Creating Opportunities for Young People in Berlin: Support for Self-Employment

Johanna Möhring, OECD LEED Programme

Joint OECD-Investitionsbank Berlin Seminar OECD Urban Renaissance Studies: Berlin - Towards an Integrated Strategy for Social Cohesion and Economic Development Berlin, December 12th 2002

1 General Overview: Youth in Berlin‘s Distressed Urban Areas (DUAs)

Youth Entrepreneurship: Challenges and Prospects

Recommendations

2 General Overview: Youth in Berlin‘s Distressed Urban Areas (DUAs)

Youth takes center-stage in the current problems affecting Berlin’s DUAs requiring combined targeted action:

Unemployment
Lack of local economic development
Problems of integration and identity
Social Exclusion

3 Unemployment (Statistical Office of Berlin, 1999) Reinicken- Falken- dorfer berger Strasse Reuterkiez Chaussee Berlin

Unemployment in % of working age 15.61 15.27 12.34 10.95 population (15.31 (13.61 (11.21 (surrounding districts) Wedding) Neukölln) Hohen- s schönhausen) Thereby as share of total unemployed:

Young people aged 20 2.88 2.70 3.58 2.74 or less (2.89) (2.89) (3.29)

Young people betw. 8.68 8.30 10.77 8.70 20 and 25 (8.83) (8.46) (10.44) 4 Lack of local economic development

Disappearance of the manufacturing sector in both East and West Berlin. Creation of jobs in the service sector does takes place outside of DUAs
Lack of local perspectives for youth (few job opportunities, obstacles to business creation)
Skills-mismatch (low-skilled labor force)
No emphasis on business development activities on community level yet

5 Problems of integration and identity

Very high percentage of foreign pupils in many schools (in some schools of study areas as high as 80%)
Insufficient German language skills - “closed educational and cultural circuit”
Lack of language proficiency increases difficulty of training/ retraining
High level of unemployment combined with low levels of education attainment and high share of welfare recipients point to problems of social integration

6 Problems of Integration and Identity (Youth crime rates, Berlin Criminal Statistics 1989-1997)

Crimes committed by children (8-14) and young persons (14-18) are on the rise – Children (1989-1997): Rise in crimes by 43.1% (German) and by 48.7% (non-German), respectively
Perpetrators are becoming younger and minors are becoming more violent – Number of children and young people suspected of brutal offences more than doubled between 1989 and 1997 (1997 17% of all children crimes)
In some age groups and crime categories, a significantly higher percentage of non-Germans is reported – f. ex. Robberies committed by children and young people: Non- Germans are three times more prone to be involved 7 Social Exclusion (Social Welfare Dependency among Young People, 1998)

220 200 180 160 140 120 100 80 Index, Berlin = 10 60 40 20 Mitte Steglitz Pankow Treptow Spandau Marzahn Wedding Neukölln Köpenick Tiergarten Kreuzberg Tempelhof Zehlendorf Berlin total Hellersdorf Weissensee Schöneberg Lichtenberg Wilmersdorf Reinickendorf Friedrichshain Charlottenburg Prenzlauer Berg

Hohenschönhausen Total Population Youth, under 18

8 Youth Entrepreneurship: Challenges and Prospects for Berlin‘s DUAs

Why youth entrepreneurship?

Rising unemployment rate of youth
Concentration of youth unemployment in target areas
Failure of education system to prepare young people for the job market -> Goal: Channel youth energies into enterprise creation creating economic and job growth and contributing to social cohesion in DUAs

9 Insights:

Young people are willing and able to start their own business
Start-ups contribute to economic dynamism of Berlin in general and of DUAs in particular

->Youth entrepreneurship needs to integrated into national, regional and local education, labour market and local development policy

10 Challenges

Finance: Banks are reluctant to provide money to young entrepreneurs
Education: Skills-mismatch, lack of culture of entrepreneurship
Embeddedness: Entrepreneurship is rooted in local economic and social environment
Policy co-ordination: Programmes linked to local development need to be co-ordinated to create the right conditions fostering youth entrepreneurship

11 Prospects

Business Development Programmes by IBB (Business development, micro-credit and ethnic business programs)
Territorial Employment Pact Neukölln: Economy and Employment Association Neukölln
Kommunales Forum Wedding
Advice and Co-operation Centre for Foreign Entrepreneurs
Co-ordination of local economic development efforts through Quartiersmanagement

12 Recommendations
Finance: – Leverage private finance – Expand existing micro-credit/ start-up programmes focusing on young entrepreneurs – Focus on start-ups, especially on creating new businesses among young people within Berlin’s diverse ethnic groups
Education: – Improve educational level of young people with innovative training schemes – Offer special mentoring and consulting programmes for entrepreneurs – Foster network-building among young entrepreneurs – Expand information base on business opportunities – Celebrate and support young entrepreneurs – Identify light-house projects 13 Recommendations

Embeddedness: – Create favourable business environment by capitalising on area assets through Public-Private Partnerships – Instil sense of identity among young people to build social capital
Policy co-ordination: – Link youth entrepreneurship with Quartiersmanagement – Co-ordinate economic development services encouraging learning and sharing among agencies such as the IBB, the Berlin Business Development Corporation, business associations and the Senate Office for Foreigners putting a special emphasis on young entrepreneurs – Integrate local economic development into wider Berlin context

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