This note describes the steps that policy makers can take to ensure that the regulatory environment does not create unnecessary challenges or disincentives for women entrepreneurs. The policy guidance is structured around the good practice statements that comprise the “Building a Supportive Regulatory Environment for Women Entrepreneurs” module in the Inclusive Entrepreneurship component of the Better Entrepreneurship Policy Tool. For further discussion of these issues and additional examples of relevant policy actions, please see:
OECD/European Union (2018), “Policy brief on women’s entrepreneurship”, Publications Office of the European Union, Luxembourg. https://doi.org/10.1787/f493861e-en
OECD/European Union (2017), The Missing Entrepreneurs 2017: Policies for Inclusive Entrepreneurship, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264283602-en
OECD/European Union (2016), Inclusive Business Creation: Good Practice Compendium, OECD Publishing, Paris.http://dx.doi.org/10.1787/9789264251496-en
OECD/European Union (2015), The Missing Entrepreneurs 2015: Policies for Self-employment and Entrepreneurship, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264226418-en
OECD/The European Commission (2014), The Missing Entrepreneurs 2014: Policies for Inclusive Entrepreneurship in Europe, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264213593-en
OECD/The European Commission (2013), The Missing Entrepreneurs: Policies for Inclusive Entrepreneurship in Europe, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264188167-en
Business start-up regulations and procedures can be a significant obstacle to business start-up for many entrepreneurs, especially those from under-represented and disadvantaged groups (e.g. women, youth, immigrants, the unemployed). These groups often have low levels of entrepreneurship skills and little experience with regulations and institutions related to business start-up. Policy makers have been simplifying processes and reducing capital requirements in recent years, but more can be done. To ensure that business start-up regulations and procedures do not pose undue difficulties for women entrepreneurs, policy makers should undertake a regulatory impact assessment in consultation with women’s organisations and other relevant stakeholders.
Administrative regulations and procedures related to business creation can pose challenges for all entrepreneurs. However, entrepreneurs from under-represented and disadvantaged groups (e.g. women, youth, immigrants, the unemployed) may face greater barriers in understanding and complying with start-up regulations and procedures due to limited experience with regulatory procedures and institutions, and lower levels of entrepreneurship skills. Such barriers can discourage business start-up, especially where the costs and time involved to register a business or to become self-employed are high. Barriers and challenges may also encourage some to operate in the informal sector.
Policy makers have been simplifying business start-up requirements and procedures, notably by:
It is important for policy makers to continue with these efforts as entrepreneurs from under-represented and disadvantaged groups are disproportionately affected by these requirements.
To go further, policy makers should consider additional options for simplifying administrative requirements during business start-up. First, they can reform existing burdensome regulation. Second, they can minimise the burden introduced by new regulations, through the use of tools such as the Regulatory Impact Assessment.
Another issue for policy makers is to minimise indirect barriers to business creation, such as licensing, certification and permit requirements, which also add time and complexity to the start-up process.
An effective provision of information on business creation and self-employment that caters to specific target groups is also an important tool for supporting entrepreneurs from under-represented and disadvantaged groups in business creation. Information should be clear and presented in easy-to-understand language. Where there are many migrant entrepreneurs, information should also be provided in several languages. Consideration should also be given to the format (e.g. brochure, online) since different groups will access information differently. Information must be disseminated through channels used by the intended target groups.
A more active approach to addressing undue administrative burdens during the start-up process is to provide individual assistance (e.g. coaching) to guide entrepreneurs from under-represented and disadvantaged groups through the start-up process. Although a resource intensive approach, it can be effective. Another option could be to provide one-shot advice and support with business start-up procedures over the phone, through email or at a help desk at an appropriate location.
