According to the Global Entrepreneurship Monitor (GEM), entrepreneurship in Luxembourg has suffered the consequences of the COVID-19 pandemic: entrepreneurial activities are in decline in Luxembourg in 2020, and some of the measurement indicators are at their lowest since 2013, the year in which Luxembourg joined the GEM project.
Despite the overall negative impact of the pandemic, some entrepreneurs report that the COVID-19 crisis has provided them with new business opportunities to pursue.
In light of the COVID-19 crisis, and its potentially severe effects on entrepreneurial activities, the GEM team has surveyed entrepreneurs to monitor their response to these challenging times. Data were collected during the months of June and July 2020 and thus reflect respondents’ view after the first wave of the pandemic.
In 2020, the share of respondents involved in setting up or running a new business dropped by 20% if compared with 2019. This decline has been especially strong for women. In fact, the gap between men and women has widened even more, with the rate of women engaging in entrepreneurial activities decreasing from 8.3 to 4.9%. This figure represents an all-time low since 2013.
The pandemic has triggered a drop in the number of individuals currently trying to setup a business, a delay in getting businesses operational accompanied by a worsened perception in terms of opportunities to start a business.
Around 40% of entrepreneurs expect their business to grow less than they would have expected in 2019. However, roughly 30% of entrepreneurs declare an increase in their growth expectations.
This reflects the fact that crises, while posing considerable challenges to new and established businesses, can also represent opportunities to those that leverage the new economic conditions to introduce innovative products and services.
The negative impact of the coronavirus potentially affects both current and future entrepreneurial dynamics. The share of people planning to establish a business in the future decreased from 18.4% in 2019 to 14.4% in 2020. This decline is largely due to COVID-19, with roughly 83% declaring that their decision is influenced by the pandemic.
The COVID-19 pandemic has not changed the perceptions concerning the barriers to entrepreneurship. Entrepreneurs reported increase difficulties in accessing potential customers, arguably due to the drop in aggregate demand over the first half of 2020. Except for this, 2020 saw a continued positive
trend suggesting an overall reduction in many of the perceived obstacles to entrepreneurship.
Entrepreneurs show an overall positive perception of the government response to the economic consequences of the pandemic. Around 79% at least somewhat agrees that the response was indeed satisfactory.
The Global Entrepreneurship Monitor (GEM) initiative was launched to study entrepreneurship in 1999. GEM collects and analyses data to:
- better understand entrepreneurship and its link with countries’ economic performances
- to assess the evidence on links between entrepreneurship and growth
- to provide information needed to support policy actions.
