- Observatory: EMCC
- Topic:
- Published on: 12 January 2012
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Encouraging self-employment and entrepreneurship has traditionally been deemed an effective approach to increasing employment. The public debate and the discussion about programmes that aim to promote self-employment and entrepreneurship focus more on general structural issues than on specific issues linked to the economic crisis. Policies that aim to foster self-employment, entrepreneurship and job growth in micro enterprises cover the complete range of relevant issues, e.g. information and advice, legal structures and procedures, financing.
QUESTIONNAIRE
Part 1: Overall policy context
This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.
1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level
1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?
| Yes, continuously since xx? (Please indicate year) | Yes, on and off in the last 10 years (Please indicate ‘X’ where it applies) | Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year) | No, it has never had policy focus before the recession (Please indicate ‘X’ where it applies) | |
|---|---|---|---|---|
| Self-employment | X (since 1986 with respect to specific grants given to unemployed, see Table 3) | |||
| Hiring the first employee | X | |||
| Hiring additional employees/creating additional jobs in micro enterprises | X |
1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)
| Entrepreneurship (Business development in general) | Job creation (Employment) | Growth (Competitiveness) | Others (please specify) | |
|---|---|---|---|---|
| Self-employment | X | X | X | X (see Table 3) |
| Hiring the first employee | X | X | ||
| Hiring additional employees/creating additional jobs in micro enterprises | X | X |
1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:
| Self-employment | |
|---|---|
| Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly) | The promotion of self-employment by, among other things, conducting awareness campaigns, establishing special agencies to support entrepreneurs, granting subsidies, loans or loan guarantees has always been an important goal for the various governments at national, regional and local level in Germany. The current position of the Federal Ministry for Economic Affairs (BMWI) may be regarded as representative for the general attitude towards self-employment in recent decades. According to the BMWI, the promotion of self-employment and the establishment of new businesses pursue four objectives: Self-employment as a substitute or complement to employment, lowering unemployment and preserving human capital New businesses and start-ups as a spur to inter-firm competition, accelerating structural change in the economy Entrepreneurship as a driver of innovation, fostering technical change and economic growth as well as creating new jobs Self-employment as a factor in stabilising democracy, enhancing economic control and promoting economic and entrepreneurial freedom On 25 January 2010, the BMWI, the Association of German Chambers of Industry and Commerce (DIHK), German Confederation of Skilled Crafts (ZDH) and the Federal Association of Liberal Professions (BfB) launched the initiative ‘Germany: Nation of Company Founders’ (Initiative Gründerland Deutschland). The initiative comprises activities in several areas, such as awareness campaigns and financing for high-tech start-ups. With respect to the political focus in a communique the BMWI emphasised that the economic recovery of the economy from the recession enhanced the chances for new entrepreneurial activity. It added, however, that the extent of entrepreneurial activity had been relatively moderate in 2009 in view of the scope of public programmes supporting entrepreneurs. Strictly speaking, the recession has not resulted in a fundamental policy change involving the widespread implementation of new programmes or the revision of existing ones. As policies promoting entrepreneurship tend to be driven by long-term factors, such as dealing with demographic change, fostering innovation and economic growth, recent activities have particularly focused on exploiting synergies between existing programmes supporting start-ups or self-employment. As the financial crisis may, however, have impaired the access of firms to regular loans issued by financial institutions, the Federal Government set up the KfW Special Programme, for which start-ups and entrepreneurs were also eligible and which ran until the end of 2010. Access to loans and liquidity for start-ups has always been the main focus of public authorities. Furthermore, self-employment is explicitly deemed effective and efficient in combating unemployment by the Federal Ministry for Labour and Social Affairs (BMAS). Explicit provision for the promotion of self-employment is made in both Social Security Code II (SGB II) and Social Security Code III (SGB III). According to SGB III, unemployed persons wishing to become self-employed and meeting certain specific conditions have since 1986 been eligible for specific grants. Between 1986 and 2006, registered unemployed persons could apply for a so-called ‘bridging allowance’ (Überbrückungsgeld). In 2003, the ‘Me-Inc’ (ICH-AG) was established as a result of the Hartz Commission’s reform proposals. While the bridging allowance consisted of monthly payments equal to the regular unemployment benefit and was granted only for a six-month period, the ‘Me-Inc’ benefit was substantially lower and actually declined every year over its maximum period of three years. In 2006, the two programmes were merged into a new ‘start-up premium’ (Gründungszuschuss) that combines elements of both the previous schemes (DE0705039I). The ‘start-up premium’ consists of two elements: Firstly, a