sou · GNB349 · 2000-01-01 00:00:00 — The Commission on "Special obstacles for persons with a foreign background when starting and developing their own businesses" (In 1998:1) was appointed after a Government decision on 22 January 1998. The Commission adopted the name "Entrepreneurship for persons with a foreign background". The terms of reference for the Commission, enclosed as 1, state the following. In the 1998 Budget , the Government gave high priority to measures to facilitate the creation of new jobs. During 1996, around 28 000 completely new businesses were started. Persons with a foreign background were responsible for a fifth of these new . Given the difficulties in entering the labour market, it can be assumed that many people with a foreign background may wish to start their own business. Immigrants encounter numerous problems when starting new businesses. One such problem may be obtaining loans. There are cases of entrepreneurs with an immigrant background being refused a small loan despite being able to provide considerable collateral. According to its terms of reference, the Commission shall study the procurement of capital by immigrants and their opportunities for obtaining loans, and shed light in this context on the lenders' credit processing procedures and provision of competence. No special bank guarantees or assistance should be introduced. The Commission shall also study whether lack of knowledge of Swedish and cultural barriers are a barrier in connection with obtaining capital when starting up and developing a business. Furthermore, the Commission shall investigate whether it is possible to identify differences between the entrepreneurs who have experienced obstacles and those businesses that have been successful. Implementation of the agreement To shed light on problems and opportunities, the Commission has had contacts with a number of entrepreneurs with a foreign background and with representatives for trade organisations. The Commission has visited the Entrepreneurs' (IFS) premises in . A seminar with researchers etc. has been arranged. A number of interviews have been carried out with representatives of businesses to attempt to clarify differences between entrepreneurs who have experienced obstacles and difficulties in their operations and those who have overcome these barriers. Obtaining capital and loans are of key importance when starting up and running businesses. The Commission has had a number of contacts with representatives of banks. The Commission has also had meetings with the executive ' Association, to which the chief executive officers of the four largest banks belong, as well as representatives of the banks' trade union organisations. Issues relating to financing and other financial services and concerning contacts with authorities, etc. have been examined by two expert working groups as part of the Commission's work. In accordance with its terms of reference, the Commission has taken into consideration the work of the Banking Legislation Commission and the observations and documentation made by the Ombudsman against Ethnic Discrimination (DO). The expert in the Commission . has produced "Invandrar- företagande - några grundläggande fakta" [Some basic facts about immigrant business activity, not translated] (2). The expert has produced "Från invandrarföretagsamhet till generell tillväxtdynamik (From immigrant business activity to general dynamic growth, not translated) (3). Furthermore, some prominent researchers, among others, have been given the opportunity to make contributions that have enriched the Commission's work. These contributions have been enclosed as 7 of the report. has had 10 minuted meetings, one of which took the form of a two-day residential meeting. The considerations and proposals of the Developments are moving towards an increasingly internationalised and restructured world. This leads to changes in population structures and in economic conditions. These changes entail both problems and opportunities. The countries that can lead changes towards for the country's population and make use of the new visions and economic climate will be winners. This applies both to tangible and intangible values. There is a great need for increased employment. There are substantial benefits for society when a person goes from unemployment into work or to running their own business and earning their own livelihood. One main task for the Commission has been to make recommendations that can be implemented to create work by people running their own businesses, i.e. putting human and financial resources at work for growth. The focus is then on the economic perspective. The Commission's other main task is of a general human and ethical nature. Persons with a foreign background do not at present have the same opportunities as the majority population to start and run businesses. This sometimes has a purely factual background. Immigrants do not as a rule have sufficient knowledge about , the existing systems of rules, etc. to be able to run a business on the same conditions as the majority population. The Commission takes the view that an immigrant should be given the opportunity to overcome this disadvantage of insufficient knowledge. However, as well as this disadvantage, immigrants encounter attitudes and even outright discrimination or other circumstances that impede their integration into Swedish society and commercial life. These barriers to entry may be considerable. These barriers or obstacles consist of rules, norms or methods of work that have been designed according to the conditions of the majority population and which entail disadvantages for people who have not been in for such a long time. Some results have already been achieved at the initiative of the Commission in the course of its work in order to accelerate development in the intended direction of the Commission's work. The Financial Supervisory Authority has