactive brain, passion and knowledge of business.
Many young people fit this profile (with the exception of business knowledge, but they can gain this quickly). Most do not have the capital to start a new business, and banks don’t show much trust in new people, so the circle is closed.
However, according to a survey carried out in 120 countries by the organizers of Global Entrepreneurship Week, it is now easier for people in Kazakhstan to obtain financial support compared with other countries – with the exception of young people, who have no collateral. With this in mind, it is not easy to encourage young people to start their own business.
About 20% of the population has the potential to become entrepreneurs, yet only 5% do. The mentality in Kazakhstan seems to stem from a perception that a good job is working for a state agency, while entrepreneurship represents risk. This is why we need more programmes that encourage the development of entrepreneurs.
These programmes require cooperation between the government, investors, banks and NGOs. Together they can bring about positive change.
The government’s role is to create laws that allow businesses to be fairly regulated. Public officials should understand that the development of business will benefit the economy, by creating jobs and increasing GDP.
Banks and other financial institutions need to provide financial support for entrepreneurs who have innovative business ideas. NGOs, meanwhile, are responsible for finding young people with good ideas and equipping them with the business skills to turn their ideas into reality. Everything related to non-financial support should be done by non-profit organizations.
Getting to this point will require several steps. First of all, NGOs should announce a programme offering tutorship in running a business, and the most successful students with the best ideas should be offered financial support for their enterprises.
It is important that non-financial support (training and mentorship) should be used instead of collateral or other kinds of guarantee for banks. In other words, NGOs should agree, with the banks, to provide their students with start-up capital with a lower risk in the event of non-payment of debts.
Mentorship is key to successful entrepreneurship, but in Kazakhstan it is not well developed. In a survey carried out by Youth Business International, one-third of polled entrepreneurs said that mentors’ support helped their business more than money. Taking this into account, we should encourage mentorship in Kazakhstan because support, both financial and non-commercial, is the cornerstone of business.
Author: Pavel Koktyshev is chief executive officer and co-founder of the Young Entrepreneurs Club of Kazakhstan and is the curator of the Almaty Hub of the Global Shapers Community. He will be attending the Global Shapers Annual Curators Meeting from 21-25 August in Geneva, Switzerland, which brings together over 325 Curators from around the world.
Image: A fan holds up a flag of Kazakhstan during a men’s ice hockey game. REUTERS/Brian Snyder