6. Pillar B – Entrepreneurial Human Capital
This pillar assesses the progress made by the five Eastern Partner countries in building entrepreneurial human capital in terms of 1) entrepreneurial learning and women’s entrepreneurship and 2) SME skills. After introducing the assessment framework, the chapter presents the results of the analysis for entrepreneurial learning policies and institutional arrangements, looking at both formal education and lifelong learning, and measures for women entrepreneurs, including policy frameworks, women-specific support services, and gender-sensitive data collection, among others. The second part of the assessment delves into SME skills development, focusing on the provision of training services for SMEs as well as skills intelligence and its use for policy and practice. Each of these sub-dimensions concludes with a set of policy recommendations to help EaP countries overcome persisting challenges.
Human capital – which can be defined as the knowledge, skills and other personal characteristics embodied in people that help them to be productive – is a key driver of firm growth and productivity. The latter is positively correlated with the entrepreneur’s years of schooling, while several studies suggest that human capital plays a role in enterprises’ growth and overall survival (Shen et al., 2021[1]; Queiró, 2022[2]). It can be enhanced by, among other things, entrepreneurial learning, i.e. the promotion of an entrepreneurial mindset and behaviour through educational programmes, training and non-formal learning (European Training Foundation, 2018[3]). Research has shown that entrepreneurial learning has a significant influence on entrepreneurship, and notably business performance. The topic has been gaining increasing attention and relevance against the backdrop of recent social, economic and political shocks, including the COVID pandemic and Russia’s war of aggression against Ukraine, as individuals and firms have found themselves forced to adapt to new realities, transition to digital solutions, and come up with innovative ways to tackle rising challenges. The existence of an entrepreneurial mindset, combined with a diversified skillset, fosters adaptability, resilience and innovation.
The multifaceted nature of the topic calls for comprehensive and adaptive policies. The European Union (EU) is providing guidance and direction to promote entrepreneurship in its Member States, most recently through its New Skills Agenda (European Commission, 2021[4]). Building on the ten actions of the European Commission’s 2016 Skills Agenda, this new strategy re-emphasises the need to promote entrepreneurial mindsets and relevant skills to enhance competitiveness, improve resilience and ensure social fairness. In 2016 the EU had launched the European Entrepreneurship Competence Framework (EntreComp) in 2016 (Bacigalupo et al., 2016[5]), which identifies fifteen competences in three key areas, encompassing both hard and soft skills, such as creativity, opportunity-spotting, financial and economic literacy, stakeholder engagement, initiative-taking, planning and management. It provides a reference framework for policy makers for the design of formal education and lifelong learning opportunities. Indeed, these competences need to be developed at all stages of life – from the education system to continuous learning in adulthood.
When developing policy approaches to build entrepreneurial human capital, policy makers should include SME-specific measures. SMEs often face more difficulties than larger firms when dealing with skills shortages, particularly when trying to attract and retain skilled workers – which impedes profitability and growth prospects. Compared to larger firms, SMEs also have fewer resources for providing upskilling and reskilling opportunities to their employees. These issues are widespread across countries, including in the EaP region – the lack of an adequately educated workforce is among the main obstacles faced by SMEs, according to the EBRD-EIB-World Bank Business Environment and Enterprise Performance Surveys (BEEPS) (World Bank, 2021[6]). Government support for SME skills development is therefore essential to overcome financial and educational barriers, and to encourage firms to address the challenges of digitalisation and sustainability. It also helps them adjust to the swift evolution of skills demand, prompted by rapidly changing economic and labour market conditions.
The entrepreneurial human capital dimensions are at the core of the economic and SME development agenda, and policies addressed under Pillar B cut across all dimensions of the Small Business Act. Adequate skills and competences are not only key enabling factors for entrepreneurial activity, business innovation and internationalisation, but also help SMEs make economic performance more sustainable through greening and digitalisation. This results in synergies within the SBA framework: for instance, adequate skills and competences should be fostered by SME support services; green skills underpin strategies for sustainable development and resource efficiency; financial literacy is essential for SMEs’ access to capital; and digital skills are a pre-requisite for a successful digital transformation, including approaches to e-commerce.
This chapter analyses the state of policies developed in EaP countries to help citizens acquire and develop entrepreneurial skills and competences, in line with EU policy frameworks for human capital and SME development. It assesses the extent to which entrepreneurial learning, women’s entrepreneurship, and SME skills are developed through policy design, implementation, and monitoring and evaluation – with increased granularity compared to the last SBA assessment, and with additional attention given to stakeholder co-ordination and impact evaluation.
This chapter will address the two dimensions of Pillar B: i) entrepreneurial learning and women’s entrepreneurship and ii) SME skills.
The central concept behind entrepreneurial learning under the Small Business Act for Europe is the idea of entrepreneurship itself – enabled by cognitive and behavioural skills such as opportunity spotting, risk assessment, teamwork, and mobilising resources – as a key competence. Efforts to develop entrepreneurship are often grouped into three different approaches – namely, teaching about entrepreneurship (theoretical approach to the topic), teaching for entrepreneurship (occupationally oriented method to provide necessary skills and competences) and teaching through entrepreneurship (process-based approaches, embedding entrepreneurship in other subjects in general education (Lackéus, 2015[7]). Practical entrepreneurial experience is essential in this regard, but is often challenged by resource constraints, such as time, budget and skills. Strong connection between schools and businesses is also needed to create opportunities for real-life practical experiences.
To be effective, entrepreneurial learning requires a comprehensive policy approach that combines both formal and non-formal learning. While education systems should include and teach entrepreneurship as a key competence across national curricula, these skills can be further developed through lifelong learning opportunities (e.g. hackathons, bootcamps), thereby increasing employability and helping tackle skills mismatches by allowing for a more well-rounded and well-developed workforce (Bell, 2016[8]).
