Entrepreneurship Policies through a Gender Lens

Italy

By Sara Poggesi, University of Rome Tor Vergata

Michela Mari, University of Rome Tor Vergata

Luisa De Vita, Sapienza University of Rome

Background

In Italy, women’s employment situation and their role within the family are key determinants of their level of entrepreneurial engagement. In 2019, women’s employment rate in Italy (population 20-64 years) was 53.8%, compared to men’s employment rate of 73.4% (Eurostat, 2019). These data are particularly alarming because they show that Italy has one of the lowest employment rates for women in the European Union, where the average rate for women stands at 68.7%. Similarly, Italy also faces one of the highest gender employment gaps between women and men; 19.6 percentage points (p.p.) versus 11.4 p.p. (Eurostat, 2019). As an added disadvantage, when Italian women are employed, they tend to be over-represented in non-standard and precarious work where they face greater difficulties than men in terms of career progress (World Economic Forum, 2020). This can be explained, in part, by structural and cultural barriers that limit women’s participation in the labour market as well as their career opportunities (e.g. Bettio and Plantenga, 2004).

Italian women also face a gendered division of labour within the family. Due to the persistence of stereotypical gender roles (e.g. León and Migliavacca, 2013; Saraceno, 2016) that categorise men as “breadwinners” and women as “caregivers”, Italy has one of the worst gender imbalances in terms of unpaid care (OECD Stat, 2017). Italian women spend, on average, 5 hours and 10 minutes in unpaid work, against 2 hours and 18 minutes spent by men. This represents the largest gap among EU countries, with the sole exception of Portugal. The discrepancy is exacerbated due to the effects of the COVID-19 pandemic that has suddenly increased workloads, especially for women. Recent surveys have shown that the 68% of Italian working women with a partner spent more time on housework during the lockdown period than before, and that this trend is anticipated to continue post-lockdown (InGenere, 2020).

The substantial difficulties in the Italian labour market for women help to explain why so many Italian women choose an entrepreneurial path. Italian data on self-employed women (with or without employees) are significantly higher than the OECD average (OECD, 2016), and women-owned firms constitute 21.9% of the country’s overall population of firms (Unioncamere, 2019). According to the OECD (2016), Italian women tend to be “pushed” by necessity motivations (e.g. in order to better manage work and family life, Poggesi et al., 2017) rather than “pulled” (e.g. from personal ambition, need for achievement) into entrepreneurship. The fact that necessity is a major driving force for women-owned firms in Italy results in a concentration of firms in low value-added and low innovation-oriented sectors, such as retail, healthcare and education. Nevertheless, similar to other developed countries, Italy has witnessed an increasing number of women launching, operating and funding start-ups and small and medium-sized enterprises (SMEs) in traditional men dominated sectors, such as scientific, professional and technical activities (Unioncamere, 2019). In these categories, the percentage of women-led start-ups in Italy is 12% compared to 9% in France and 11% in Germany (Italian Equal Opportunities Department, 2020).

As is the case in most nations, women-led start-ups are under-represented in high tech. In the case of Italy, this paucity of innovative high tech women-led start-ups can be explained by the educational path pursued by most women. According to Censis data (2019), women graduates in Italy represent 56% of the total, and 59.3% of students enrolled in doctoral programmes, specialisation courses, or masters’ degrees. In terms of degree focus, however, women are more likely to have a background in the humanities as opposed to focusing on economics, finance, or STEM fields during their studies (Unesco, 2017). Gender differences in employment opportunities combined with homecare responsibilities and different educational paths help explain why pursuing an entrepreneurial career may represent a feasible alternative for Italian women to achieve both personal and economic goals. This, in turn, calls for a growing awareness and responsibility on the part of Italian policy makers to capitalise on women’s skills, foster their entrepreneurial intentions, and sustain women-led firms. Consistent with this, financing is one of the key issues that policy makers need to consider, since it has a major role in determining the decision to start an entrepreneurial venture, as well as the decision to make it grow over time.

Policy issue: Financing women-owned firms

Although access to finance is globally recognised as a crucial element for launching a business and for sustaining its growth, data on Italian women entrepreneurs’ access to finance are alarming. Only 4% of Italian women indicate that access to capital is not a barrier to starting a business compared to 27% of the OECD area average (OECD, 2016). These data contrast with Italian legislators’ efforts, over the course of the last 30 years, to support women’s entrepreneurship through measures designed to increase access to financial capital while also reducing its cost.

