|  10.08.2016

Disruption at Work or How Entrepreneurs Are Driving Job Growth

Entrepreneurs are the architects of their growth and show an ability to grasp opportunities that the whole economy can learn from.

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We live in exceptionally transformative times. Record numbers of jobs are disappearing – whether through automation, digitization or disintermediation – while more and more work is being done on a freelance or ‘gig’ basis. Against this backdrop, the global hiring plans of entrepreneurs, as reported in the fifth annual EY Global Job Creation Survey: Disruption at work, are more important than ever.


EY surveyed a record number – nearly 2,700 – of entrepreneurs in 12 major economies. Almost 6 in 10 (59%) respondents expect to increase their workforce in 2016, a leap of more than a quarter year-on-year. It is also twice the proportion of large companies planning to grow headcount, as reported in our recent Capital Confidence Barometer.


Entrepreneurship has long been the driving force behind economic growth and job creation. But with the exponential acceleration of technological advances, from artificial intelligence and robotics to big data and predictive analytics, are entrepreneurs still engines of job growth? ‘Creative destruction’ – as economist Joseph Schumpeter described it in the 1930s – has been driving employment change since the first steam-powered textile looms displaced craft workers in 18th-century Britain. Consider the effects of the first Industrial Revolution: at one point, more than 95% of jobs involved growing food; today fewer than 2% of people in the developed world work in agriculture.


Entrepreneurs are at the forefront of this change, as they disrupt incumbent market leaders and accelerate productivity, replacing sclerotic business models with agile innovations. Schumpeterian economists estimate that more than 50% of productivity growth derives from this creative destruction. Jobs disappear, and new jobs demanding different skill sets take their place. So far, so good.


But recent reports, such as the World Economic Forum’s 2016 The Future of Jobs, suggest that we are entering a very different jobs era. In this fourth industrial revolution, automation and disintermediation are destroying jobs at such an unprecedented pace that new jobs are no longer sufficient to replace those redundant roles.


In addition, radically different models of employment are enabling many enterprises to grow and scale with extraordinarily lean workforces. You only have to look at Uber to see the gig economy – in which people juggle a portfolio of jobs for multiple employers, in action – or Airbnb, to grasp the scale of the sharing economy, which allows property owners to maximize the value of their assets by renting them out.


Against this backdrop, the fifth annual EY Global Job Creation Survey into the views of entrepreneurs in 12 major economies throws a beam of optimism into the gathering gloom. In surveying the hiring intentions and recent hiring practices of a wide range of young and mature private companies, we find that entrepreneurs are indeed creating jobs. Of the 2,673 entrepreneurs surveyed, almost 6 in 10 (59%) say they intend to increase their workforces in the next 12 months, leading to an aggregate workforce increase of 9.3%, up from 47% and 7.8%, respectively, in 2015.


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