First Business programme, Poland

About

Country: 
Poland
Sectors: 
Public sector
Target Groups: 
workers/suppliers

 

The ‘First Business’ (Pierwszy biznes) programme was launched in July 2005, and complemented the ‘First Job’ (Pierwsza praca) programme launched in June 2002. The ‘First Business’ programme focuses on supporting and promoting entrepreneurship and self-employment among young people. The programme is still ongoing and mainly targets secondary school graduates aged below 25 years and university graduates aged below 27 years.

 

Background

Youth entrepreneurship became one of the main policy focuses in Poland at the beginning of the 21st century. At that time, it became evident that an expected 5% growth of the national economy would be unable to absorb the number of unemployed persons, as well as the expected inflow of the baby boom cohorts, into the labour market.

In light of this, the government initiated the ‘First Business’ (Pierwszy biznes) programme in July 2005, which complemented the ‘First Job’ (Pierwsza praca) programme launched in June 2002. The first business programme, however, focuses on supporting entrepreneurship and self-employment among young persons instead of boosting their dependent employment as is the case under the first job programme.

The programme is still ongoing and mainly targets secondary school graduates aged younger than 25 years and university graduates under the age of 27 years. The Ministry of Labour and Social Policy (Ministerstwo Pracy i Polityki Społecznej, MpiPS) and the Provincial Employment Offices (Powiatowe Urzędy Pracy) are the main actors involved in implementing the programme. It is worthwhile noting that the first business programme is carried out nationally, but implemented in a decentralised way.

Objectives

The first business programme has the following two basic objectives:

  • helping young people to set up and run their own business or start working as a self-employed person;
  • promoting youth entrepreneurship.

Specific measures

The programme includes three specific measures:

  • theoretical courses on how to set up and run an enterprise;
  • practical training in matters related to entrepreneurship;
  • loans and subsidies from the Labour Fund (Fundusz Pracy) and the Bank of Domestic Economy (Bank Gospodarstwa Krajowego); subsidies to set up a business can amount to a maximum of PLN 12,000 (about €3,318 as at 31 January 2008), while the amount of loans can vary between PLN 5,000 (€1,383) and PLN 40,000 (€11,060).

Evaluation and outcome

Achievement of objectives

The First Business programme is an ongoing programme with a relatively short history of implementation. The only available data cover the first year of its implementation, but they can suggest likely later outcomes.

First, approximately 61% of Provincial Employment Offices participated in the programme, which means that they called for resources and presented a plan of activities.

Secondly, about 21% of those young persons who attended information meetings participated in the theoretical and practical training to set up their own businesses – this indicates that the programme has generated high interest among young people.

Thirdly, the interest in preparatory training was much higher than that in practical training in existing enterprises. The relatively low number of people participating in practical, company-based training can be explained by both the unwillingness of companies to share knowledge with potential competitors – as young people were supposed to work with an entrepreneur in an industry in which they wanted to become active themselves – and the haste of young people to start their own business.

Obstacles and problems

The Provincial Employment Offices complained that they had little time to prepare for the implementation of the programme after its launch in mid 2005.

Participants also emphasised the fact that subsidies and loans did not cover the full costs of setting up a business and that they have difficulties in finding further funding. In addition, not enough regional centres were distributing loans.

Lessons learnt

The main aim of the programme has been to ‘make entrepreneurship’ a realistic alternative for young people in supporting them in their attempts to start their own businesses, by giving practical advice, helping them to overcome administrative barriers and gaining hands-on experience. In addition, young entrepreneurs could rely on limited financial assistance from the state.

Nonetheless, the programme’s main focus is to offer young entrepreneurs real assistance in setting up and managing a business and not just to provide them with financial subsidies. Such a programme orientation entrusts business support institutions, which have been growing and maturing over the past 15 years, with the task of selecting and tutoring potential young entrepreneurs. The quality of this assistance has yet to be assessed.

Impact indicators

Every year, about 25,000 young persons have been attracted by the First Business programme by participating in information meetings, according to estimates. Other impact indicators in relation to the programme are less encouraging.

Number of young people

In 2005, Provincial Employment Offices distributed about 1,800 subsidies to young people starting their own business. In the same year, the Bank of Domestic Economy issued only 44 loans to young people with a total value of PLN 1.375 million (€380,203). Some 2,464 persons participated in theoretical training, and 336 persons participated in practical company-based training in 2005.

Estimated costs

The costs of information campaigns, including leaflet production, organising meetings, courses and training, are covered by the funds allocated to the Provincial Employment Offices. In total, these costs were estimated at PLN 7 million (about €1.94 million) in 2005.

Subsidies are not reimbursed and their value amounted to about PLN 10 million (about €2.77 million) in 2005. Issued loans, on the other hand, have to be paid back with an interest rate on the borrowed amount of 0.75% of the National Bank of Poland interest rate plus 1% transaction costs charged by the bank.

Estimated benefits

No studies exist so far to evaluate the sustainability of the effects of the programme. It seems that the benefits of the programme may increase with subsequent waves of participants, as it can be expected that people trained in one year might return later with a specific business idea in mind and the willingness to start their own enterprise.

Transferability

Many programmes of this type exist in western Europe, notably in Italy. It is known that the efficiency of such programmes depends on the quality of the supporting organisations. In Poland, such organisations have gained experience over time, but a lot more needs to be done to improve their capacity in implementing public policies in support of entrepreneurship.

Commentary

Subsequent Polish governments have slowly recognised the key role of entrepreneurship as an opportunity for young people to become economically active and for the country’s economic development. Entrepreneurship appears to be the most promising way to reduce the economic burden of a ‘Poland of welfare recipients’ on the development of the country. It is one of the main factors contributing to endogenous growth, in helping to reduce the dependence of local situations on the vagaries of international markets and foreign investors.

Although policy initiatives to support youth entrepreneurship have been stimulated more by demographic pressure than by the anticipation of policy problems, some types of ideas and programmes seem to have been well received and are likely to remain in place for years to come. For instance, the idea of establishing an Academic Incubator of Entrepreneurship in each secondary school and offering young graduates an opportunity to test their entrepreneurial ideas in such a supportive environment has been well received. Thanks to a greater organisational density and increased maturity of business support organisations, it is also more likely that policies to offer real assistance and not just financial subsidies will prove effective and less prone to exploitation by special interests. Finally, Poland’s accession to the EU in May 2004 has made additional resources available to the Polish government, which will fuel innovative public policies in future years.

Contacts

Main organisation responsible for this programme: Ministry of Work and Social Policy

Website: www.mpips.gov.pl

Bibliography

Case Doradcy, Evaluation of progress of SPO WKP, Warsaw, CASE Foundation, September 2005.

Drozdowski, R. and Matczak, P. (ed.), Samozatrudnienie. Raport z Badań [Self-employment, Research Report], Warsaw, PARP, 2004.

Ministerstwo Gospodarki i Pracy [Ministry of Economy], Przedsiebiorczosc w Polsce [Entrepreneurship in Poland], Warsaw, Czerwiec, 2004.

Ministerstwo Pracy i Polityki Społecznej, Informacja o realizacji programu aktywizacji zawodowej absolwentow ‘Pierwszy biznes’ [Information on the implementation of the First Business programme], Warsaw, March 2006.

Aleksander Surdej

 

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