Presentation by Anna Ludwinek (Eurofound) on the occasion of the SOC section hearing on Migrant entrepreneurs' contribution to the EU economy on 24.11.2011 in the framework of the Permanent Study Group on Immigration and Integration.

1. Migrant entrepreneurs’ contribution
to the EU economy
European Economic and Social Committee
Anna Ludwinek
Eurofound
Brussels, November 24, 2011

2. European Foundation (Eurofound)
• Established in 1975
• First EU Agency
(DG Employment & Social Affairs)
• Tripartite Board (Govs, employers,
trade unions)
‘To provide information, advice and expertise – on living and
working conditions and industrial relations in Europe – for key actors
in the field of EU social policy on the basis of comparative
information, research and analysis’

3. Ethnic entrepreneurship
• Objectives
 Characteristics of the urban economy since 1980s. Focus on SMEs
 Profiles of ethnic entrepreneurship. EE role in both integration and economic strategy of the
city.
 Role of local authorities and their policies in promoting ethnic entrepreneurship.
• Based on 28 case studies per city plus consolidated report with policy
recommendations.
• Method and approach of study
 Concept of mixed embeddedness
 Starting point: Continuously changing opportunity structure in local markets for ethnic
entrepreneurs
 Structure/conditions: Political, social and economic institutions, regulations and activities
provide obstacles and opportunities for ethnic entrepreneurs
 Personal agency: Education and language, professional skills, finance and networking with
relevant ethnic and majority society institutions

4. Contribution of ethnic entrepreneurship
Economic aspects Social aspects
Job creation Enhanced social chances
Own jobs and jobs for others chances for social upward mobility
Provide places for apprentices
More internal local opportunities
New/better products and services Roles of community leaders
Credibility for certain kinds of business
Filling the gap in the market Revitalisation
Filling gaps not covered by indigenous
sector Streets and neighbourhoods
Rejuvenation of neglected crafts New economic, social and cultural life
New external links
Improve local import and export links
New supply and export chains

5. Challenges
Segregation of communities Ethnic markets and neighbourhoods may lead to
stronger spatial and social segregation
Support and strengthen parallel societies
Embedding in ethnic niche as an Long term survival: break out of the ethnic
market
economic impediment
Exploitation, dependency
Low quality of markets covered Place in the low value added part of the market
Move into vacancies left by national
entrepreneurs
Low profits, long working hours,
bad employment conditions

6. Ethnic Entrepreneurship: Neglected policy area
Ethnic entrepreneurship - Important dimension of diversity (products, services, local
area, work)
Europe Cities
European Employment (EES) Similar orientation with certain
and European Integration Strategy exceptions of Vienna, Strasbourg,
(Common Basic Principles), Europe Frankfurt, Amsterdam
2020 focus strongly on integration
of migrants into paid employment
Missing link - Between overall integration strategy and the economic, social and cultural
role of ethnic entrepreneurship

7. Definition of ethnic entrepreneurship in the study
 Definition of ethnic entrepreneurship (EE)
 Entrepreneur as a person in effective control of a commercial
undertaking for more than one client, over significant period
of time, first and second generation included
 Structural features
 Self employed or with staff
 Ethnic or migrant entrepreneur
 People born abroad
 Plus second and third generation

8. Mapping of national context of ethnic entrepreneurship
in European countries
Ethnic entrepreneurs have in general only slightly higher entrepreneurial spirit
than nationals 12,8% compared to 12,1% - there are significant variation
between the countries.
• Share of ethnic entrepreneurs (EE) in working age population of foreign born in
EU (2008)
• High share – PL, SK, CZ
• Medium – BE, HU, IT, UK, PT
• Low – AT, DE, IE
• Share of self employment in total employment levels amongst natives
compared to foreign born
• 5 countries where native share is higher- GR,IT, IE, ES, PT
• Foreign born higher than native – FR, DK, UK, BE
• Foreign born much higher than native – PL (18%), SK (11%), CZ (5%), HU
(4%).
• Evolution of the self employment of foreign-born (between 1998-2008)
• Significant decrease in IE (from 16, 8% to 8,7) and ES (19,9% 11,9)
• Significant increase in PL (from 25% to 29) and SK (from 7,6% to 23%).

9. Critical mass of ethnic entrepreneurs
in several cities
Share of ethnic business among total business (%)
in cities with available data
35
30
25
20
15
10
5
0
Amsterdam Arnsberg Athens Bologna Frankfurt Kirklees Malmo Sundsvall Stuttgart Strasbourg Turku Vienna Zurich
Source: CLIP case studies

10. Growing numbers of ethnic start-ups
Share of ethnic entrepreneurs in total business
start-ups (in %) in cities
60
50
40
30
20
10
0
Copenhagen Turku Malmo Stuttgart Frankfurt
Source: CLIP case studies

11. Conclusions - mapping
 Lack of readily available data
 Substantial numbers and % of ethnic entrepreneurs in some cities
 Strong future dynamic in start ups
 Critical mass in many cities
 Need for policy attention
 Need to make use of data in many cities
 Lack of interest in some statistic department
 Lack of interest or availability by integration department
 Additional info available
 Economics department?
 Other local organisations?

