Young entrepreneurs from Latin America need innovative policies and government support

Oct 27, 2016

Around 20% of young people in the workforce currently qualify as entrepreneurs, mostly in conditions of economic vulnerability. ILO and UNDP considered necessary to "rethink" policies to improve the integration of youth in a labor market where unemployment increases.

CARTAGENA –Entrepreneurship emerges as a clear alternative to improve opportunities for young people in Latin America, particularly in a context of high unemployment, but to tap its potential it’s necessary to urgently rethink policies designed to facilitate the integration of young people in the economic activity, ILO and UNDP said today in a joint report.

Currently 20% of young people participating in the labor market qualify as entrepreneurs. However, the vast majority -equivalent to 18.6% of the total- are self-employed, which generally involves working conditions of vulnerability. Only 2% are employers, mostly with small businesses.

"The problem of Latin American youth has reached a magnitude and complexity that demands urgent responses from States, and also from their societies", said the Regional Director of the United Nations Development Programme (UNDP), Jessica Faieta, and the Regional Director of the International Labor Organization (ILO), José Manuel Salazar, in the preface of this report.

The document of the United Nations agencies was released during the week of the XXV Ibero-American Summit of Heads of States and Governments, held in Cartagena, under the theme "Youth, Entrepreneurship and Education", and was developed with the support of the Ibero-American General Secretariat (SEGIB) and the International Youth Organization (OIJ).

The report titled "Promoting Entrepreneurship and Youth Social Innovation in Latin America," recalls that of a total of 156 million young people between 15 and 29 years in the region, 39% live in poverty, while 20% of those between 15 and 24 neither study nor work. Moreover, it is expected that youth unemployment will rise to around 17%.

The persistence of few inclusive education systems, the highest incidence of poverty among rural youth, exclusion of indigenous and African descent youth, and the need to meet the challenge of employability of young people in a world of technological revolutions, are mentioned as outstanding issues in most countries.

"All these transformations and challenges bring the need to rethink the ways of labor and social integration of young people", explain the Regional Directors of ILO and UNDP.

The fact that most young entrepreneurs are self-employed implies that they have "a high probability of earning income poverty for their work", says the report.

Additionally the report emphasized that a high fraction of entrepreneurs who declare themselves either as employers or self-employed, admit that they have chosen this option by necessity. Usually it is a way to address the lack of employment opportunities, poor working conditions and to generate revenue relatively quickly.

These independent workers share with the predominant form of youth employment, the informal salaries, which are dependents, a situation of vulnerability with "the current low income and limited possibilities to increase it in the future". In many countries, most of these young entrepreneurs have incomes below the international poverty line of $4 a day.

The report shows an increase in countries of the region of programs to support youth entrepreneurship, "with limited knowledge about their impacts", and limitations in their application to the neediest population.

 The ILO and UNDP made a series of recommendations to promote entrepreneurial culture of young people and to involve the private sector, and share innovative and successful experiences in the region.

"Youth should be seen as one of the most valuable parts ​​of the current human and social capital in the region, as subjects and relevant stakeholders, as a strategic and essential factor for sustainable development and for the progress towards a more just and inclusive Latin America and Caribbean, in which no one is left behind.... For youth the future begins and is built every day”, highlighted the Regional Directors of UNDP and the ILO.

The report was made with the support of the Ibero-American General Secretariat (SEGIB) and the International Youth Organization (OIJ).

Contacts

UNDP: Nuria López in Panama, nuria.lopez@undp.org; Aleida Patarroyo, aleida.patarroyo@undp.org, in Colombia; Marcela Barrientos in New York marcela.barrientos@undp.org.

OIT: Luis Córdova, cordova@ilo.org.  

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