The impact of the Covid crisis on women's entrepreneurship

The health crisis and the successive lockdowns have slowed-down global economic activity. In France, according to the INSEE (FR), the first lockdown implemented between March 17th and May 11th, 2020 led to a 19% decline in economic activity in the second quarter of 2020 (compared to the second quarter of the previous year). The lockdowns had differential impacts for men and women. For example, the INSEE (FR) indicates that mothers gave up work twice as often as fathers to look after their children during the first lockdown. Did the lockdowns and the health crisis also have a greater impact on women's entrepreneurial activity? What are the differences with the 2008 economic crisis?

I - LESSONS FROM THE 2008 CRISIS: WOMEN'S BUSINESSES WERE NO MORE FRAGILE THAN THOSE CREATED BY MEN

The OECD, which monitored a cohort of start-ups between 2009 and 2012, showed that women's businesses survived the shock of the 2008 crisis as well as those created by men, particularly in Italy, Finland, Austria and Slovakia. According to the OECD (FR), between 2007 and 2009, the number of new businesses started by male entrepreneurs decreased even more than that of women entrepreneurs.

One reason for the resilience of women's businesses may be that women entrepreneurs are in sectors that are usually more resilient to economic shocks (such as health, education and other personal services), while men entrepreneurs are in sectors that are more fragile to shocks (such as manufacturing).

What about the health crisis of 2020?

II - IMPACT OF THE HEALTH CRISIS ON FEMALE ENTREPRENEURSHIP IN FRANCE

1) Overview of French entrepreneurship in 2020

a) Despite the health crisis, the year 2020 saw a record number of business start-ups in France

According to the INSEE (FR), in 2020, 848,200 businesses were created (in the market economy excluding the agricultural sector). This is a new record (32,900 more new businesses were created compared to the previous year, i.e. 4% more).

This astonishing record of business creation in 2020 can be explained in particular by a "catching up" that took place in the summer of 2020 and a "sustained" level of creation until the end of the year (driven by the explosion in home delivery services during the two lockdowns of 2020). Beyond the sectoral explanations, the entrepreneurial dynamic of 2020 can also be explained by the fact that entrepreneurs, once the first lockdown had passed, resumed their entrepreneurial projects which had been interrupted on 17 March 2020 and by the fact that individuals preferred to create their own businesses in the face of the weak hiring prospects existing on the labour market in 2020.

b) This upward trend is driven by micro-entrepreneurs

According to the INSEE (FR), business creations under the micro-entrepreneur regime increased by 9% in 2020 (45,900 creations). In contrast, the number of traditional businesses created has decreased. The number of traditional sole proprietorship creations fell by 13% in 2020 and the number of companies created (218,100) did not increase for the first time since 2013.

2) The sectors with the highest levels of female entrepreneurship are those where there were the fewest business creations in 2020 and the financial situation of self-employed women is more precarious than that of self-employed men

a) The sectors with the highest levels of female entrepreneurship are those with the lowest number of new businesses in 2020

In 2020, the sector with the most business creations was transport and storage. However, this is a sector in which the proportion of male entrepreneurs is particularly high (92%). 18,000 businesses were created in this sector this year (an increase of 22%). The surge in home delivery during the lockdowns helps to explain the very strong increase in business creation in this sector.

Conversely, in 2020, business creations decreased particularly in education (-8%) and other service sectors (“autres services aux ménages”) (-1%). Yet the share of women starting their own business is high in these sectors : 52% for education and 71% for other services (“autres services aux ménages”).

b) The financial situation of self-employed women is more precarious than that of self-employed men

According to the "Living Conditions and Aspirations" (FR) survey conducted by CRÉDOC in September 2020, 57% of self-employed women declare that the Covid crisis has led to a drop in income within their household, compared to 50% of men and 30% of French people as a whole. Furthermore, 33% of self-employed women are in the low income category, compared to 26% of self-employed men. 

The financial situation of self-employed women is more precarious than that of self-employed men, and the sectors where there is the most female entrepreneurship are those for which there were the fewest business creations in 2020. How can we explain that the Covid crisis has had a stronger impact on women entrepreneurs?

III - WOMEN ENTREPRENEURS RUN SMALLER BUSINESSES AND HAVE FACED INCREASED DOMESTIC WORK DURING THE LOCKDOWNS

1. Women entrepreneurs often run smaller businesses, making them more vulnerable to economic shocks

Businesses founded by women tend to be smaller than those founded by men. How many employees work in businesses founded by women on the one hand and men on the other? In 2018, in the European Union, self-employed men had more employees than self-employed women: 1 in 3 self-employed men had at least one other employee, compared to less than 1 in 4 self-employed women. Thus, female entrepreneurs often run smaller businesses than male entrepreneurs.

2. During the lockdowns, women faced an increase in domestic tasks

According to the OECD, women have faced an increase in domestic and childcare tasks during the lockdowns. In OECD countries, women spent about two hours more per day in unpaid work than men. This gap was particularly high in Japan and Korea (2.5 hours) and Turkey (4 hours per day). However, countries such as Denmark, Norway and Sweden also had large gaps (1 hour per day).

A survey launched in May 2020 by the Women In Business Chair found that in France, during the first lockdown, women were less satisfied than men with the distribution of household tasks and reported doing more childcare and household chores.

In view of these findings, has any specific support been provided for women?

IV - ALTHOUGH MASSIVE AID HAS BEEN DEPLOYED TO SUPPORT ENTREPRENEURS, WOMEN HAVE NOT BENEFITED FROM SPECIFIC MEASURES

In France and around the world, significant aid was provided to support entrepreneurs during the Covid crisis. However, women entrepreneurs have generally not been targeted by specific measures.

1. Support for entrepreneurs in OECD countries

OECD countries provided various types of financial support. In Portugal, Israel and Belgium, the self-employed benefited from reductions, deferrals or cancellations of their social security contributions. Canada, Denmark, France, Germany, Ireland, Israel, Italy, Korea, the Netherlands, Spain, South Africa and the UK have focused on access to unemployment benefits and emergency capital. In Italy, Spain, South Africa, Chile, Peru and Argentina, SMEs and the self-employed were able to benefit from a tax moratorium.

2. Support for entrepreneurs in France

Several measures were taken to support French entrepreneurs during the crisis. A solidarity fund has been set up by the State and the regions for companies, associations, micro-entrepreneurs, farmers and the self-employed. The amount allocated is equal to the loss of turnover recorded for losses of up to 1,500 €.

Bpifrance has also implemented measures funded by the State, such as the extension of credit guarantees to accompany the restructuring of loans made by banks (without management fees) and the introduction of a new loan scheme guaranteed by the State (PGE).

Measures have also been put in place by Agefiph to support entrepreneurs with disabilities (financial aid for periods of work stoppage targeting entrepreneurs supported by Agefiph; crisis exit support for business creators supported by Agefiph over the past three years). However, no measures have been specifically targeting women.

Thus, did the lockdowns and the health crisis have a greater impact on female entrepreneurship than on male entrepreneurship ? Despite the health crisis, the year 2020 saw a record number of business creations in France, mainly driven by micro-entrepreneurs. However, the sectors with the highest levels of female entrepreneurship are those where there were the fewest business creations in 2020 and the financial situation of self-employed women has been more precarious than that of self-employed men. One reason for the differential impact on women is that women entrepreneurs run smaller businesses and have taken on more domestic tasks during the lockdowns. While governments provided significant financial support to entrepreneurs during the crisis, women entrepreneurs did not benefit from specific measures.

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