worked out new so-called general advice, in collaboration with the Commission, "General advice and guidelines of the Financial Supervisory Authority when dealing with ethical issues at institutions subject to scrutiny by the Authority. This general advice states that the guidelines worked out by the institution on the basis of this general advice shall be characterised, among other things, by good business practice and consistent action, fair treatment of the customer in the event of a conflict of interest and equal treatment with respect, for instance, to ethnic background. The executive ' Association - of which the chief executive officers of the four largest banks are members - has expressed the aim, after consultation with the Commission, for increased and improved contacts with immigrants to make possible increased entrepreneurship among these persons. The Commission takes the view that such standpoints have a considerable long-term impact, in particular as commercial reasons favour such a development. In order to improve service to persons with a foreign background, some banks have already started work to improve training by including issues such as "Problems in providing loans to immigrants" in their training. The bank employees' largest trade union organisation, the Union of Financial Sector Employees, has also expressed its support for increased training and other steps to increase knowledge of persons with a foreign background in order to improve the services of the financial institution. The Commission notes with satisfaction these statements and steps taken by the banks and the bank employees. Immigrant entrepreneurship - background and some statistics Chapter 3 contains a historical perspective on business activities by immigrants in . The chapter also contains some statistical information on present conditions. Immigrant entrepreneurs have throughout history, in and elsewhere, been intimately connected with the internationalisation of trade and the economy. Attitudes to immigrant entrepreneurship, its conditions, character and consequences, have varied from time to time. Sometimes, they have appeared as the pioneers of developing capitalism or been regarded as saviours at times of economic crisis and stagnation. At other times, immigrant entrepreneurship and immigrant businesses have been obstructed and viewed as a threat against domestic culture, employment and entrepreneurs. For better or worse, they have served to bring with them and clear the way for new ideas, new products, forms of production and distribution, and power structures. With the reservation that divisions into periods is always somewhat arbitrary, we can speak in terms of three periods in the history of Swedish immigrant entrepreneurship. The first extends from the high Middle Ages until the first decade of the nineteenth century. The second extends from the beginning of the nineteenth century until the second world war. The third, finally includes the post-war period. From the end of the second world war until the beginning of the 1970s, the country was considered as to need labour and not competent immigrant entrepreneurs with capital. Immigrants looking for employment came from the Nordic area, Western Europe, and . Refugees came primarily from the communist countries in Eastern Europe controlled by the Soviet Union. After the mid-1970s, economic growth slackened and the need for labour decreased. At the same time, refugee immigration became increasingly important. Refugees now came instead from West , Latin and . In the light of this, it might be expected that immigrant entrepreneurs and immigrant enterprises were an extremely marginal phenomenon before the mid-1980s. This picture is not entirely accurate, however. Unlike small-sized businesses in general, the number of entrepreneurs among immigrants increased. It was not before the mid-1980s that post-war Swedes seriously noticed immigrant entrepreneurs and their businesses. How was this possible? One explanation might be that immigration had a different character and financial conditions prior to the 1980s. A good economic situation and large demand for labour up to the first half of the 1970s contributed to concealing immigrant enterprise. The fact that small business generally declined in importance due to the ongoing concentration of the business sector may have contributed. As unemployment increased in the 1980s and 1990s and immigration from increased, immigrants, foreigners, and their businesses emerged from the shadows. They became visible. They became "them". What seemed new to many Swedes in fact had long roots in Swedish history. What was new was the large number of immigrant entrepreneurs. There have never been so many immigrant entrepreneurs in as in the late 1980s and 1990s. Increase in immigrant entrepreneurship The number of immigrant businesses, i.e. businesses run by person with a foreign background, has increased notably during recent years in . Today, there are around 65 000 immigrant enterprises, or around 12 per cent of the stock of small businesses1. This means that immigrants are still under-represented in relation to their proportion of the population. However, immigrants are well represented in the new business category. Persons of foreign origin today make up a fifth of all new entrepreneurs and are thereby important potential sources for entrepreneurship in the country. Many immigrants come from countries where running a business is more common than in . The proportion of entrepreneurs under 34 years of age among all immigrant enterprises is over 20 per cent. The corresponding proportion among other entrepreneurs is around 12 per cent. and more immigrants are starting their own businesses and in many cases succeeding in establishing their activities thanks to considerable assistance from family, relatives and friends, as well as long working hours and low income requirements. Moreover, they serve