monthly allowance that corresponds to the level of the regular unemployment benefit I and is intended to cover basic living costs. Secondly, a monthly flat-rate payment of €300 is awarded to cover premiums for private health and pension insurance. Originally, beneficiaries received the monthly allowance plus the flat-rate payment for the first nine months after starting a business. The latter could even be extended for a further six months after the expiration of the monthly allowance. On 25 May 2011, the Federal Government announced its decision to revise the length of these two different stages of the programme, the first phase being shortened to six months, the second phase extended to nine. According to SGB II, recipients of unemployment benefit II, the former unemployment assistance (DE0401205F), may apply for a monthly allowance, the so-called entry allowance (Einstiegsgeld), when starting a business. It usually amounts to 50% of the regular level of unemployment benefit II. |
| Change due to the financial recession Please tick: Yes: No: x | If ‘Yes’, please elaborate:
|
| Hiring the first employee | |
| Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly) | In two federal states, North Rhine-Westphalia and Berlin, certified master craftsmen can apply for a special start-up grant (Meistergründungsprämie) which, among other conditions, explicitly requires at least one additional job to be created within three years of establishing the new business. In North Rhine-Westphalia, for example, 13,000 persons received this grant between 31 March 1995, when the programme came into effect, and 31 March 2010, when its 15th anniversary was publicly celebrated. About 65,000 jobs had by then been created. The then State Minister of Economic Affairs praised this special grant as the most effective and efficient start-up programme in North Rhine-Westphalia. |
| Change due to the financial recession Please tick: Yes: □ No: x | If ‘Yes’, please elaborate: |
| Hiring additional employees/creating additional jobs in micro enterprises | |
| Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly) | Concerning the creation of additional jobs in micro enterprises, for more than a decade the focus of public debate has always been on the impact of the employment protection legislation (EPL) on job creation and employment growth (DE9901291N, DE0303105F, DE0304204F, DE0306108F). Since 1 January 2004, the EPL has applied only to those employed in establishments with more than 10 employees. However, working contracts that were concluded in micro enterprises with five or more but less than ten employees before 1 January 2004 have not been affected by the amendment. They are still covered by the provisions of EPL that was in effect prior to 31 December 2003 and applied to all establishments with five or more employees. Apprentices are not counted in calculating workforce size and part-time employees are counted only in proportion to their working hours. |
| Change due to the financial recession Please tick: Yes: □ No: x | If ‘Yes’, please elaborate: |
2. Disincentives for self-employment and job creation
The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).
2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)
To our knowledge, no public measures introduced before the economic recession have had a direct negative impact on incentives to become self-employed or on job creation in micro enterprises.
2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)
To our knowledge, no public measures introduced as a result of the financial crisis have had a direct negative impact on incentives to become self-employed or on job creation in micro enterprises.
3. Representation of/lobbying for self-employed and micro enterprises
Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?
| Self-employed | Micro enterprises | |
|---|---|---|
| Employers’ organisations | Yes, explicitly. There are a great many trade associations that are organised on an occupational or professional basis, i.e. they organise self-employed workers according to their profession or occupation. Examples include: • The BfB, an umbrella organisation which covers the self-employed in a wide range of professions, such as lawyers, doctors and other health professionals, architects, engineers, etc. • Very specific, single-profession bodies, such as
Membership of the chambers of commerce or skilled crafts is compulsory if certain criteria are met. | Yes, both implicitly and explicitly
Like any other company, micro enterprises can become members of the relevant sectoral and regional employer association that is actively involved in collective bargaining (DE0910049Q). |
| Employees’ organisation | Yes, explicitly
| No |
| Not-for-profit organisations |
|
|
| Others |
|
Part 2: Identification and description of relevant recent support instruments
The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.
1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive
When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.
| Administrative level relevant for the rest of the questionnaire | Federal and state (Land) levels |
|---|---|
| If a specific regional/local are is selected, please provide the following information | |
| Name of region | Bavaria |
| Motivation for selecting this region | Illustrative example of activities that aim to bundle and coordinate programmes provided or administered by regional authorities |
| Facts about the region e.g. - Geographic location - No. of inhabitants - Business structure (sector, size) - Labour market - Specific characteristics if applicable | Geographic location: Southern Germany
|
2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises
2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.
Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).