A major obstacle to ensuring equal female labour market participation is persisting gender gaps in entrepreneurial activities. These gaps cost economies in terms of missed opportunities for ideas, innovation and job creation (OECD, 2023[9]). In OECD countries, women are on average 30% less likely than men to be launching or running a new business, and they are also less likely to create employment opportunities for others. Women also often operate different types of businesses than men – they are, for instance, under-represented in the ICT sector, and were more negatively affected by the COVID-19 pandemic due to their concentration in the hardest-hit sectors, such as high-contact service industries. Moreover, women tend to have different motivations and intentions than men in their entrepreneurial undertakings, with some starting a business to avoid the “glass ceiling” in regular employment. Common to OECD, EU and EaP countries, these gender gaps in the quantity and quality of entrepreneurial activities derive from a variety of factors – such as skills gaps (e.g. in business and risk management or opportunity recognition), uneven access to finance and weaker networks. Understanding and addressing the needs of women entrepreneurs and promoting equal opportunities across countries and sectors are therefore critical to bridging the gaps and unlocking women’s full entrepreneurial potential, thereby contributing to more sustainable and diversified economies.
Assessment framework
This dimension assesses EaP countries’ progress in i) fostering entrepreneurial learning through formal school education and lifelong learning initiatives and ii) promoting women’s entrepreneurship.
Two important methodological changes have been introduced in this dimension since the previous SBA assessment: first, the analytical framework has been enhanced, with additional questions (emphasising policy implementation, monitoring and evaluation) designed to increase the granularity of this assessment. Second, the analysis now considers countries’ ability to regularly collect quantitative information to monitor the impact of policies on target groups (students, teachers, women) and on entrepreneurship (“outcome-oriented indicators”).
As a result, the assessment framework for this dimension is composed of the following:
Entrepreneurial learning: This sub-dimension focuses on the policy context and institutional arrangements for entrepreneurship across all levels of education (primary, lower and secondary (general and vocational), and higher) and on lifelong learning initiatives. This new assessment round places more emphasis on policy implementation (e.g., the existence of a dedicated budget and targets) for each level of education, and pays particular attention to policy impact, notably learning outcomes, and to monitoring and evaluation practices.
Women’s entrepreneurship: The second sub-dimension assesses the policy framework and measures implemented to support women business owners and efforts undertaken to bridge the gender gap in entrepreneurial activities. This sub-dimension has benefitted from new insights into women-specific programmes and a new focus on measures to encourage women’s participation in science, technology, engineering and mathematics (STEM) disciplines, and to promote women’s entrepreneurship outside the capital city. Greater consideration is also given to co-ordination across stakeholders and to addressing remaining barriers to women’s entrepreneurship.
The section on outcome-oriented indicators for this dimension considers countries’ ability to regularly collect statistical information about the following indicators: i) share of students in formal education engaged in entrepreneurial learning programmes, by level of education; ii) share of teachers in formal education trained in entrepreneurship key competence development, by level of education; iii) entrepreneurship education in primary and secondary schools and iv) in higher education (the extent to which training in creating and managing SMEs is incorporated within the education and training system); v) the share of young people having acquired at least one practical entrepreneurial experience prior to leaving school; vi) perception of entrepreneurship as a desirable career choice; vii) employment rate of graduates from vocational education programmes in the first year after graduation; viii) incidence of self-employment, within the general population, by education level, ix) women, by educational attainment, x) men, by educational attainment; xi) established business ownership rates, by sex; xii) newly established enterprises, by sex of the owner; xiii) share of women participants in SME support programmes; and xiv) value of collateral needed for a loan, by sex of loan applicant.
Analysis
Regional trends and comparison with 2020 assessment scores
Starting from a strong basis in the last SBA assessment, EaP countries have been working to foster entrepreneurial learning and support women entrepreneurs, resulting in an average score of 3.64 (see Figure 6.2). While Georgia and Moldova remain regional leaders on the topic, scoring above 4, Ukraine has made significant progress since 2020 as has Armenia, especially in the area of entrepreneurial learning. Azerbaijan has stayed constant in its approach to the two policy areas but shows a slight decrease in overall dimension scores due to the absence of policy documents, notably an action plan, for women’s entrepreneurship. The country has, however, implemented ad hoc measures and programmes for female-led businesses, as further explained below.
Entrepreneurial learning
EaP countries continued to develop policy frameworks for entrepreneurial learning, addressing the topic in national policy documents. The latter, however, vary in nature: most countries include entrepreneurial learning in education strategies, sometimes for a specific level -- vocational education and training (VET) or higher education, for example – and Armenia and Georgia have additional provisions in their respective SME strategies. In Ukraine, entrepreneurial learning is embedded in the overarching economic strategy. These policy frameworks are most often associated with action plans, except in the case of Azerbaijan. However, not all countries have formal policy partnerships for entrepreneurial learning1 in place.
While entrepreneurship as a key competence was already included in EaP national curricula at the time of the previous SBA assessment (albeit not always at all levels of education), this new round reveals further improvements across the region. Armenia, which had displayed modest performance in 2020 compared to its peers, has introduced changes in school curricula, notably emphasising the need to promote the development of an entrepreneurial mindset and related skills – as recommended in the SME Policy Index 2020. Azerbaijan also updated its curricula and launched new VET infrastructure and career guidance services, while Georgia has made further efforts to harmonise with EntreComp – although both countries’ approaches to entrepreneurial learning remain rather focused on VET. Moreover, all EaP countries have worked towards introducing innovative learning and teaching methods. The COVID-19 pandemic has prompted educational institutions, teachers and students to move to online learning solutions, resulting in the creation of dedicated platforms – such as Azerbaijan’s “Free Learning Portal” (tehsilim.edu.az) and the All-Ukrainian Online School (osvitoria.org). Beyond these online portals, there are several examples of innovative tools that have been implemented i) in both lower and upper secondary schools (e.g. the Clasa Viitorului in Moldova and the “Social school entrepreneurship” project in Vinnytsia, Ukraine, which combines active learning and a flipped classroom) and ii) in VET education, e.g. in Georgia through the development of "Fablabs” (fabrication laboratories) in VET institutions.
