ICT and young entrepreneurs: an interview with MEP Novakov

Employment and Social Affairs
After the adoption of a New skills agenda for Europe on digital expertise, we interviewed Mr Novakov, Member of the European Parliament on the link between ICT and young entrepreneurs.

The European Commission has recently adopted a New Skills Agenda for Europe, aimed to improve digital skills in the EU. Called “New Skills Agenda for Europe: working together for human capital, employability and competitiveness”, its purpose is to improve the quality of skills development, make skills and qualifications more visible and comparable and improve skills intelligence for better career choices.

Cornerstone of a truly functioning digital society and Digital Single Market, digital skills will be more and more required by all jobs in the future, stresses the European Commission. In particular, there could be 756 000 unfilled jobs for ICT professional by 2020, although continued high levels of unemployment.

We discussed on the link between ICT, youth entrepreneurship and employment with Mr Andrey Novakov, Bulgarian Member of the European Parliament of the European Popular Party. One of the youngest MEPs, Mr Novakov focuses his parliamentary activities on structural funds, cohesion policies, regional development and youth employment.

How is the situation of SMEs and youth entrepreneurship in general and, in particular, in terms of ICT across Europe? What challenges are they facing?

At the moment, I would say that we have enough funds for SMEs and especially those dedicated to ICT sector. Just for 2014, one of the biggest and most successful programmes of the European Union, Horizon 2020, allocated 2.4 billion Euros to over 850 projects just in the ICT sector. So, I used to say that, especially from 2014 on, we have got more money than good ideas to use them.  However, more and more projects are approved, especially within horizon 2020, which means that the quality of the project increases. An example I can provide is 3D printing, which started in Japan in the late 80’s and then it widespread in Europe, where the environment and terms were better. But, it is going back to Asia.

Why is this trend changing again?

It is so because Europe is lagging behind China and the United States in terms of technology research. Indeed, even if we have funds at the moment, we have to adopt further legislation because, in some countries, it is hard to start a company. For young entrepreneurs, the burden is too much, if they have to endure a long and though procedure in order to get the EU funding. If someone decides to create a company somewhere in the European Union, he or she will need a particular environment with certain services. However, while in some EU countries it can take even weeks to start a business, in the United States this can be done online in few minutes.

How can Europe reverse the situation? Can you provide an example of best practices?

Well, this is why we need simplification. On the one hand, all funding instruments are there, since 80 billion under the horizon 2020 programme are dedicated by the EU to innovation and a huge part of it goes to the ICT sector. In Bulgaria, for example, we have got operational programmes supporting SMEs, and now there is also the Juncker plan, officially called EFSI, the European Fund for Strategy Investments. But on the other, we really need in Europe to cut the red tape and promote much easier procedures to start a business. Few years ago, during the first government of Prime Minister Boyko Borisov, legislation was adopted stating that only one euro, or the equivalence of one euro in the Bulgarian currency, was all capital needed to start a company. This has been really helpful because, if a hundred years ago a company needed a huge amount of money to start a factory, nowadays tomorrow’s huge invention will be produced with a laptop in a garage, with no capital provided. So we have to adopt a different legislation.

For more information, read “Why the EU entrepreneurship system has failed?

Do you think it is time for the EU to fully embrace the digital revolution as soon as possible?

I do not believe so much in the “third revolution” but, it is true that it is changing the world we live and we know today. Youth in Bulgaria is covered mostly by the programmes that already exist in the whole European Union such as the Youth Guarantee. But I do believe that private funds and private initiatives are much more successful in creating inclusive growth than public funding and policies. Juncker’s plan is an example of that. Because, no matter how big public funds are, private would be always bigger. So, Juncker’s plan aims to get money out of the banks and to the put them in the economy, as so to create jobs.

What is the current situation in Bulgaria in terms of ICT and entrepreneurship? Does Bulgarian Youth have obstacles in starting their careers?

