The Innovations We Are Missing

At some point in our lives, we have all entertained thoughts of crafting something innovative, creative, and entirely new. However, the critical question remains: How many of us actually take the leap and transform these ideas into reality? Recent studies shed light on a reality that may surprise us—indicating that the number of individuals who let promising ideas slip away is more significant than we might anticipate.

Although entrepreneurship has been on the rise in all corners of the world and in Europe and in Malta respectively, as the self-employment rate increased from 13% in 2012 to 15% in 2022, nevertheless, the potential is far from being realised yet.

In an attempt to further understand this phenomenon, the OCED released The Missing Entrepreneurs 2023 report, providing an overview of recent trends in the field of inclusive entrepreneurship policy. These policies seek to ensure that everyone has an equal opportunity of creating a successful and sustainable business, regardless of personal characteristics.

To give you a bit of a snapshot; 31 million enterprises were active in the EU in 2021, employing 156 million persons. Of that total, 98% were SMEs which employed two-thirds of the active population in the EU business economy. If you think these are huge numbers, imagine what would happen if we closed a crucial gap in entrepreneurship and brought missing entrepreneurs into the equation.

But before we dig deeper, what do we actually mean by ‘missing entrepreneurs’?

The number of missing entrepreneurs is determined by comparing the actual number of entrepreneurs with the hypothetical number of entrepreneurs if everyone was as active as 30–49-year-old men in starting and managing new businesses. In simpler terms, we align the overall population's entrepreneurial activity with that of 30–49-year-old men.

But why are 30–49-year-old men taken as a specimen; one might wonder?

Typically, this demographic is commonly chosen because it represents a segment of society that is statistically more inclined to initiate and sustain a successful business.

In a nutshell, the share of “missing” entrepreneurs is reported as a ratio to the number of actual entrepreneurs to provide an indication of the scale of entrepreneurship that could be possible if the uneven impact of barriers and policies were removed. In Malta specifically, there would be 26,000 more entrepreneurs if this gap was closed.

The concept of inclusive entrepreneurship goes hand in hand with that of missing entrepreneurs, as the rationale behind those two concepts lies within the fact that denying opportunities to talented people can end up hurting everyone.

The question thus raises itself, where does this gap lie?

1.????? Women

The OCED report identified that there are nearly 7.5 million missing entrepreneurs in the EU representing 44% of all entrepreneurs and 34.1 million in the OECD representing for 34% of actual entrepreneurs. Nearly three-quarters of these missing entrepreneurs are women, and in Malta, 81% of the missing entrepreneurs are women, indicating that this challenge is largely a gender issue. Needless to say, the fact that we still measure the number of active entrepreneurs by the number of active 30–49-year-old men speaks volume.

These numbers clearly show that there continues to be significant gender gaps in entrepreneurship, including in terms of the numbers of start-ups, their economic impact, and the ability of women entrepreneurs to access resources.

Although the gender gap in self-employment fell by 6% overall in the EU over the last decade, women still face more obstacles than men in starting and growing a business. These obstacles relate to gender bias and social norms, a lack of entrepreneurial skills and unequal access to funding.

Empowering women entrepreneurs should not be a distant dream, but a tangible goal. Luckily, there are several ways to close the gender gap and reach gender parity in the entrepreneurial context, some of those policies and tactics are starting to be recognised and implemented by governments across the EU.

In terms of engagement with JA Malta's two flagship programmes, there has been a steady rise in female participation. In the Company Programme, female participation reached 33% in 2023, increasing to 43% in 2024. Meanwhile, the Start-Up Programme saw an encouraging 42% involvement from female participants in the past year, with statistics to be added after the programme takes place in April 2024.

2.????? Youths

In today and tomorrow’s economy, being young and looking for employment is not an easy task. Following the recent developments, from the pandemic to the rise of AI and new technologies, it becomes evident that there is a lack of a well-adapted educational curriculum to address these dynamic changes. In Malta, for instance, the educational curriculum has not been updated since 2012. Youths are therefore left unequipped with the necessary skill to fill in certain job positions, as 87% of Maltese SMEs reported in 2023 that they were finding it difficult to find workers with the necessary skills to fill in available jobs. If this current trend persists, the skills gap is surely expected to deepen in the near future.