Further progress has been made in teacher training, albeit to varying degrees across countries. Additional courses and materials have been developed in most countries, such as Armenia. Major progress has been achieved in Georgia through the newly established Skills Agency, which is notably active in creating teacher networks to foster peer learning, exchange of good practices, and collaborative teacher projects.
In addition, EaP countries have been working to develop non-formal learning, including on entrepreneurship. Since 2019, Azerbaijan, Moldova and Ukraine have introduced normative-legal frameworks to allow for the certification of competences acquired in informal ways, while almost all countries include related provisions in their policy documents on entrepreneurial learning. Moldova, for instance, has developed regional centres for entrepreneurial education in six cities across the country. Moreover, all countries continue to promote entrepreneurship among the general population through various tools such as information campaigns, role models and national award ceremonies – although no major change was recorded over the assessment period.
Co-operation between higher education institutions and businesses has intensified across the region, through different mechanisms and often with donor support – e.g. through Creative Spark partnerships in Armenia, or MoUs between KOBIA and universities in Azerbaijan. Collaboration between VET institutions and firms has also improved – through work-based learning in Moldova, for instance. These practices have been further implemented in non-business faculties since 2020, which is a welcome development, although they have been implemented only on an ad hoc basis and limited to VET and higher-education institutions. Co-operation between general schools and SMEs on entrepreneurial learning is still at a very early stage in the EaP region – yet such collaboration can be very useful to tackle skills mismatches.
Overall, while EaP countries show strong achievements in policy planning and design, more could be done to ensure effective implementation of entrepreneurship as a key competence, as well as monitoring and evaluation. Indeed, entrepreneurial competences are not always captured in learning outcomes, and not all learners engage in at least one practical experience. This round of the SBA assessment has revealed persistent challenges in terms of monitoring and evaluation, a thematic block that has been enriched with additional detail. While all EaP countries have some form of monitoring of entrepreneurial learning policies, only Georgia and Moldova produce publicly available reports annually. Students’ progress in entrepreneurial learning is not systematically assessed, and students’ labour market outcomes are tracked only on an ad hoc basis by some universities. Teacher competences with regard to entrepreneurship are also rarely evaluated, which results in limited insights on teachers’ actual progress in that direction.
Women’s entrepreneurship
Policy frameworks for women’s entrepreneurship in EaP countries have not undergone major changes since the previous assessment. The new results reveal different trends across the region. Georgia and Moldova remain EaP leaders, with a steadily strong performance in all thematic blocks; Azerbaijan and Ukraine show a more unified picture across the sub-dimension than in 2020, when their scores were driven by a good performance in implementation; and Armenia’s approach has been constant – the country has included women’s entrepreneurship in policy documents but could still improve stakeholder co-ordination, awareness-raising, and monitoring and evaluation.
All EaP countries have implemented a range of women-specific business support services, albeit to varying degrees. In Moldova, the SME agency (ODIMM at the time, now ODA since 2022) re-conducted its programme Women in Business for three years in 2019, following a successful pilot version, and should soon approve a new follow-up Women’s Economic Empowerment Programme. The comprehensive support provided by Women in Business (training, mentoring and co-financing) has helped aspiring women entrepreneurs gain managerial skills and increases their access to resources, services and technologies. While this full-fledged initiative remains unique in the region, gender-tailored accelerators have been developing in all five EaP countries (Table 6.4).
Additional measures have been implemented to address different barriers faced by women entrepreneurs. Armenia, for instance, has worked to ease their access to finance through preferential interest rates for aspiring entrepreneurs (introduced in 2020 by the Ministry of Economy, the Investment Support Centre fund and banks in response to the COVID-19 pandemic). In Ukraine, existing initiatives have been complemented by war-related support tailored to women, e.g. to help female entrepreneurs relocate and/or access business advisory, mentoring, psychological and other types of support (see Box 14.3 in the Ukraine country chapter). Most of these programmes across the region are promoted online, on the national web portals of SME agencies and/or business associations; however, Ukraine is the only country to have so far developed a one-stop shop providing an overview of existing support (Diia.Business, at business.diia.gov.ua)) – following a recommendation in the SME Policy Index 2020.
Moreover, support for women entrepreneurs has been expanding beyond capital cities. All countries have made significant progress in this regard by developing the territorial coverage of their national support programmes, and/or by implementing complementary measures and programmes directly in regions. In Azerbaijan, for instance, 17 women’s resource centres have been created in different cities, notably providing training and consultancy services to help women launch their businesses (see Box 6.1), while Georgia has launched a pilot programme to support women’s employment more broadly, aiming at integrating economically inactive women into the labour market and fostering their involvement in agriculture.
In Azerbaijan, the State Committee for Family, Women and Children Affairs, in collaboration with the United Nations Development Programme (UNDP), has established Women’s Resource Centres across different regions of Azerbaijan. These centres’ core mission lies in empowering women, fostering their economic and social independence and active participation in socio-economic life, and promoting community development. To this end, the centres provide comprehensive support, including:
Early-stage entrepreneurship: Women can access assistance in developing business plans, receive consultations, and gain support in starting and running their own businesses. This also entails support in the registration process for new businesses, simplifying the procedure for starting new ventures.