Measures not specifically dealt with:
- The initiative ‘Germany: A Nation of Company Founders’ (Initiative Gründerland Deutschland) – launched in January 2010 – and several funding programmes established to support entrepreneurs or small and medium-sized enterprises – partly established in the wake of the economic recession – were already discussed in the country report for Germany to the European Employment Observatory Review on self-employment 2010.
- The same applies to the KfW Special Programme (see Table 3) and longstanding regular programmes that aim to facilitate the access of entrepreneurs to loans.
- New provisions concerning the ‘start-up premium’ for unemployed persons eligible for unemployment benefit I will take effect once the relevant bill has been approved by parliament (see Table 3).
| Title | Haftungsbeschränkte Unternehmergesellschaft (‘Mini-GmbH’) / Mini-company with limited liability |
|---|---|
| Aim/objective | Facilitating the foundation of private limited liability companies |
| Description of support | Minimum paid-up capital on foundation of the company is reduced from €25,000 to €1 |
| Target group | Entrepreneurs who lack sufficient capital to found a regular limited liability company. |
| Initiator and other actors involved | Federal Government |
| Duration (please also indicate whether the measures has been initiated due to the recession) | Since 1 November 2008 (No) |
| Title | In national language and English Gründerpakt Bayern/Pact for Company Founders in Bavaria |
|---|---|
| Aim/objective | Coordination and bundling of the various public and private activities that focus on starting and developing a new business. Improvement of private and public support programmes for start-ups, the self-employed and small and micro-enterprises. |
| Description of support | Provision of information about all stages of starting and developing a business
|
| Target group |
|
| Initiator and other actors involved | Bavarian Ministry of Economic Affairs (stamwivt), chambers of commerce and chambers of skilled crafts, the Junior Chamber in Bavaria (Wirtschaftsjunioren Bayern), the Bavarian Business Association (vbw), LfA Förderbank Bayern, the Chamber of Bavarian Notaries, the regional employer, business and banking associations, local and regional centres for business start-ups, universities, and municipal and regional authorities The complete list of all partners involved is available from http://www.startup-in-bayern.de/themenmenue/partner0.html. |
| Duration (please also indicate whether the measures has been initiated due to the recession) | Since July 2007 (No) |
| Title | In national language and English Micro Credit Funds Germany/Mikrokreditfonds Deutschland |
|---|---|
| Aim/objective | Improving access to capital for start-ups and micro enterprises |
| Description of support | Providing short-term micro loans (up to three years if investments are to be financed) in amounts of €2,000, €5,000 or €10,000. The credit volume may be raised to a maximum of €20,000 if previous loans have been repaid. |
| Target group | Entrepreneurs and self-employed persons who have failed to obtain standard loans from private financial institutions |
| Initiator and other actors involved | BMAS, GLS Bank, European Social Fund (ESF) |
| Duration (please also indicate whether the measures has been initiated due to the recession) | From 2010 to 2015 (Partly) |
| Title | In national language and English German Coaching Initiative for Entrepreneurs/Gründercoaching Deutschland |
|---|---|
| Aim/objective | Increasing the survival prospects of start-ups |
| Description of support | Entrepreneurs can apply for a grant when they undergo coaching.
|
| Target group | Already active full-time self-employed persons whose business was founded no longer than five years before the application for the coaching grant |
| Initiator and other actors involved | BMWI, BMAS, KfW, ESFLocal partners of the KfW; i.e. usually the chambers of commerce and chambers of skilled crafts. |
| Duration (please also indicate whether the measures has been initiated due to the recession) | Since 1 November 2007 (No) |
Source for further information: http://www.kfw.de/kfw/de/Inlandsfoerderung/Programmuebersicht/Gruendercoaching_Deutschland/index.jsp
| Title | In national language and English SME Acts II and III/Mittelstandsentlastungsgesetze II und III |
|---|---|
| Aim/objective | Reduction of administrative costs incurred by small and medium-sized companies by around €300 million |
| Description of support | Exemption from reporting obligations, such as the exemption from mandatory reporting to the municipal, regional or national statistical offices, switching from accounting rules according to tax regulations to a simple revenue surplus accounting. |
| Target group | Small companies including entrepreneurs/start-ups |
| Initiator and other actors involved | Federal Government |
| Duration (please also indicate whether the measures has been initiated due to the recession) | SME Act II took effect on 14 September 2007, SME Act III took effect on 25 March 2009 (No) |
Source for further information:
http://www.bmwi.de/BMWi/Navigation/Wirtschaft/Wirtschaftspolitik/buerokratieabbau,did=307088.html
2.2. In-depth description of ‘Good Practices’
Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.