as examples for other immigrants and their children. Grants to start businesses are paid at an amount equivalent to the payment a person is entitled to from the unemployment fund. Unemployment benefit varies from to 580 per day. During 1998 (up to and including October), grants to start businesses for members of unemployment funds averaged per day and per day for non-members. Immigrants – and others, mainly young people, who are new entrants on the labour market, are not entitled to unemployment benefit. Those who do not meet the conditions for unemployment benefit receive the minimum amount per day. The lowest grant to start your own business is probably often lower than social welfare grant. The present benefit rules for start your own business grants are very disadvantageous 1 Companies with less than 200 employees. to immigrants and others who have not entered the Swedish labour market. Immigrant enterprises are to be found primarily in the service sectors where they employ the greater part () of the number of employees in immigrant companies. The greatest and dominant service sector is trade, hotels and restaurants that provide employment for two-fifth of all employees in immigrant businesses. The proportion of entrepreneurs among those employed is much higher among non-European immigrants () than among the majority population (). The regional variations in immigrant enterprise seem to a great extent to differ between town and country. Almost two-thirds of all immigrant businesses are located in the big city regions. County is in a class of its own with almost two-fifth of all immigrant businesses, followed by and County and County with 13 per cent each. The proportion of companies run in the form of a sole proprietorship makes up half of all immigrant companies. The proportion of women among immigrant entrepreneurs amounts to 29 per cent. Most immigrant businesses that are started remain small and geographically restricted. Despite this, their financial effect can add up to an important benefit to society in terms of turnover and employment. Furthermore, they create a vitalising local competition and their contribution to making the economy dynamic can be very important. If we examine their effect on employment alone, their importance in the economy appears as very great. Today, immigrant businesses account for around 14 per cent of all employees in small businesses. If we add on their other direct and indirect contributions to economic development, their importance will be considerably greater. Making international comparisons on public assistance provided to immigrant business is hazardous. It is difficult to carry out such a comparison since there are many different forms of support at different levels and these also change continually. However, it seems clear that most European countries try to stimulate immigrants and ethnic minorities to start their own businesses and thereby reduce the often very high unemployment among the immigrants and ethnic minorities. Assistance covers a broad range of areas to make it easier for these groups by, for instance, by increasing entrepreneurs' competence, reducing bureaucracy and rules and improving the financial conditions. Targeted assistance only available for immigrant groups occurs to a smaller extent in western European countries than in and the , however. Some issues of principle In the light of the statements made in the introduction, the Commission develops further the basis for the positions adopted in chapter 4. There are high entry barriers to Swedish society. Within the private sector, there are norms and working methods that are applied on the basis of the conditions of business life for the majority population and its business cultures. This means that persons with a foreign background and their businesses often end up in a less favourable position. The task of the Commission is to create a basis for the prerequisites to changes to provide equal opportunities for all inhabitants of the country. According to the Commission, society should design the system of rules for entrepreneurship so that persons with initiative and business ideas are able to earn their livelihood by running businesses. Unemployment must be lower. A good business climate provides good opportunities for profitable investments. In this way, opportunities are created to provide employment for others as well. The frameworks within which entrepreneurs with a foreign background are to work shall be the same as for entrepreneurs in general. However, the Commission considers that certain special initiatives through training and advice, etc. are required to equip people with a foreign background with the same opportunities as the majority population to start and run businesses. Special measures are required and, above all, a general growth policy. Furthermore, the Commission does not propose any general exemptions or benefits for persons with a foreign background once the business has been set up. At some points, which are of particular importance for entrepreneurs with a foreign background, general measures are proposed to improve the conditions for entrepreneurship. to differences in traditions and ways of thought in different countries, an immigrant often has considerable barriers to cross before he or she finds a good in . This also applies to starting and operating a company. An important tasks for the Commission is to investigate the effect that procedures for, among other things, the provision of loans and renting of premises have on the opportunities for persons with a foreign background to run businesses. As the banks together have a dominant position, the Commission considers that they have a collective responsibility for the deposit and loan system for private persons and businesses being able to operate in reasonable conditions. Accordingly, the banks have a social responsibility at the same time as they are businesses operating on a commercial basis. There is a conflict between broad, general action and the requirement for profitability. This conflict - or rather balance to be struck - must be kept continually under review by the central government authorities. The Commission establishes - in addition to what has been said above - the following theses to be borne in mind for bringing about increased entrepreneurship among persons with a foreign background. 