Vocational training: The centres offer vocational training programmes to enhance women’s skills and expertise in various fields, potentially improving their employability or business ventures.
Financial literacy: Women can receive training and guidance in financial management, budgeting and other financial skills to increase their financial independence and decision-making abilities.
Gender equality education: The centres provide education and awareness programmes to promote gender equality and advocate for women’s rights.
Non-financial support: Women may receive material-technical assistance, including goods, equipment, furniture and accessories to support their business ventures or initiatives.
Business monitoring: Regular monitoring of business subjects is conducted to ensure progress and success, especially in areas such as agriculture, tailoring, baking and pottery.
E-commerce: Women are encouraged to improve their online selling opportunities for handmade products via training and guidance.
As of 2022, 17 Women’s Resource Centres had been established in Azerbaijan, with over 13,000 women participating in different training sessions and events, and 617 having started a new business with the help of the centres.
Source: (UNDP Azerbaijan, 2023[15]), fact-finding exercises.
In addition, countries have pursued efforts to bridge gender gaps in STEM disciplines, including initiatives designed to increase girls and women’s involvement in these fields. These efforts mostly focus on raising awareness, e.g. through annual events, and sometimes provide training in IT skills – in Georgia and Moldova, for instance.
Overall, support for women entrepreneurs has been strengthened by the active involvement of the private sector and international donors. On the one hand, business associations play a major role; for example, Azerbaijan’s Scale Up Accelerator for Women Entrepreneurs is a public-private initiative co-implemented by the women’s entrepreneurship development association AQSIA, while the Georgian Chamber of Commerce and Industry cooperated with UN Women on a project promoting gender equality and women’s empowerment in the workplace. On the other hand, international organisations significantly contribute to – and at times drive – governmental efforts. An example is UNDP, which participates in the vast majority of existing programmes across Armenia (e.g. accelerators and small-grant projects with the SME Cooperation Association).
Despite these common trends, the assessment reveals substantial differences in policy frameworks for women’s entrepreneurship across the region. Not all countries currently have a formal policy partnership on the topic, or an action plan with concrete measures, set targets and allocated budgets. Azerbaijan, despite its above-mentioned achievements in terms of support, currently does not have a strategic document or policy framework in place. Developing a more structured approach would help to ensure co-ordination between the different initiatives and actors (public and private, national and international) and to step up support for efforts to strengthen the capacity of non-governmental organisations (NGOs).
Women’s entrepreneurial potential in the EaP region remains untapped. Relevant quantitative and qualitative data remain scarce, preventing regional comparisons, but the few insights available reveal persisting challenges. Women entrepreneurs still face more barriers than men – notably in terms of access to finance and networks. They tend to export less and are concentrated in lower-value-added sectors. In Ukraine, for instance, they mostly operate in retail sales (food beverages, tobacco, textile) and restaurants, mobile food service activities, and funeral businesses (Ukrstat, 2022[16]). Some 87% of women entrepreneurs operate only in their region, and only 7% export goods and/or services abroad (Diia.Business, 2023[17]). Moreover, data available for Georgia illustrates that women are under-represented in the sectors offering the highest wages (e.g. IT, professional, scientific and technical activities) – and, even in sectors where they outnumber men (e.g. accommodation, food services, human health, social work), they continue to be paid less than their male counterparts. Gender stereotypes and housework, enhanced by the COVID-19 pandemic and containment measures that increased the time spent on domestic tasks, further impede business development.
Understanding and tackling these remaining challenges requires, among other things, more and better data insights. EaP countries are not, for instance, included in international databases on the topic, such as the Global Entrepreneurship Monitor. Some studies are conducted to assess barriers to women’s entrepreneurship in most EaP countries; however, apart from Ukraine, these are not conducted annually. Moreover, monitoring and evaluation of existing programmes could be improved in order to assess their concrete impact on women-led businesses and to identify persisting issues.
The way forward
Entrepreneurial learning
Building on the aforementioned achievements and continued efforts to foster entrepreneurial learning at all stages of life, EaP countries could:
Strengthen policy frameworks for entrepreneurial learning by introducing entrepreneurship as a key competence at all levels of education in Azerbaijan and Georgia and adopting formal national policy partnerships on entrepreneurial learning in Armenia.
Complement teacher-training efforts by ensuring the inclusion of entrepreneurship in pre-service teacher training, and in in-service training at all education levels. Improvements could also be made in assessing the impact of teacher training, e.g. by regularly assessing teachers’ competences in entrepreneurship.
Step up co-operation between secondary schools and SMEs, especially in general education. Educational institutions and employers could exchange information and collaborate in a more systematic manner, thereby fostering student engagement in practical experiences. Surveys, such as those conducted by the Labour Market Information System of Georgia, suggest firms’ demand for closer co-operation with the education system is still unmet.
Improve monitoring and evaluation practices in entrepreneurial learning, ensuring the assessment of learning outcomes, and systematically track graduates’ labour market outcomes to inform labour-market policy making.
Women’s entrepreneurship
Moving forward, women’s entrepreneurship policies could be further improved by:
Ensuring co-ordination among stakeholders involved in women’s entrepreneurship policies and programmes. Azerbaijan and Ukraine could adopt formal policy partnerships in this regard, clearly defining the role of each public and private sector actor and setting up co-ordination mechanisms among them, which would also help to ensure that efforts are complementary.
Improve data collection on gender-related issues and guarantee and improve impact evaluation for existing programmes. Table 6.5 provides examples of indicators that EaP countries could consider collecting, in line with international standards. Regularly conducting studies on remaining barriers to women’s entrepreneurship would also help in building a better understanding and fostering evidence-based policymaking.