Policy makers may find it useful to set out a strategy for addressing administrative burdens related to business creation and self-employment. There are a few aspects to consider:
In assisting women entrepreneurs in understanding and complying with their regulatory obligations, policy makers should:
The provision of tailored information on business creation and self-employment can facilitate business creation by groups that are under-represented and disadvantaged in entrepreneurship (e.g. women, youth, immigrants, the unemployed) since it can address their specific needs. In developing tailored information for different profiles of women entrepreneurs (e.g. part-time entrepreneurs, growth-oriented entrepreneurs), it is important to ensure that the information is written in gender neutral language. Information should be relevant for the types of businesses that women operate.
The provision of tailored information on business creation and self-employment has two purposes. First, it can raise awareness about the potential of entrepreneurship as a career or part-time activity. Second, it can help people from groups that are under-represented or disadvantaged in entrepreneurship (e.g. women, youth, immigrants, the unemployed) in the start-up process by explaining requirements and offering basic advice on meeting obligations.
Potential entrepreneurs from under-represented and disadvantaged groups face varied obstacles and circumstances, which should be taken into account when designing and delivering information on business creation and self-employment for them. The business start-up process can itself be a challenge for many of these entrepreneurs since they have little experience with entrepreneurship. In addition, they are also likely unaware of the range of support services that are offered to help them start their business (e.g. information portals, business advice, training).
The provision of tailored information can facilitate business creation by these groups. The information provision is likely to be more effective if it is tailored and there are three important considerations when developing information products to support inclusive entrepreneurship:
Information about business creation is increasingly delivered through the Internet. A range of online platforms provide a “one-stop”, also known as a “first-stop”, facility for potential entrepreneurs to access information on issues such as marketing, operations, business registration, tax compliance and sources of finance. The advantage of this approach is that information can be disseminated widely at a very low cost. It is beneficial for entrepreneurs because the information is usually very easy to access. For example, WEGATE is an online one-stop shop for women entrepreneurs that provides information and networking opportunities. Furthermore, online information and tailored support materials can help people from some target groups overcome difficulties associated with physical access to business support centres.
Case study: WEGATE, European Union
The WEGATE website is a one-stop shop for women entrepreneurs that acts as an information and network hub for women entrepreneurs who are looking to start a business, or are already operating a business. Registered users benefit from a community of women entrepreneurs and can participate in forum discussions, write blog posts and share good practices to inspire other women.
In developing tailored information on business creation for women entrepreneurs, policy makers should:
Social security systems can offer both incentives and disincentives for entrepreneurship. Women’s entrepreneurship can be encouraged by ensuring that family and taxation policies encourage labour market activities, including entrepreneurship. It is also critical that women entrepreneurs can access childcare.
Social security systems are comprised of schemes such as unemployment insurance, health insurance, sickness benefits and pension schemes. Entrepreneurs’ access to social security schemes often differs from this of employees. In order to remove disincentives for business creation, public policy needs to ensure that there is appropriate coverage of social security for the self-employed. This is particularly important for entrepreneurs from under-represented and disadvantaged groups (e.g. women, youth, immigrants, the unemployed) who are more likely to be beneficiaries of these schemes. They may lose access to some of their benefits if they start a business, or may be significantly disadvantaged without a safety net in the event of injury, long-term ill-health or business closure.
Depending on the national context, the self-employed may be entitled to contribution-based benefits, such as State Pension and Maternity Allowance, yet ineligible for other benefits enjoyed by employees. Self-employed people are also less likely than employees to be saving in a private pension scheme. To be entitled to the same protection as employees, there needs to be a commensurate adjustment in the contributions made by the self-employed to various social security schemes. In countries where the self-employed are not covered by social security, they do not make the same contributions as employees.
Improving access to social security schemes for the self-employed would help create a level playing field between the self-employed and employees, removing some of the disincentives for entrepreneurship. To explore options for improving access to social security for the self-employed, policy makers should consult with relevant stakeholders from under-represented and disadvantaged groups to gain an understanding of the advantages and disadvantages of current social security schemes. Similarly, any proposed change should be vetted with stakeholders to ensure that there are no unintended consequences.
