We should be ashamed of youth unemployment in the UK

Mostly we tend to think of entrepreneurs as a good thing. They drive growth, innovate, employ people and move us all forward. But is a forced entrepreneur as good as a voluntary entrepreneur?

A press release just out from peopleperhour.com is pleased to announce that a huge number of young people are setting up their own businesses and so have signed up to the site (freelancers use it to sell their time by the hour). 89% more are signed up this year than last year. Good news indeed, you might think. You'd be wrong. Why?

Two reasons. First because "most" of the new freelancers "admit that the tough jobs market" has forced them into it. In this week's Moneyweek magazine I interview Luke Johnson. (If you're not already a subscriber, subscribe to MoneyWeek magazine.)

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We run through the characteristics common to successful entrepreneurs. They include being optimistic, persistent, maverick and the like. They don't usually include being desperate (although if you have the other characteristics it might help).

The fact that you can't get a job and so are forced to hawk what skills you do have around on the internet doesn't make you an innovative wealth creator. More often than not I would guess it makes you one of the semi-hidden unemployed.

The second problem is this: peopleperhour describes the people who sign up to its site as "freelance consultants". And if there is anything we really don't need too many more of it is these.

Run your eye down the list of services on offer and you will see that they are all actual services accounting and legal stuff; web design stuff; fundraising and sales stuff; and an awful lot of marketing. That's all fine. But it isn't enough. A dependence on the circularity that is the services sector is part of what got us into the trouble we are in now.

We should of course be pleased that our young are having a go at making a living but, much more that, we should be ashamed of the fact that, in part thanks to their lousy educations (one of the miserable unemployed youths highlighted in the Times today had a degree in music and media management for god's sake) and to our employment-inhibiting regulatory environment, this is how they have to do it.

Johnson wrote a piece in the FT yesterday calling for a bonfire of red tape and a tax holiday for fast-growing start ups. If we want get our youth out of the dead end that is freelance consultancy and into proper jobs we are going have to do that and more.

Why just start ups? Maybe we owe it to the youth we have so let down with our idiotic credit bubble and bust; our failed education policies; and our woefully ill-balanced economy to introduce some kind of special treatment for all fast-growing employers whenever they were founded.

That might, as Johnson says, not seem particularly fair to the plodders in the corporate world. But having youth unemployment at 21% isn't exactly fair either.