Step up support by helping women entrepreneurs beyond the early stages of business development. Most existing support programmes target early entrepreneurship, enabling women to launch their businesses. Moving forward, this approach could be complemented by measures to help women entrepreneurs scale-up their businesses. Enterprise Ireland’s approach, notably its Competitive Start Fund for Female Entrepreneurs, offers an interesting example in that regard (see Box 6.2).
Address structural barriers by further tackling remaining gender stereotypes and encouraging women to engage in higher-value-added sectors. The 2023 OECD Toolkit for Mainstreaming and Implementing Gender Equality offers useful guidance, including actionable measures and concrete examples, for policy makers working to promote gender equality at large (OECD, 2023[18]).
Develop incentives to reduce women’s participation in the informal economy. Only Georgia has taken measures in this direction so far, having conducted a study on the topic and developing a policy document based on the results. Azerbaijan and Ukraine have taken steps to reduce informality, but these do not yet entail women-specific provisions.
Context
The Action Plan for Women in Business – initiated by Enterprise Ireland, the Irish government’s enterprise development agency – represents an ambitious and comprehensive strategy aimed at fostering greater representation of women in the business world, particularly in leadership positions throughout Ireland. Starting in 2020, this plan comprises four objectives:
Enhance the presence of women-led established companies growing internationally.
Augment the number of women in middle and senior management and leadership roles.
Facilitate the rise of female entrepreneurs, encouraging more women to take the path of entrepreneurship.
Boost the prevalence of women-led start-ups that exhibit high growth potential.
Competitive Start Fund (CSF) for Female Entrepreneurs
In line with these objectives, Ireland's Competitive Start Fund (CSF) for Female Entrepreneurs stands as the strategic scale-up funding initiative, backing women-led startups and businesses with both financial and non-financial support. Targeting specifically female entrepreneurs, the Fund aims at narrowing the gender gap in entrepreneurship and providing targeted support to women-led start-ups, promoting diversity and inclusion in the Irish start-up ecosystem.
The CSF focuses on start-ups with innovative and scalable business ideas with the potential for rapid growth and international market expansion. While the CSF primarily provides funding to early-stage start-ups, it plays a crucial role in laying the foundation for future scale-up success. Apart from product development, market validation, and pre-seed-stage and seed-stage support, Enterprise Ireland offers equity investment to eligible female entrepreneurs establishing new high potential start-up (HPSU) companies.
HPSUs are start-up businesses with the potential i) to develop an innovative product or service for sale on international markets and ii) to create 10 jobs and EUR 1 million in sales within three years of starting up. Enterprise Ireland’s funding closely aligns with the company’s stage of development, whether it is in the feasibility, investor-ready or growth stage. The selection process involves a competitive evaluation of the applicants' business plans, growth potential, market opportunities, and founding team capabilities.
Beyond funding, the selected entrepreneurs under the CSF can receive additional business support, such as mentorship, access to networks, and other resources to aid in business development and scaling. Mentorship plays a pivotal role in guiding entrepreneurs through the challenges of scaling their businesses and navigating the complexities of the market. CSF-recognised start-ups also gain visibility and validation within the entrepreneurial community, particularly among potential investors, partners, and collaborators, which is crucial for scale-up success.
By nurturing female-led start-ups at different stages of development, the CSF contributes to the overall growth and vibrancy of the start-up ecosystem in Ireland – creating jobs, driving innovation and contributing to the country’s economic development.
Source: (Enterprise Ireland, 2020[24]); (Enterprise Ireland, 2022[25]).
Skills shortages and mismatches are often quoted among the major challenges encountered by SMEs. They experience more difficulties than large firms in attracting and retaining skilled workers and providing their workers with upskilling and reskilling opportunities – which can in turn impede firm profitability and competitiveness. This is notably due to their lack of means, such as time and financial resources, to carry out and/or participate in training. SMEs also often lack awareness of their needs, of how training can help develop their business, and of the support mechanisms available – notably because of less-developed human resource management systems. They also face higher opportunity costs of training (OECD, 2021[26]).
Recent crises, such as the COVID-19 pandemic, along with the fast-paced development and spread of new technologies across economies and societies and the green transition, have been prompting changes in the nature of jobs and, consequently, in skills demand within labour markets. Recent data insights suggest that the skills required by the labour market changed by approximately 25% between 2015 and 2022, and that this number will likely double by 2027 (Roslansky, 2022[27]). Certain competences become redundant as a result of automation, while the demand for digital skills, for instance, is surging. According to the latest estimates, 1.1 billion jobs are likely to be radically transformed by technology in the next decade (World Economic Forum, 2023[28]). The Future of Jobs Report 2023 reveals that 43% of work tasks will be automated by 2027; six workers out of ten will require training by then, but only half of the workers currently seem to have access to adequate training options, and the most in demand are not always included in corporate upskilling strategies (World Economic Forum, 2023[29]). These trends create a pressing need for more investment in human capital. Creative and analytical thinking – as well as technological literacy, resilience, flexibility and agility – are among the most and increasingly sought-after competences among firms.
The importance of skills development among SMEs is reflected in EU documents, such as the Next Generation SME Strategy, and 2023 has been designated the European Year of Skills. Building stronger, diversified, and vibrant economies will require both SME managers and employees to gain the necessary enterprise skills to grow, create jobs, and further contribute to wealth creation. These competences will also allow firms to make effective use of their full potential and enhance competitiveness.
Equipping individuals with relevant skills and competences can be done through training opportunities and targeted financial and non-financial training incentives. It also requires multi-level, collaborative governance by public and private stakeholders, including government bodies responsible for economic, education and labour market policies; education and training providers; private and civil society organisations active in the fields; and firms themselves. Such co-operation also fosters comprehensive and systematic skills intelligence that then enables the design of policies, education and training provision that meets the skills needs of SMEs.