One of the most common approaches to offering incentives for entrepreneurship is the use of a “welfare bridge”, which is the payment of future benefit entitlements in the form of a small subsistence allowance during the early stages of being an entrepreneur. Often this allowance is paid for six months. In many cases a one-time grant is also provided to support business creation. Bridging schemes are typically supplemented by additional support services, for instance training, mentoring and start-up loans or grants.
Some evidence suggests that these schemes have been successful and the start-up survival rates of those in receipt of support are similar to survival rates of those without the support. Yet, it has also been pointed out that policy makers must consider the programme costs, deadweight costs and displacement costs when measuring the effectiveness and efficiency of such schemes.
Another mechanism for providing incentives for business creation is a temporary reduction in social security contributions. Often these mechanisms are done for two years. It is good practice to phase out the reduction rather than ending it abruptly as entrepreneurs will need some time to adjust to the increased charges.
To provide incentives for business creation to women entrepreneurs through the social security system, policy makers should:
Monitoring and evaluation are an important part of the policy development process. These activities are often contracted out to leverage specialised knowledge and to maintain the impression of impartiality. When evaluating the impact of regulations on women’s entrepreneurship, policy makers need to assess whether the types of businesses that women operate are disproportionately impacted by regulations. It is also important to examine how women are treated in the broader legal framework, e.g. contract law.
Monitoring and evaluation are important policy development tools that can be used by policy makers to understand and assess problems in the regulatory environment for inclusive entrepreneurship. Policy makers should want to understand how the regulatory system influences the decision to start a business and become self-employed, as well as the impact of regulatory measures that seek to create incentives for business creation. An important feature of evaluation of regulatory measures in the context of inclusive entrepreneurship is to track impact on different groups.
Basic monitoring is done with key performance indicators (KPIs) by programme or project managers. KPIs measure progress of a policy or project against the objectives and targets. Indicators can be grouped into three main types:
Mid-term and ex-post evaluations can help identify the ways in which a policy can be improved or developed to increase its impact. These evaluations are typically undertaken by external experts to ensure independence and objectivity. Such evaluations should be built into the policy design process from the outset. Furthermore, the lessons learned from evaluations should be available and accessible to other policy makers in order to share good practice.
Effective policy evaluation should include several features. It should be systematic and analytical, focused on actual effects and provide judgement of the level of success. Moreover, they should aim to improve decision making, help resource allocation, enhance accountability, and bring about organisational learning. Six principles for sound evaluation practices can be highlighted:
The process of policy evaluation may vary, depending on the circumstances. Some government departments and organisations have a dedicated unit with responsibility for evaluating policies, while others may commission evaluations in-house or from outside organisations, as required. Although best practice principles exist, the context of the policy and the target audience requires particular attention against these broader best practice guidelines.
Policy makers can use various tools to monitor and measure the extent to which administrative regulation and procedures impact on business creation. To start with, the World Bank Group’s Doing Business reports provide estimates of the number of legal procedures for starting a business, and time and cost involved, across countries. These indicators can be used by decision makers to assess their particular context in comparison with other countries.1
Regular monitoring of social security schemes should be undertaken to ensure that entrepreneurs are not treated less favourably by social protection schemes than employees. An appropriate mechanism for monitoring should involve consultations with representative organisations of employers, workers, businesses, representatives from under-represented and disadvantaged groups of entrepreneurs and other relevant stakeholders, including ministries and departments responsible for designing and implementing social security schemes. The monitoring should comprise a number of elements, including:
When monitoring and evaluating the impact of the regulatory environment on women’s entrepreneurship, it is important for policy makers to:
1The World Bank Group’s ‘Doing Business: Measuring Business Regulations’ website presents measures of legal procedures for starting a business and time and costs involved in 190 countries. Available at: www.doingbusiness.org/data/exploreeconomies/united-kingdom/starting-a-business.