12. Promoting ethnic entrepreneurship in cities – strategy
Integration policy without
Low rates of ethnic entrepreneurs –
economic orientation (paid
not the case in many cities
employment)
EE up to know has
not played a major
role in the overall
integration nor
economic strategy
Neo-liberal approach adopted by
View of lack of disadvantage
some cities

13. Ethnic entrepreneurship: Barriers
 Skills and competences
 Language proficiency
 General education
 Missing professional skills to run a business
 General bureaucratic procedures to set up and to run a business
 lack of familiarity with rules and regulations
 Specific rules to curtail certain sectors
 Telephone shops, Taxis
 Access to finance
 But only 20% use foreign finance
 Involvement in business networks – impact
 Discrimination
 Access, control

14. Good practices improving personal capacity
• Local authorities scope to offer a range of measures (agency
measures)
 Advice and information services
 Provision of business location
 Support to access finance
 Help in developing local and international networks
 Recruitment and management of personnel
 Improvement of business skills

15. Advice and information services
• Providers
 Local authorities departments
 Chambers of Commerce (Stuttgart Indian and Arab Business Centres, Frankfurt
Chamber of Commerce, Copenhagen Business Centre with dedicated staff with
migration background)
 Trade unions – Breda trade unions providing range of services
• Services
 Information events – Kirklees, Vienna
 Helpdesks, phone lines, websites – Chinese website of the economic
department in Amsterdam
 Guides – Bologna multi language leaflets, Vienna guides for potential migrant
grocers

16. Finding business location
improving local and transnational networks
• Generic measures
 Incubators – Indian Project – Wolverhampton, Wroclaw Special Zone
• Migrant specific support
 Mingo Enterprises Vienna, Indian Business Centre in Stuttgart
• Local networks, chamber of commerce's
 Turin – Social Cooperative –Peruvian Women active in food distribution
 Amsterdam – Dutch-Turkish cooperation in fashion industry
 More involvement in mainstream networks
• Transnational networks
 Frankfurt, Amsterdam, Malmo - involvement of leading ethnic entrepreneurs in
the economic promotion of the city

17. Improve the organisations of interests
 Encourage establishment of ethnically-specific business
associations
 Catering to specific needs
 Provide practical support, exchange of experience
 But these associations are usually rather vulnerable
 Lack resources, difficult connections to mainstream business associations
 No political clout. Many cease to exist after a while.
 Encourage EE to become members of existing business associations
 Effective participation in policymaking
 Opportunity to create and participate in self-organized and ambitious groups
of ethnic entrepreneurs within the remit of the existing business organisation
 Encourage mainstream business associations to open up for EE
 Welcome and active inclusive strategy for membership

18. Access to finance
• Many factors – poor bookkeeping, lack of business plan, involvement
in high risk, low profit sectors, banks mode of operations, prejudices
 Decreasing risk for lending institutions
 Help with writing quality business plans, (Terrasa, Wroclaw)
guarantees
 Provision of loans, and grants – Vienna fund for up-
skilling, microcredit's (Dublin (60% of customers are EE) and Turin
(33%))
 Banks – Vienna, Amsterdam – employment of ethnic staff in local
branches

19. Finding and managing staff
• General opinion of dominance of family members, lack of
awareness of existing schemes
• Apprenticeships
 Frankfurt – Croatian Business Association – encourages former Yugoslavian
firms to take on migrant trainees
 Zurich – Migration Chance – mobilises SMEs to create more vocational
training for young migrants
• Mentoring schemes
 Vienna – Mentoring for Migrants – 6 months mentoring scheme
 Zurich – prospective ethnic entrepreneurs follow successful ethnic
entrepreneurs
• Group specific measures – migrant women
 Malmo – Organisation for International women – mentoring programme
 Copenhagen - Q-Project –Young migrant women shadow successful
businesswomen

20. General policy conclusions
 General level
 more impact in the area of agency than structure.
 Importance of implementation
 Combined or unilateral
 High propensity of combined state intervention
 More involvement of local authorities
 General or group specific
 As much general policy as possible and as much group specific as necessary
 Broadening EE in growth sectors
 specific measures on awareness raising
 Anti-discrimination/reducing barriers and/or positive measures
 Measures for the whole business cycle not only start-up

21. Recommendations for policymakers
• Use the potential of ethnic entrepreneurship for more economic growth within the
EU 2020 strategy
 Ethnic entrepreneurship as part of the successful implementation of the Small Business
Act
• Helping SMEs to face globalised markets – importance of certain set of skills
• Promoting entrepreneurship, job creation and inclusive growth - closer co-operation
between ethnic entrepreneurs and schools in facilitating traineeship in ethnic
businesses
• Increase long term employment rates by more support for ethnic entrepreneurship
 EES focus on paid employment
 The potential of ethnic entrepreneurship as a creator of jobs is largely overlooked
• Recognise ethnic entrepreneurship in the integration strategy for migrants
 CBP and Stockholm Programme focus on paid employment
 Entrepreneurship as a vital instrument for job creation, social upwards mobility, social
leadership, increased social cohesion, revitalisation of neighbourhoods
• More policy attention of European Social Partners

22. Integrate ethnic entrepreneurship systematically in
integration strategy and economic development
 Include ethnic entrepreneurship equally in cities economic development and
integration strategy
 Use existing data and close info and intelligence gap
 Try to synthesis local strength with added value provided by EE
 Support EE to break out of their ethnic niche markets
 Reflect on the policy to address the high number of EE start-ups
 Reflect on the systematic interrelation of EE with other key integration
domains
 Job creation
 Social integration
 Education and training as precondition for EE
 Urban development programmes of deprived and segregated areas
 Better intercultural and community relations

23. Better co-operation between different departments and a
coherent policy approach to relevant stakeholders
 Between the economic, statistical, external relations and integration
departments
 Convince top level of political decision makers of the importance of EE
 Regular dialogue and involvement of prominent ethnic entrepreneurs
 Promotion and facilitating a co-operation between different stakeholders
 Mainstream and ethnic business associations, trade bodies, media, professional training
organisations
 Institutional structures (regular round tables and meetings)
 Resources (manpower and time)

24. The magic of diasporas
Immigrant networks are a rare bright spark in the world economy.
Rich countries should welcome them
http://www.economist.com/node/21538742