Assessment framework
This dimension takes stock of the progress achieved by EaP countries in providing relevant training opportunities to SMEs, tackling obstacles to upskilling and reskilling among firms, and gathering skills intelligence to feed into policy making.
In comparison with the previous assessment, the framework now covers additional topics, corresponding to areas of increasing relevance (e.g. digitalisation, greening, intellectual property, social economy) and at times going more in-depth, e.g. on smart specialisation and on the availability of online courses. More emphasis is now placed on monitoring and evaluation, assessing skills intelligence on SME managers and employees, and more generally skills assessment and anticipation practices. Furthermore, the analysis considers countries’ ability to regularly collect quantitative information to monitor the impact of policies on in-house and external training provisions for SMEs (“outcome-oriented indicators”).
As a result, the assessment framework for this dimension comprises of the following:
SME skills examines government policy for SME training in a range of areas and for various target groups (e.g. women and the youth). It assesses the existence of national frameworks for the collection and analysis of data on SME skills, available support for training, and monitoring and evaluation practices.
The section on outcome-oriented indicators for this dimension considers countries’ ability to regularly collect statistical information about four indicators: i) the share of enterprises providing training to their employees; ii) participants in state-financed SME training, by sex; iii) the share of enterprises providing training to their personnel to develop/upgrade their ICT skills; and iv) the share of enterprises that employ ICT specialists, by enterprise size class.
Analysis
Regional trends and comparison with 2020 assessment scores
All EaP countries have made progress in their approaches to SME skills development since the previous assessment, as reflected in a considerable increase in average scores, from 2.97 to 3.78 in the scores calculated based on a comparable methodology.
Moldova and Ukraine have been catching up with Georgia, which remains the EaP leader in the field. Azerbaijan is closely following, boosted by significant improvements in skills intelligence and training provision thanks to KOBIA’s (the SME agency) efforts in that direction. Armenia has also made some progress, albeit more modest, having been notably slowed down by the restructuring of its SME support infrastructure.
However, the current lack of outcome-oriented indicators on skills and training slightly mitigates scores for all EaP countries, leaving considerable room for improvement.
SME skills
This sub-dimension, the only one in this dimension, can be divided into two main themes: i) provision of training services for SMEs and ii) skills intelligence and its use for policy and practice.
Regarding training opportunities, the range of courses offered to SMEs has been expanded in the region. Azerbaijan and Ukraine have made particularly noteworthy progress in this regard. In Azerbaijan, KOBIA has created a network of operators (SME development centres, SME houses, SME Friends) across the national territory, with SME development centres conducting courses on a wide range of topics. In Ukraine, Diia.Business, launched in 2020 (see Box 14.4 in the Ukraine country chapter), now acts as an online ‘one-stop shop’ for entrepreneurial knowledge and consulting. Overall, EaP countries have worked to create new courses covering increasingly demanded skills such as digital and, to a lesser extent, green skills. Moldova is at the forefront in this regard, with ODA having implemented programmes in these two directions. Its SME digitalisation programme, launched in 2020 and re-conducted in 2022, remains, so far, the only full-fledged programme supporting the digitalisation of SMEs in non-IT sectors in the region, while Georgia has been actively working towards expanding its support in this direction. Armenia’s current approach differs from that of its neighbours, with most of the SME/start-up skills development programmes being delivered by NGOs, most often with donor support; but the range of services available has also been widened, notably by the Enterprise Incubator Foundation and the increasing number of incubators and accelerators flourishing in the country.
Moreover, online training has become increasingly available in EaP countries, prompted by the COVID-19 pandemic and successive lockdowns. Its implementation is, however, advancing at different speeds in the region. Azerbaijan and Ukraine have dedicated online video training platforms on Kobim.az and Diia.Business, respectively; by contrast, although their EaP neighbours have moved some courses to a remote format (on an ad hoc basis) and launched new online training courses, these are not gathered on a one-stop-shop portal. Overall, these developments are very welcome and are helping to maximise training outreach beyond capital cities. However, the learning outcomes and overall impact of the materials launched so far could be further enhanced by making them more interactive. EaP countries, apart from Ukraine, have not yet introduced innovative digital learning methods such as gamification (i.e. game-like courses with learning objectives to be achieved) to improve SME skills.
With regard to smart specialisation, Georgia, Moldova and Ukraine have been further developing their approaches since the previous assessment. The three countries have worked on relevant policy documents: Ukraine addresses the topic in its National Economy Strategy 2030 and State Regional Development Strategy 2021-272, with plans to implement regional development projects and SME support instruments; while Georgia and Moldova have prepared draft strategies, to be adopted soon. However, SMEs could be given more encouragement to tap into the potential of smart specialisation, e.g. through targeted training in identified priority areas. An analysis of skills implications could also be foreseen in the different areas to identify and address gaps. In terms of institutional frameworks, the three countries have worked to ensure co-ordination across stakeholders, through dedicated inter-ministerial groups most often involving a selection of public and private actors.
In parallel to training provision, most EaP countries have improved their frameworks for skills intelligence, and their use thereof. SME agencies in the EaP region, except in Armenia, collect sex-disaggregated statistics on training participants, as well as their feedback; this information then feeds into the development of new courses and/or adjustments to existing programmes. However, the concrete impact of training on skills development and SME performance is rarely assessed. Overall, national frameworks for the collection and analysis of data on SME skills have been strengthened in most countries. Georgia remains the regional leader in this regard, with its annual surveys of business demand for various skills, along with additional sector-specific studies. Starting from a weak basis in 2020, Azerbaijan has also made considerable improvements, and now collects insights on the training needs of entrepreneurs and in-house training within small firms – as recommended in 2020. Nevertheless, Armenia has not yet implemented such practices.