| Name of the programme/instrument | In national language and English Haftungsbeschränkte Unternehmergesellschaft (‘Mini-GmbH’)/Mini-company with limited liability | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Is the instrument explicitly addressing any of the following: | Self-employment | Hiring the first employee | Hiring additional employees/creating additional jobs in micro enterprises | ||||||
| Please ‘X’ and/or describe if relevant | X | ||||||||
| Operational level | Local | Regional | National | ||||||
| Please ‘X’ and/or describe if relevant | X | ||||||||
| Rationale/motivation for the instrument (please describe) | The ‘Mini-Co. Ltd’ is an illustrative example of how legislation can promote entrepreneurial activity by reducing the financial liability of company owners. In addition, the ‘Mini-Co. Ltd’ is one of several modifications to the regulation on limited liability companies explicitly linked to the national implementation of the Lisbon strategy. | ||||||||
| Purpose and aims for the instrument (please describe) | The ‘Mini-Co. Ltd’ is a special modification of the regular German ‘company with limited liability’ (GmbH). When the draft legislation modifying the regulation of limited liability companies was announced, the then Minister of Economic Affairs, Michael Glos, stated that the modified regulation enabled even entrepreneurs with very low start-up capital to choose this specific legal form. This would make starting up a new business easier and shorten the founding process. In addition, it was hoped that entrepreneurs would prefer the legal form of the new ‘Mini-Co. Ltd’ to the private limited company under British law which many companies had been adopting. | ||||||||
| Initiator | |||||||||
| Please ‘X’ | X | ||||||||
| Other stakeholders actively involved in implementation (please name them and describe their roles) | The chambers of commerce and the chambers of skilled crafts are intensively involved in advising potential entrepreneurs on the conditions for, and stages necessary in, starting a ‘Mini-Co. Ltd’. | ||||||||
| Target groups | |||||||||
| Please describe the target groups (sector, age, level of education, gender) | Potential entrepreneurs who lack the minimum start capital of €25,000 necessary for starting a traditional ‘company with limited liability’ (GmbH), yet are not willing to be liable for the company’s debts with their private assets in the case of insolvency. | ||||||||
| Funding | |||||||||
| Please describe the funding of the instrument/programme (national and European sources, budget available) | No public funding | ||||||||
| The legal form of ‘Mini-Co. Ltd’ allows potential entrepreneurs to start a new business as a private limited company without providing the minimum start capital of €25,000 normally required. A ‘Mini-Co. Ltd’ may be founded with a start capital of only €1. 25% of the annual profits must be retained as a reserve until the minimum capital required for a traditional ‘company with limited liability’ (GmbH) has been paid up. Only then can the ‘Mini-Co. Ltd’ be officially entered in the commercial register (Handelsregister). Nonetheless, it is fully operational already before official registration. Investments in kind, such as machinery and other equipment, do not count towards the statutory minimum capital. | |||||||||
| Results (Effectiveness) | |||||||||
| Please describe the results e.g. number of beneficiaries, advised enterprises | According to the latest report on the foundation of new companies published by the DIHK, the chambers of commerce responded to 23,000 inquiries in the first twelve months after the modified legislation on limited liability companies took effect. According to the Institute for Research on Small and Medium-Sized Companies (IfM-Bonn), 9,711 ‘Mini-Cos. Ltd’ were founded in 2009 whilst a further 10,978 were established the following year. | ||||||||
| Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome | According to the DIHK’s above report, the chambers of commerce have noticed that ‘Mini-Cos. Ltd’ in rural areas may experience difficulties when they apply to open accounts with financial institutions. | ||||||||
| Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible) | The IfM-Bonn figures show that the total number of newly established British-style private limited companies in Germany was significantly lower in 2009 (343 companies) and 2010 (211 companies) than in 2008 (670 companies) and before. In this respect, the ‘Mini-Co. Ltd’ has not only largely replaced the British model as the typical legal form for low-capitalised corporations with limited liability, but has also spurred further entrepreneurial activity. | ||||||||
| Outcomes (Efficiency) | |||||||||
| Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment) | See above | ||||||||
| Please provide link to evaluation documents if possible | http://www.dihk.de/presse/meldungen/meldung012630 http://www.ifm-bonn.org/assets/documents/UntGr_UntLi_RF_2003-2010.pdf | ||||||||
| Name of the programme/instrument | In national language and English Gründerpakt Bayern/Pact for Company Founders in Bavaria | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Is the instrument explicitly addressing any of the following: | Self-employment | Hiring the first employee | Hiring additional employees/creating additional jobs in micro enterprises | ||||||
| Please ‘X’ and/or describe if relevant | X | X | X | ||||||