The first document issued under the Italian Ministry for Industry, Commerce and Craft is Law 215/1992 “Positive actions for female entrepreneurship”. This policy measure provides ad hoc capital grants aimed at encouraging the creation and development of women-led firms, the acquisition of pre-existing businesses, the implementation of innovative projects and the acquisition of services, as well as the promotion of entrepreneurial training and the facilitation of access to credit for women-owned firms. Italy’s policy focus on women-led firms continued in subsequent years. In 1996, the Italian Ministry of Economic Development launched a Guarantee Fund for supporting access to credit for SMEs. The fund, launched in 2000, provides a public guarantee covering up to 80% of the loan and up to EUR 2.5 million for financial operations. Within the Guarantee Fund, a special section devoted to women’s entrepreneurship was introduced in 2014. Accordingly, women-owned firms are exempted from paying the one-off fee to the Fund which, today, is between 0.125% and 1.0% of the amount financed, depending on characteristics such as the size of the firm, the region in which the firm is established and the type of project proposed. As a further measure to encourage women’s entrepreneurship, legislative provisions from 2015 pertaining to the self-employment of young people were extended to include women, with no age limits, with the aim of supporting new entrepreneurs through the creation of competitive micro and small businesses while also providing better access to credit. The benefits associated with these provisions are granted on the basis of an evaluation procedure up to a maximum of EUR 200 000.

In recent years, special attention has been devoted to innovative firms. In 2012 and again in 2015, legislation was enacted to stimulate entrepreneurship overall, particularly the development of innovative start-ups and innovative SMEs. As clearly stated, innovative start-ups can access the Guarantee Fund for SMEs for free. The share of the loan covered by the guarantee can be as high as 80%, up to a maximum of EUR 2.5 million, with no evaluation of the business plan and balance sheets and with no additional guarantees from the bank. Innovative SMEs are entitled to several benefits, with some differences compared to innovative start-ups. For example, innovative SMEs do not have automatic access to the public guarantee. Alternatively, the Fund was charged with developing an ad hoc credit assessment process on the basis of its own rating system, excluding those companies with the lowest rating from access to credit (Ministero dello Sviluppo Economico, 2019).

In 2014, Smart & Start Italy, the main financing programme dedicated to innovative start-ups at the national level, with a total budget of about EUR 260 million, was launched. The programme offers interest-free loans for a period of up to 10 years to innovative start-ups to cover up to 80% of investment plans and managing costs between EUR 100 000 and EUR 1.5 million. The loan coverage rate rises to 90% for those start-ups launched by women and/or under 35 years old. Moreover, if the innovative start-up is based in Southern Italy, 30% of the funding is issued as a non-repayable grant (Ministero dello Sviluppo Economico, 2019).

In addition to these national financial initiatives, a variety of local measures aimed at promoting women’s entrepreneurship in technology, innovation and scientific research have been developed. Examples include the Lazio Region “Innovazione: Sostantivo Femminile” (“Innovation: A feminine noun”) project, and the partnership between the European Investment Bank (EIB) and Unicredit Bank. The first, started in 2014 and linked to the Regional Operational Program for the Lazio Region and the European Regional Development Fund for the period of 2014-20, provides funding to support the creation and development of innovative ideas and projects, while also promoting the adoption and use of new technologies in women-led firms. The second, launched in 2019, is geared toward financing projects by innovative SMEs or SMEs supporting innovation that are managed or controlled by women, through loans granted by Unicredit Bank using funds provided by the EIB. Most recently, the legislators’ focus on financing has become even stronger in the wake of the COVID-19 pandemic. In line with other European countries, Italy is working to provide liquidity support for new and innovative firms through public guarantee programmes for loans provided by banks and by deferring tax payments (Ministero dello Sviluppo Economico, 2019).

What emerges from this analysis is Italian legislators’ focus on measures relating to financing, but a lack of attention to other support mechanisms that could help women overcome specific barriers to starting and growing a business. These include measures to strengthen women’s managerial skills, improve upon the low levels of financial education in the country (OECD, 2017), and effective measures to support work-life balance for women who are responsible for a greater share of family care (Carta, 2019).

Conclusions and recommendations

There is no doubt that attention must be paid to financing in order to foster the start-up stage as well as the development of both traditional and innovative firms. However, a “step forward” in supporting women entrepreneurs’ initiatives needs to be taken. Based on the Italian experience, the following recommendations are offered to policy makers.

Recommendations for Italy

• Strengthen public investment in care services for children, disabled and elderly people. Stimulate private care service offerings and provide ad hoc tax reduction mechanisms, thereby facilitating women’s entrepreneurship.

• Invest in women’s financial and STEM education in order to equip them with the skills required to launch innovative, growth-oriented firms.

• Support the entrepreneurial ecosystem in ways that will benefit women entrepreneurs and attract private investors interested in financing Italian women-led firms.

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