Finally, skills assessment and anticipation tools are still at a nascent stage in the EaP region. Apart from the above-mentioned surveys, they remain mostly limited to labour market analyses, with additional insights being provided by ad hoc, donor-led studies and other tools. The Edu2work platform launched in Armenia offers an interesting and innovative example in this regard, providing fresh insights on skills demand and inputs for national policies.
The way forward
Moving forward, EaP countries could complement and strengthen their approaches to SME skills development by:
Raising awareness of available training offers: Given the variety of public and private stakeholders involved in training provision for SMEs, gathering all opportunities in a single, one-stop-shop portal could help increase visibility and help SMEs navigate between the different options. Diia.Business offers a good example in this regard.
Further developing online training opportunities: Building on the online courses that have been developed in recent years, EaP countries could consider introducing innovative and digital learning methods. Such practices can enhance learning outcomes through their interactive approach.
Improving monitoring and evaluation practices by capturing the impact of training on skills development and SME performance – for example, through simple surveys conducted among participants after the training, asking about the extent to which skills have improved, and/or through skills assessment before and after the course, to allow for objective evaluation. Training providers could also consider following up with trainees a few months after the programme.
Considering introducing certification of the skills acquired, which would help ensure the quality of training and flag competences to hiring managers.
Introducing/strengthening systemic approaches to data collection on SME skills, including for the green and digital transitions, training needs analysis, as well as barriers to participation in training. Countries could step up efforts in this regard, collecting more granular insights on a regular basis, and developing a database of indicators on SME skills to inform policy making.
Implementing skills anticipation tools, such as sectoral studies and quantitative forecasting models (see Box 6.3).
Strengthening smart specialisation approaches by developing targeted support for innovative, competitive, and growth-oriented SMEs in the priority areas. Vocational education and training provision could be updated in these priority areas.
Overview
Skills assessment and anticipation exercises are usually defined as activities designed to estimate future skills needs in the labour market “in a strategic way, using consistent and systematic methods”. They can be highly valuable tools that allow policy makers to capture the changes in skills demand and supply and to develop relevant measures to prevent and/or address skills shortages and mismatches.
They can take a variety of forms, ranging from simple surveys (among employers and/or school/training graduates) to quantitative projections based on macroeconomic modelling. Examples include:
A combination of different methods, both quantitative and qualitative, can help to build a keen understanding of current and upcoming trends.
Example: OSKA Estonia
OSKA is the Estonian anticipation and monitoring system for labour and skills demand, analysing the labour and skills necessary for Estonia’s economic development over the next 10 years. It has been conducting sectoral studies of labour and skills needs since 2016, anticipating skills needs over the next 7-10 years in every sector of the Estonian economy (up to five sectors per year).
It combines qualitative and quantitative methods, using statistical data from various surveys (e.g. on labour force, education, Population and Housing Census, sectoral surveys) and qualitative personal interviews and group discussions (e.g. sector experts, policy makers, education providers). This enables policy makers to draw conclusions, identify mismatches and formulate suggestions.
Conclusions are derived from sectoral expert panels composed of one-half employers, one-quarter educational institutions, and one-quarter policy makers. They oversee the process, validate the results, and help ensure dissemination and follow-up.
OSKA has become a well-known and acknowledged system that is widely used by target groups. Its strengths lie in its multi-stakeholder approach, the fact that a similar methodology is applied to all sectors, and the follow-up done on results and recommendations. The intelligence collected is used in policy making. Recent examples of resulting adjustments include planning and adjusting VET and university curricula; developing a government project to promote growth occupations; and planning migration measures and digital re-training and up-skilling projects.
Source: (ILO, 2015[30]; OECD, 2016[31]; OSKA, 2022[32]).
References
[5] Bacigalupo, M. et al. (2016), EntreComp: The Entrepreneurship Competence Framework, Publications Office of the European Union, https://doi.org/10.2791/593884.
[8] Bell, R. (2016), “Unpacking the link between entrepreneurialism and employability: An assessment of the relationship between entrepreneurial attitudes and likelihood of graduate employment in a professional field”, Education and Training, Vol. 58/1, pp. 2-17, https://doi.org/10.1108/ET-09-2014-0115.
[17] Diia.Business (2023), Women’s entrepreneurship, https://business.diia.gov.ua/en/women-entrepreneurship (accessed on 11 June 2023).
[25] Enterprise Ireland (2022), Client Solutions Hub: Access the advice you need to stay competitive, https://globalambition.ie/.
[24] Enterprise Ireland (2020), Enterprise Ireland’s Action Plan For Women In Business, https://www.newfrontiers.ie/blog/enterprise-ireland-action-plan-for-women-in-business-diversity.
[12] Estonian Refugee Council (2022), Empowering Women Entrepreneurs in Georgia 2022, https://entrepreneur.pagulasabi.ee/georgia/empowering-women-georgia-2022 (accessed on July 2023).
[4] European Commission (2021), European Skills Agenda, https://ec.europa.eu/social/main.jsp?catId=1223&langId=en.
[3] European Training Foundation (2018), INFORM - ISSUE 16 - ENTREPRENEURIAL LEARNING: KEYSTONE TO AN ENTREPRENEURIAL CULTURE, https://www.etf.europa.eu/sites/default/files/m/32FE9A69B45747F3C1257BA600329BD4_INFORM_16.pdf (accessed on September 2023).
[20] Eurostat (n.d.), Data, https://ec.europa.eu/eurostat/web/main/data (accessed on July 2023).
[23] Global Entrepreneurship Monitor (2022), GEM 2021/22 Women’s Entrepreneurship Report: From Crisis to Opportunity, GEM, https://www.gemconsortium.org/report/gem-202122-womens-entrepreneurship-report-from-crisis-to-opportunity.