| Operational level | Local | Regional | National | ||||||
| Please ‘X’ and/or describe if relevant | X | ||||||||
| Rationale/motivation for the instrument (please describe) | The Pact for Company Founders in Bavaria is an illustrative example of how the various public and private actors at the regional level coordinate and bundle their activities in order to raise the efficiency and effectiveness of programmes that aim to promote start-ups, the self-employed and small and micro enterprises. | ||||||||
| Purpose and aims for the instrument (please describe) | To accelerate the process of starting a new business and increase the success rate of start-ups and micro enterprise expansions. | ||||||||
| Initiator | |||||||||
| Please ‘X’ | |||||||||
| Other stakeholders actively involved in implementation (please name them and describe their roles) | The stakeholders include ministries and municipalities, regional employer and trade associations, private local or regional initiatives, universities and financial institutions, such as LfA Förderbank Bayern. The complete list of all stakeholders involved is available at http://www.startup-in-bayern.de/themenmenue/partner0.html. In addition, the local chambers of commerce and chambers of skilled crafts act in cooperation with the municipalities as one-stop shops for entrepreneurs. They provide all relevant information on starting and developing a new business, register the new firm and deal with other legal formalities in the founding process. | ||||||||
| Target groups | |||||||||
| Please describe the target groups (sector, age, level of education, gender) |
| ||||||||
| Funding | |||||||||
| Please describe the funding of the instrument/programme (national and European sources, budget available) | The information and service platform Pact for Company Founders in Bavaria is funded by the Bavarian Ministry of Economic Affairs (stamwivt). | ||||||||
| Provision of information about all stages of starting and developing a business
Establishment of one-stop shops at the local chambers of commerce and chambers of skilled crafts that provide the information necessary for starting a new business or expanding a micro enterprise and as public agents administer the legally required steps in the foundation process. | |||||||||
| Results (Effectiveness) | |||||||||
| Please describe the results e.g. number of beneficiaries, advised enterprises | See below. | ||||||||
| Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome | No challenges specified. | ||||||||
| Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible) | On 6 May 2011, Katja Hessel, undersecretary at the Bavarian Ministry of Economic Affairs, emphasised in her speech at the start-up convention in Nuremberg that the Pact for Company Founders in Bavaria had significantly improved the conditions for entrepreneurs in Bavaria. She also stated that the existing one-stop shops at the chambers of commerce and chambers of skilled crafts provided information to around 500 persons per day on average. According to Martin Zeil, Minister of Economic Affairs in Bavaria, in 2009 around 700 entrepreneurs benefitted from the regional coaching programme for those who had just established businesses. | ||||||||
| Outcomes (Efficiency) | |||||||||
| Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment) | No information available. | ||||||||
| Please provide link to evaluation documents if possible | |||||||||
| Name of the programme/instrument | In national language and English Microcredit Fund Germany/Mikrokreditfonds Deutschland | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Is the instrument explicitly addressing any of the following: | Self-employment | Hiring the first employee | Hiring additional employees/creating additional jobs in micro enterprises | ||||||
| Please ‘X’ and/or describe if relevant | X | X | |||||||
| Operational level | Local | Regional | National | ||||||
| Please ‘X’ and/or describe if relevant | X | ||||||||
| Rationale/motivation for the instrument (please describe) | The Microcredit Fund Germany can be seen as the governmental response to the problems incurred by small and micro enterprises when raising capital, be they problems of a fundamental and structural nature or solely due to the financial crisis. | ||||||||
| Purpose and aims for the instrument (please describe) | The Microcredit Fund Germany is intended to improve the access of small and micro enterprises and the self-employed to new capital. It aims to empower people with entrepreneurial spirit but no financial means to start their own business. Further, it can be used to prefinance short term contracts and support growth phases in small enterprises. In the medium and long term the programme is also expected to establish a nationwide funding model for micro loans. By the end of 2015 15,000 microloans are to have been disbursed. | ||||||||
| Initiator | |||||||||
| Please ‘X’ | |||||||||
| Other stakeholders actively involved in implementation (please name them and describe their roles) | The implementation of the Microcredit Fund Germany has been assigned to the GLS Bank, its main task being to establish a nationwide agency network through which the micro loans can be channelled. Potential members of the agency network are consulting firms, associations or foundations, which then handle most parts of the loan process from finding and vetting clients to monitoring loan repayment. Since they have no legal right to issue credit, the loan contract is actually signed between the GLS Bank and the client. The agencies are expected to cooperate with regional partners, such as banks, business promotion units, job centres, municipalities, and other employment agencies, foundations and sponsors, investment promotion agencies run by the states and state ministries. | ||||||||