Youth in Bulgaria has problems like everywhere else, namely unemployment. But in Bulgaria youth unemployment rate is lower than in Italy, Greece, Spain and Portugal. According to some statistics, we are among those countries that have a fast dropping rate in youth unemployment. For example, Plovdiv, the second biggest city in Bulgaria, created an economic zone, called TEZ – Trakia Economic Zone, which provides annually 12% of the local economic growth and attracts companies from the ICT sectors. Bulgaria was ranked by the Financial Times as the 9th outsourcing destination in the world. And this is only by providing, let’s say, an environment. I don’t believe the state and government have much to do in details with managing business, interfering with the day by day work of the companies. But I think they should at least create an environment allowing entrepreneurs to develop their business.

Read “ICT and start-up growth still uneven across the EU?” to get an insight into the situation of Start-ups across Europe. 

How can entrepreneurship be encouraged across Europe?

An important programme from the EU is the Erasmus programme for Entrepreneurs that allows people without experience but motivated to develop a company to travel around Europe and find a company in their sector and learn from high-ranking managers and go back to their own countries and develop their own companies out of the new experience. But sometimes the best examples are not in Europe. Thus, this is why I have tabled a proposal for a new programme, called ALECO, funded by 1 million Euros, supposed to provide to whoever want it – not only to youngsters, but also whomever wants to develop a company or has recently created one  – the possibility to travel to Singapore, China, United States or wherever the best example might be. Because if an entrepreneurs wanted to set up a company building 3D printers, it would be hard for him or her to find companies that could be a good example of that. Conversely, in China they build houses with 3D printers and that maybe would the best destination for that entrepreneur to see how they make them.

What role should member states play in order to foster youth entrepreneurship?

Cooperation between Member States is important for the Union. This is why I would have trans-border cooperation projects, to improve cooperation between country – not just to build bridges or roads but rather to improve communication, which can take so many different forms. But laws are created here, at the European level. When you observe closely at the national level, even more burden is created with gold-plating. Another example is youth guarantee, which works very well in Scandinavian countries. But the results are quite different in Mediterranean countries. This shows that, no matter how long we have been in the Union together, especially the funding members, things are still so different at the national level. One procedure or programme is not working equally well in every Member State. So, if we want to get the best out of an initiative, we need to adapt it at the national level to every Member State. Otherwise, while supporting young farmers in France, which is a huge sector there, would not work as well as in Finland. Therefore, we need to change the projects to be financed because maybe Finland economy is better at ICT for example. But one sector should not be a prioritised than others.


What do you mean when you said that a sector should not be prioritised than others?

When you focus only on one thing is not good, because at the end, it would be as successful as you though. When I took part into the negotiation of the Budget, we were debating on whether having margins to cover unexpected expenditures. In order to do so, they wanted to cut funds for some ongoing programmes, but I do not believe that is the way it should go, because if we will need to tackle the migration crises or enhance our external border in the future, that does not mean that we have to stop spending on horizon 2020 programmes for ICT or for innovation, as well as facilities connecting Europe. At some point, we will figure out how to solve the migration crisis but then we will see that we have created so many other crises due to the lack of funding for youth employment, for innovation, for SMEs – which is the backbone of the European economy. So, along with solving certain problems we should not forget, to provide what is necessary for other EU priorities.

So, how do you think young people could be helped in such a period of economic hardship?

I do not say that supporting youth entrepreneurs mean cutting funds for any other youth programme initiatives. What I am saying is, when funds are allocated in order to get youth hired and reduce youth unemployment rate at the end of the month, then those funds might eventually finish and young people might be unemployed again, while if the supports went to those creating jobs, this would be more sustainable. Not everyone must be an entrepreneurs and this should not be the only way to solve the problem, of course. But this is the sense of initiatives such as youth guarantee or the EU Skills Agenda proposed by the Commission last week. This is the direction where we heading to and there a lot of programmes to support youth unemployment. But I believe we should start changing and adapting the educational system. History repeats and, like during the industrial revolutions, the development causes hard times for many people who lose their jobs. In order to be competitive, these people would need new skills to face the new job market. If 10 years ago we simply needed an engineer specialised in automotive components, but now we have electric cars and we need more people to work on them. So, if we start now, in 15 years we’ll get suitable specialists in the areas we are interested in. Along with programmes funding, we need reforms not only in legislation but also in education.

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