[22] Global Entrepreneurship Monitor (n.d.), Entrepreneurial behaviour and attitudes, https://www.gemconsortium.org/data/key-aps (accessed on July 2023).
[30] ILO (2015), Anticipating and matching skills and jobs, https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---ifp_skills/documents/publication/wcms_534307.pdf (accessed on 26 April 2022).
[11] Kobia (2019), “Scale Up” Accelerator Program for Women Entrepreneurs, https://www.smb.gov.az/en/all-news/scale-up-accelerator-program-for-women-entrepreneurs (accessed on July 2023).
[7] Lackéus, M. (2015), Entrepreneurship in Education - What, why, when, how, https://www.oecd.org/cfe/leed/BGP_Entrepreneurship-in-Education.pdf.
[9] OECD (2023), Joining Forces for Gender Equality, OECD Publishing, Paris, https://www.oecd-ilibrary.org/social-issues-migration-health/joining-forces-for-gender-equality_67d48024-en (accessed on 17 July 2023).
[18] OECD (2023), Toolkit for Mainstreaming and Implementing Gender Equality 2023, OECD Publishing, https://doi.org/10.1787/3ddef555-en.
[26] OECD (2021), Incentives for SMEs to Invest in Skills - Lessons from European Good Practices, OECD Publishing.
[31] OECD (2016), Getting Skills Right: Assessing and Anticipating Changing Skill Needs, OECD Publishing, https://doi.org/10.1787/9789264252073-en.
[19] OECD (n.d.), Entrepreneurship: Indicators of female entrepreneurship, https://stats.oecd.org/index.aspx?queryid=83119 (accessed on July 2023).
[32] OSKA (2022), OSKA - Koolitused, https://oska.kutsekoda.ee/en/ (accessed on 1 July 2022).
[2] Queiró, F. (2022), “Entrepreneurial Human Capital and Firm Dynamics”, Review of Economic Studies, Vol. 89, pp. 2061-2100, https://academic.oup.com/restud/article/89/4/2061/6395373.
[27] Roslansky, R. (2022), “Here’s why the world of work urgently needs to put skills first”, Centre for the New Economy and Society, https://www.weforum.org/agenda/2022/03/work-skills-first/ (accessed on 20 June 2022).
[1] Shen, Y. et al. (2021), “Entrepreneurial Learning, Self-Efficacy, and Firm Performance: Exploring Moderating Effect of Entrepreneurial Orientation”, Frontiers in Psychology, https://www.frontiersin.org/articles/10.3389/fpsyg.2021.731628/full.
[13] Startup Moldova (2023), Ellevator Women Startup Accelerator, https://startupmoldova.digital/events/ellevator-women-startup-accelerator-2/ (accessed on July 2023).
[16] Ukrstat (2022), Statistical state service of Ukraine, https://www.ukrstat.gov.ua/ (accessed on 17 July 2023).
[10] UNDP (2022), UNDP and RA Government Launch “Platform #5 | Upskilling” Women’s Economic Empowerment Program, https://www.undp.org/armenia/stories/undp-and-ra-government-launch-platform-5-upskilling-womens-economic-empowerment-program (accessed on July 2023).
[15] UNDP Azerbaijan (2023), The State Committee for Family, Women and Children Affairs, USAID and UNDP Open New Women’s Resource Center in Sumgait, https://www.undp.org/azerbaijan/press-releases/state-committee-family-women-and-children-affairs-usaid-and-undp-open-new-women%E2%80%99s-resource-center-sumgait.
[14] Vidvazhna (2023), Visionary Female Accelerator, https://www.vidvazhna.com.ua/#about (accessed on July 2023).
[21] World Bank (2022), Breaking Barriers: Female Entrepreneurs who cross over Male-Dominated Sectors, World Bank, http://hdl.handle.net/10986/36940.
[6] World Bank (2021), Enterprise Surveys Indicators Data - World Bank Group [database], https://www.enterprisesurveys.org/en/data (accessed on 21 March 2022).
[29] World Economic Forum (2023), Future of Jobs Report 2023, https://www3.weforum.org/docs/WEF_Future_of_Jobs_2023.pdf (accessed on 25 July 2023).
[28] World Economic Forum (2023), Reskilling Revolution: Preparing 1 billion people for tomorrow’s economy, https://www.weforum.org/impact/reskilling-revolution/ (accessed on 25 July 2023).
Notes
← 1. A formal partnership defines a relationship between a number of organisations (public, private, civic) with agreed objectives to support entrepreneurial learning policy and its implementation. The partnership has resources (human, financial or other) to support the administration and development of the partnership and its activities, as well as a clearly identified lead institution, mandate and calendar of activities. A structured national partnership (as opposed to an informal partnership) for entrepreneurial learning comprises appointed members from the state bodies (e.g. Ministry of Education, Ministry of Economy, Ministry of Labour), national agencies (e.g. SME agency), employers’ organisations, trade unions and NGOs (e.g. youth entrepreneurship associations). Its objectives are a) to ensure co-operation between the range of players in the entrepreneurial learning eco-system, b) to ensure synergy and efficiency across the range of entrepreneurial learning activities in the country (as defined within national policies for lifelong entrepreneurial learning) and c) to provide advice to the government on developments in life-long entrepreneurial learning. The partnership's lead institution could be the Ministry of Education and could involve rotating leadership amongst its members. The roles and responsibilities of each member are clearly defined through an official document. The national partnership has a budget to support its work (e.g. engage expertise, organise roundtables, publicity).
← 2. Moreover, all regions have been requested to conduct a mid-term review and adjustment of their regional development strategies, including the smart specialisation chapters, until 2027.