People Power: Inclusive Economic Recovery Means Leveraging All of Human Potential
Kadie Ward of Ontario’s Pay Equity Commission outlines how fostering diversity and inclusion in entrepreneurship unleashes innovative forces that drastically improve the economy. Banner Image: Shutterstock/Alexandre Laprise
This article is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.
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Innovation and inclusion are at the heart of economic recovery. As nations grapple with how to rebuild local economies and global supply chains that were disrupted by pandemic-related economic contractions, one resource stands ready to be leveraged to its full potential: people.
Most policy makers would agree that a significant contributor to an economy’s well-being is employment. And yet, many people in OECD countries remain excluded from the labour market where wage inequality is rising. Providing employment that pays well and provides opportunities for personal and professional development is vital to economic recovery, and can be accelerated through entrepreneurship and self-employment. Entrepreneurs innovate, finding new solutions to social and economic problems. They identify and exploit growth opportunities. They provide jobs for themselves and others. And, with good innovations and business plans, they generate good incomes.
Read more on the Forum Network: It’s Not Rocket Science: Women need to be represented in business, by Romi Haan, President & CEO, Haan Corporation
Entrepreneurial and innovative thinking are not scarce—only we tend to have prescribed ideas of where innovative ideas come from, who can deliver them and how we support them. Entrepreneurial ideas are age, gender, ethnicity and ability neutral; they flow in and out of minds that are willing to act on them. Developing and developed nations tend to have policies and programs that only recognise the innovativeness and entrepreneurial potential of a certain demographic within a country. The OECD’s The Missing Entrepreneurs – Policies for Inclusive Entrepreneurship acknowledges this problem and examines how public policies at the national, regional and local levels can support job creation and economic growth by encouraging business start-ups and self-employment within historically disadvantaged or under-represented groups. These groups include women, youth, seniors, the unemployed, immigrants and people with disabilities.
The Missing Entrepreneur series, published biennially since 2011, looks at programmes and policies in EU and OECD countries to determine how we can build more inclusive and innovative economies through policies that support these equity-seeking groups, whose barriers to accessing resources and markets are greater than average. The 2021 edition is the 6th to be published and builds on the 2019 report’s thematic policy discussion on the potential of digitalisation. Technology has the ability to make entrepreneurship and self-employment more inclusive by enabling and increasing the scale-up potential of start-ups by founders in historically disadvantaged groups. It also examines the disproportionate impact of COVID-19 mass layoffs and lockdowns on women, youth, seniors, the unemployed, immigrants and people with disabilities.
Read more on the Forum Network: Glass Half-Broken: Shattering the Barriers That Still Hold Women Back at Work by Coleen Ammerman, by Coleen Ammerman, Director, Gender Initiative, Harvard Business School
The OECD defines inclusive growth as “economic growth that is distributed fairly across society and creates opportunity for all”. We have seen the impact and effectiveness of inclusive growth principles at the organisational and local level. Since 2015, McKinsey Global has been documenting the impact of including and excluding various groups in 1,000 organisations across 15 countries. Their most recent report Diversity Wins: How Inclusion Matters, published May 2020, notes that companies who see inclusion as a strength are likely to leverage it to bounce back from the economic recession more quickly than those who ignore the evidence. Their report cites ample evidence that diverse and inclusive companies are likely to make better, bolder decisions—a critical capability during the COVID-19 crisis and for recovery. For instance, diverse and inclusive teams have been shown to be more likely to radically innovate and anticipate shifts in consumer needs and consumption patterns, helping their companies to gain a competitive edge. At the Pay Equity Office of Ontario, we support women’s economic justice through pay equity in the workplace. The OECD has published work looking at this specific demographic and the impact of increasing women’s participation in entrepreneurship can have on markets. We have seen that companies with gender diversity on executive teams were 25% more likely to experience above-average profitability than peer companies without it. This shouldn’t be surprising: inclusion is fundamental to an organisation’s (and nation’s) ability to continuously innovate and adapt in a volatile market.
Read more on the Forum Network: Beyond Target Groups: Reforming activation and transition support for all, by Jochem de Boer, Global Public Affairs Manager, World Employment Confederation
In addition to the organisational level, inclusion works as an economic stimulus at the local and regional levels. Through extensive research on what makes local economies thrive, economist Richard Florida noted that “tolerance” was a key factor in the success of cities like San Francisco, Berlin and Bilbao in fostering a strong entrepreneurial ecosystem. “Tolerance”, by Florida’s definition, means acceptance and inclusion of diversity in thought, culture, gender, ethnicity and age. He argues that tolerant cities house and attract more creative people who go on to innovate.
The OECD’s The Missing Entrepreneur examines and builds the case for inclusion on a macroeconomic and national scale. To realise its full potential as a driver of economic growth, entrepreneurship needs to be a feasible opportunity for all people, whatever group they come from. By breaking down the barriers to entrepreneurship for all populations, we can tap into the creativity, dynamism and innovation of more people.
The report notes that inclusive policies can play an important role in giving more people the chance to be entrepreneurs, and seeks to support the creation of sustainable businesses by people belonging to groups that are under-represented in entrepreneurship. Reports such as The Missing Entrepreneurs have an important role in raising the profile of these challenges, and advising governments on potential actions they can take to support interventions that promote inclusive economic recovery.
Read the OECD report The Missing Entrepreneurs 2021: Policies for Inclusive Entrepreneurship and Self-Employment (upcoming release on November 29, 2021)
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