Wed | Dec 7, 2016

Create your own job, HAH!

Published:Sunday | January 4, 2015 | 12:00 AM
Martin Henry
Alicia Walker (right) of Things Jamaica chat with Lana Ranger at the JBDC 7th annual Small Business Expo last year.-File
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Martin Henry

We have opened up the new year with youth unemployment hovering around 40 per cent.

The unemployment number for the overall labour force is around 14 per cent. But we have to read these numbers bearing in mind what the Statistical Institute (STATIN) means by unemployment: Persons without work who are actively seeking work when the survey is done. The single largest block of workers in Jamaica is made up of those who have dropped out of the STATIN labour force and earn a money from one kind of hustling or another.

Every year the school system at the secondary and post-secondary levels delivers another 60,000 or so to the labour force, the majority of whom will ultimately get shuffled into the ranks of the uncounted hustlers in petty self-employment, seasonal work with permanent under-employment, and, particularly in the case of women, dependence on family or on a hustling, often transient, partner.

A number of well-meaning persons have been glibly advising school leavers to create their own job. To be entrepreneurs. Advice lightly trotted out particularly at graduation ceremonies. So I was delighted to see Mark Clarke, writing out of Siloah, St Elizabeth, tackling two prominent entrepreneurship advisers pointing out the lightness of the advice in a letter carried by one of the newspapers.

When I spoke at the Morant Bay High School graduation ceremony last September, I pointedly told graduates that I wasnt going to offer the usual bad entrepreneurship advice. I instead directed them to study the labour market, tracking data like that provided by the United States Bureau of Labor Statistics, an agency for which there is no Jamaican equivalent, and to press on to further training in a carefully selected reputable institution to prepare themselves for employment in areas of growing demand, whether here or abroad.

God bless migration which has mopped up the bulk of the successful output of the Jamaican education system which the domestic economy has never been able to handle. Some 80 per cent of university graduates have migrated.

Mr Clarke took on Dr Christopher Tufton, policy analyst and politician, and Minister of Youth and Culture Lisa Hanna in his letter, Tufton, Hanna need to tweak their message (Daily Observer, December 22, 2014). The message is for youth to create their own employment. Message abandonment might be more in order.

To tell young graduates to rush out and start their own businesses is not being honest, Clarke wrote. Most of our successful entrepreneurs began by working, gathered experience, saved, and later formed partnerships, or borrowed money to start businesses. They didn't immediately, after graduating, start businesses. And that's the way of the world.

Where Mark jumped tracks is in the view that Government should be a main provider of jobs but because of corruption, scandals and mismanagement, is unable to provide even temporary employment for its huge young labour force. When businesses flourish, employment flourishes.

Since the Industrial Revolution the vast majority of workers have been employees in enterprises. Before that, and still the case in the most backward present-day societies, large segments of the labour force are self-employed in low-productivity, labour-intensive work with absolutely no prospect for growing into business enterprises.

Entrepreneur and Entrepreneurship actually mean something. And its not the same as plodding along in marginal, dead-end self-employment because there is no job.

DEFINING ENTREPRENEURSHIP

Plucked from a business dictionary on the Web, entrepreneurship is: The capacity and willingness to develop, organise and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses. In economics, entrepreneurship combined with land, labour, natural resources and capital can produce profit. Entrepreneurial spirit is characterised by innovation and risk-taking, and is an essential part of a nations ability to succeed in an ever-changing and increasingly competitive global marketplace.

A business and technology writer, drawing from the University of Illinois Center for Economic and Financial Education, identifies some key characteristics of the entrepreneur: ability to plan, communication skills to market their idea, marketing skills, interpersonal skills, basic management skills, and leadership skills. There are many other such lists and some include innovativeness and risk-taking. Successful entrepreneurs create jobs for others as they grow businesses. Indeed, the potential for growth and job creation is one of the key marks of real entrepreneurship.

Most human beings are not, and will not be, entrepreneurs. Even among those willing and able to take the risks of start-ups the rate of failure is horrendously high. The Wall Street Journal reported in September 2013 that 56 per cent of Americans, in one of the most entrepreneurial countries in the world, thought that they were capable of launching their own company but only a mere nine per cent actually took steps to start a business. On average more than 50 per cent of those new businesses fail in their first five years, with a wide variation by sector.

Dr André Haughton writing in this newspaper (Economics an obstacle to happiness, December 24, 2014) provided some excellent data on the cycle of poverty and low-level self-employment. The vast majority of the worlds poor population work in small farming or are self-employed, with more than two-thirds of the population in the poorest countries working on family farms or in the informal sector. Those farms fail to improve the living conditions of the farmers, are small and inefficient, require a lot of labour but produce little output.

The majority of enterprises owned and operated by the worlds poorest people are small shops and stalls making only a few sales per day, the economic analyst, who sets out to make complex things simple and murky things clear, tells us. But then Dr Haughton muddies the water with circular reasoning, concluding that the onus is on us to create jobs of our own via entrepreneurship and enterprising.

How does a 17-year-old exiting high school, or a 21-year-old exiting university, set about starting a real business with even the low chances of US start-ups of surviving for more than year five while yielding a decent living? How can we seriously expect thousands of youngsters to pull this off?

With the massive expansion of high school places (which is different from high school education) the majority of owners manning the here-today-gone-tomorrow stalls and shops littering our streets are high school graduates. Virtually all of them below 40 would have had some kind of post-primary schooling.

Even if our graduate had the aptitude for entrepreneurship, which only a small portion of a population has, perhaps less than 10 per cent, there are many other rivers to cross.

Entrepreneurship works best when the potential entrepreneur has experience, both in a skills area and experience about how the world actually works. I have kept for a column like this Krista-Gaye Forbes letter (Observer, November 5, 2014) 8 CXC's but not ready for the road. She began her letter saying, I am genuinely concerned about how uninformed we students leaving high school are about the real world and the challenges that we will indeed come across when moving into adulthood.

The very same macro reasons why jobs are scarce for young graduates make it difficult for new businesses to emerge. In a crisis year unemployment may reach seven or eight per cent in the United States, the worlds entrepreneurship powerhouse. We have been stuck in a band of 13-16 per cent forever. New businesses, like old ones, need markets, consumers, favourable state policies and regulations, security and affordable capital infusion. New businesses flourish when economies flourish a virtuous circle.

START-UP CAPITAL

How is our graduate to obtain start-up capital? The vast majority of them are poor people pickney, many on the PATH social welfare programme, many had financial challenges just staying in school. Family money is simply not available to these youngsters for anything serious in business. And which lending agency, especially in our ultra risk-averse financial services, is going to lend a youngster its money whose only capital is an examination certificate or graduation diploma, and often not even that? STATIN has found that 67 per cent of unemployed youth did not pass any subjects in high school.

Even under more favourable circumstances, in a world where the overwhelming majority of those who work will be employees, it is misleading (to quote Mark Clarke) to preach at young people to create their own jobs. Under our special set of negative circumstances, it is downright insulting.