Job market strengthens as young entrepreneur numbers rise in UK
Record numbers of younger people are setting up their own companies, a new study has found.
In an era where youth unemployment remains higher than the overall jobless rate, it might not be surprising that many younger adults are losing faith in the job market. Even though employment has been rising and the UK economy is well on its way to recovery, a growing number of young people are finding new ways to make a living by taking the plunge and setting up their own businesses.
New figures from research company DueDil and small firm network Enterprise Nation shows that entrepreneurial activity from people under the age of 35 has rocketed in the past few years, and it’s likely to be a direct result of the recession. In fact, younger adults set up 145,104 companies in 2006 – by last year, that figure had soared for 247,049. That means entrepreneurialism is growing faster in this generation of young people than in any other.
Among the most popular sectors for company formations were business services, IT architecture and catering, suggesting that young people are putting their skills to good use in a wide range of sectors. And it’s happening across the UK: rather than being focused in London, the areas which saw the biggest increase in new company founders were actually in Scotland and Wales.
They included North Ayrshire, where young company owners increased by 169 per cent, Blaenau Gwent, with a 161 per cent leap; and the Western Isles, where there was a 150 per cent rise. West Dunbartonshire, Midlothian and Merthyr Tydfil all saw bigger rises than Greater London, where 110 per cent more companies were founded by young people.
It’s likely that the growth is pronounced because it is coming from a relatively low base in these areas, but the fact that the increase in entrepreneurialism has been so significant in these regions is still remarkably positive.
Youth ‘business boom’
The findings chime with a number of similar surveys and reports from the past few months. In May a report from The Prince’s Trust and Royal Bank of Scotland suggested that the UK could be in line for a “youth business boom”.
According to the survey, three out of ten young people believed that they would become self-employed at some point in the future. Yet that does not necessarily mean they plan to wait too long – a quarter said they expected to set up their own businesses within the next five years.
Some 43 per cent have already earned money from this kind of activity, having either worked as a freelancer or sold on a product they had made, and over 50 per cent said they hoped they would be able to do that in the future.
“Traditionally Britain has lagged behind other countries in terms of the number of young entrepreneurs, but today’s report suggests that young people’s attitudes to self-employment are changing,” said Michael Hay, professor of management practice in strategy and entrepreneurship at London Business School, at the time.
Given that some 44 per cent of the self-employed young people who responded to the survey said they felt more confident about their business than they had a year earlier, and four out of ten anticipated that business would pick up in the coming six months, it’s likely that the UK is waking up to the potential of a new generation of entrepreneurs.