1.The basis for achieving entrepreneurship for persons with a foreign background is partly ethical and partly financial. 2.The general financial policy is decisive also for immigrant entrepreneurship. Measures to stimulate immigrant entrepreneurship cannot be designed independently of this. 3.Interest in starting and running a business must be utilised as soon as possible after arrival in . The public initiatives should be focused on work or running their own businesses. 4.Persons who are not born here are in an inferior position as regards knowledge in starting and operating businesses. They shall be given the opportunity to overcome this disadvantage at the same time as these persons must adapt and accept the rules and conditions for entrepreneurship in this country. 5.Inputs from society may be required up, sometimes up to and including the company's starting of operations. Entrepreneurs with a foreign background shall not be given special treatment subsequently, but have the same rights and obligations as other entrepreneurs. 6.The difficulties that confront immigrant entrepreneurs consist more of working methods and norms that have been established in business life according to the conditions of the majority population than in directly discriminating rules. 7.The opportunity to have a matter reviewed by a neutral body is important for a contractual party which is in a disadvantageous position, which is sometimes the case for entrepreneurs with a foreign background. 8.It is especially important that public bodies and businesses in markets dominated by large companies adapt their methods of work so that the various population groups in the country are treated equally. 9.Financing issues are a decisive factor in setting up new businesses and immigrant enterprises are a group with special problems. Integration and labour market programmes shall - in addition to the goal of providing employment - also be focused on making use of interest and competence to run one's own business. However, running a business must not become a means of labour market policy to conceal unemployment. Does ethnic discrimination exist? An important task for the Commission has been to answer whether discrimination and special treatment occur and to investigate the circumstances around such conditions (chapter 5). The starting point of the Commission is that an entrepreneur must not be treated less favourably than others with another ethnic affiliation who are in a similar situation. This also means a right to be treated individually, according to individual conditions and not according to more or less preconceived opinions or even prejudices about what is characteristic for the ethnic group an individual belongs to or is assumed to belong to. Discrimination is often innate, structural, since it arises from procedures that per se appear fully normal and well conceived. Prospective and already established entrepreneurs with a foreign background encounter this form of discrimination to a considerable extent. This definition of the concept discrimination can also be expressed as persons or groups in different ways finding themselves in a less favourable position than the majority population. It is also the most common form of problems that entrepreneurs with a foreign background encounter and which the Commission has mainly focused on. According to the Commission, it is thus systemic faults and not direct open discrimination that still remains to change before immigrants have the same opportunities to start and run businesses. A large portion of the country's population has an immigrant background. This has led to changes in business life to incorporate these customer groups in business strategy. These changes mean increased income and increased costs. In certain areas, it is the changed approach - and a different attitude to contacts with new customer groups - which is of special importance. It is also especially important that public bodies and businesses in markets where large companies predominate adapt their methods of work so that the country's various population groups receive equal treatment. Achieving between persons with foreign background and the majority population should be a continually process. The state's various measures are an important component of this process. considers that these issues are of such key importance that they should always be taken into consideration in the actions of central government bodies. According to the Commission, it is important that society in a long- tern work of change notices the effects that different measures have for equality between persons of different ethnic affiliation. The Commission recommends that that it should be noted in the agency ordinance and in terms of reference for committees of inquiry that agencies should pay attention to this in their ongoing activities and committees in their work. To remove lack of clarity on whether the penal provision in Chapter 16, section 9 of the Penal Code on unlawful discrimination also refers to discrimination directed against a legal entity but which can be referred to ethnic affiliation, the Commission recommends that the provision be reviewed. The Commission supports the proposal made in the report Review of the Act concerning Ethnic Discrimination (SOU 1997:174) to the effect, among other things, that central government agencies be made responsible to the greatest possible extent for including so-called anti- discrimination in their agreements with suppliers.