Amid this struggle, the often-overlooked realm of youth entrepreneurship emerges as a potential solution, holding the key to not only job creation but also the development of crucial lifelong skills. Many young people, unable to find traditional employment, turn to self-employment, where entrepreneurship becomes a rational option for cultivating critical thinking, decision-making, leadership, and innovation.

However, the reality is that youth entrepreneurship is confronting a decline.

Over the past decade, the percentage of young entrepreneurs has decreased from 4.9% in 2009 to a mere 2.1% in 2018. Additionally, between 2016 and 2020, only 8% of young people in OECD countries actively engaged in startups or businesses, despite a significant desire to pursue entrepreneurship. While in Malta, 7% of the youth population was self-employed in 2021.

This gap between aspiration and action is influenced by various challenges, including legal complexities, financial obstacles, and a notable lack of funding.

Moreover, a critical issue compounds the hurdles faced by aspiring young entrepreneurs – a lack of financial literacy. Many may lack the knowledge required to manage finances effectively, understand investment options, or create realistic budget plans.

In the face of these challenges, supporting youth entrepreneurship becomes not only a matter of economic empowerment but a means of nurturing the untapped potential of a generation.

3.????? Immigrants

Immigrants have traditionally resorted to entrepreneurship and pursued self-employment to escape low-wage employment and discrimination at work.

In 2022, approximately 13% of working immigrants in the EU chose self-employment, only slightly below the corresponding figure for non-immigrants at 15%. Malta on the other hand, recorded a higher percentage with 21% of immigrants being self-employed in 2021.

These immigrant entrepreneurs, however, grapple with distinct challenges, such as language and legal barriers that hinder their attempts in starting their own business.

Beyond being an alternative route for economic integration, migrant entrepreneurship serves as a means for empowerment and self-realisation while ultimately contributing positively to the destination country's economy. Its impact is therefore multifaceted, from introducing new cultures and ideas to facilitating societal integration and more.

However, obstacles arise from existing policies and law, additionally, the insufficient support and training available worsen the difficulties for immigrants starting their own businesses. Governments have the power to help ease these challenges and play a crucial role in promoting migrant entrepreneurship.

What is needed?

What is crucially needed is to promote in tangible actions the concept of inclusive entrepreneurship and level the playing field for people of all backgrounds and ages. European governments - Malta included - should facilitate access to funding, as it was reported to be one of the most faced obstacles that aspiring entrepreneurs face.

Addressing challenges linked to market, institutional, and behavioural shortcomings that disproportionately affect individuals, particularly those in underrepresented groups, should be given top priority. This includes eliminating barriers in financial markets and gaining access to entrepreneurship skills, fostering the expansion of entrepreneurship networks, and cultivating a culture that actively supports entrepreneurial endeavours.

JA Malta is doing its part by contributing to the preparation of individuals for the future of work by fostering entrepreneurial mindsets and imparting essential lifelong skills that extend beyond traditional education. Additionally, JA is undertaking initiatives to tackle unemployment, upskilling the unemployed, providing education in financial literacy, and consistently engaging with relevant stakeholders to address the issue of missing entrepreneurs in Malta.

In conclusion, although not all of these “missing” entrepreneurs are expected to become entrepreneurs, this does not deny the fact that entrepreneurial skills should be taught to everyone, irrelevant of whether they grow to become active in the field of business. What reinforces this argument is the statement from the European Commission's Directorate General for Education and Culture in 2012, which emphasised that 'All young people should benefit from at least one practical entrepreneurial experience before leaving compulsory education.'

On that note, JA Malta invites all aspiring young entrepreneurs, innovators, and business-driven students aged 18 and above to participate in its StartUp Bootcamp, scheduled to take place from April 1st to the 5th, to jumpstart their ideas and contribute to bridging the gap in the entrepreneurial scene in Malta. As it is surely better late than never to start empowering individuals to fulfil their potential, instead of facing regret over people who could have had highly impactful innovations if they had been able to pursue the opportunities they deserved.