| Target groups | |||||||||
| Please describe the target groups (sector, age, level of education, gender) | Persons with entrepreneurial spirit but no financial means and small and micro enterprises that need to finance short-term contracts or growth processes. Around 40% of the current portfolio has been awarded to entrepreneurs with a migration background. A special focus is also put on female entrepreneurs, who receive around 30% of the current portfolio. The main sectors financed are the service sector, followed by food and beverage, and retail. | ||||||||
| Funding | |||||||||
| Please describe the funding of the instrument/programme (national and European sources, budget available) | Of the total volume of €100 million the BMAS provides more than €40 million, the ESF the remaining €60 million. The BMWI is expected to join the Microcredit Fund Germany and to provide a further €1.5 million. | ||||||||
| Microloans are short-term (up to three years if investments are to be financed) and are granted in amounts of €2,000, €5,000 or €10,000. The credit volume may be raised to a maximum of €20,000 if previous loans have been repaid. Concerning the disbursement of the loans, the GLS Bank cooperates with the agencies of the network that are responsible for finding clients, credit analysis and monitoring. Thus, the existing support structures for start-ups and small enterprises can be used. The agencies develop a range of loan products tailor-made for their clients, thus enabling clients to be served who would not be served with standard products. The GLS Bank pays the agencies a commission calculated on the basis of the repaid loan portfolio minus the yearly default rate and a fee per loan contract, currently amounting to €800, which is meant to support each agency’s business model. This latter fee will decrease over the next few years. In addition, the GLS Bank provides a web-based platform for loan disbursement and monitoring of micro loans and rewards agencies with the best microfinance model by giving special support. Finally, it fosters knowledge transfer between the agencies by publishing examples of best practice. | |||||||||
| Results (Effectiveness) | |||||||||
| Please describe the results e.g. number of beneficiaries, advised enterprises | More than 1,600 loans were disbursed in 2010. At the beginning of February 2011, the number of loans totalled 1,800. While at the launch of the Fund ten agencies were cooperating with the GLS Bank, by the end of 2010 the total number of network members had risen to 40. | ||||||||
| Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome | Higher demand for microloans than originally expected. | ||||||||
| Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible) | Due to its recent implementation, a reliable assessment of the programme is not yet available. However, the BMAS has emphasised in several comments and press releases that both the total number of disbursed micro loans and their total volume is considerably higher than expected. | ||||||||
| Outcomes (Efficiency) | |||||||||
| Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment) | According to information provided on the official website, on average each micro loan guarantees or creates up to 1.5 jobs. However, due to its recent implementation, a reliable assessment of the programme’s impact on employment is not yet available. | ||||||||
| Please provide link to evaluation documents if possible | http://mikrokreditfonds.gls.de/ http://www.bmas.de/portal/50502/2011__02__7__microkreditfonds.html http://www.bmas.de/portal/41766/2010__01__27__mikrokredit.html http://www.bmas.de/portal/44990/2010__05__03__esf__jahreskonferenz.html http://www.bmas.de/portal/48306/2010__09__30__microkreditfonds.html | ||||||||
Part 3: Annex: Update on recent self-employment study
The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.
| Title of the instrument | |
|---|---|
| Additional information |
| Please indicate ‘X’ if you have no additional information to provide | X |
|---|
Commentary
Encouraging self-employment and entrepreneurship has traditionally been deemed an effective approach to increasing employment. The public debate and the discussion about programmes that aim to promote self-employment and entrepreneurship focus more on general structural issues than on specific issues linked to the economic crisis. Policies that aim to foster self-employment, entrepreneurship and job growth in micro enterprises cover the complete range of relevant issues, e.g. information and advice, legal structures and procedures, financing.
The provision of easy and rapid access to capital or credit, accelerating the start-up process, and coaching entrepreneurs before and after the foundation of their businesses are regarded as crucial for exploiting the potential impact of self-employment and entrepreneurship on jobs and economic growth.
Stettes, Oliver, Cologne Institute for Economic Research
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