The number of people who have started their own businesses with the help of the government’s self-employment program will reach 120,000 by the end of this year, Federal Labor and Employment Service chief Yury Gertsy said Wednesday.
“Speaking about the self-employment support, there will be, according to preliminary estimates, some 120,000 formerly unemployed by the end of the year who have decided to start their own small business in Russia,” he said, Interfax reported.
Gertsy added that the program would boost employment, as the small businesses created will help generate jobs.
“One should take into account that the number mentioned is the entrepreneurs themselves. Each of them can hire at least two to three people more,” he said.
As part of the self-employment program, Moscow’s Labor and Employment Department held a contest last month awarding grants to prospective entrepreneurs to use as seed capital to start their own business.
The grants were up to 261,000 rubles ($8,900) and those eligible to take part in the contest included the disabled, single parents, graduates looking for their first job, discharged servicemen and people facing retirement.
A total of 2 million rubles were appropriated in the Moscow budget this year to subsidize small business startups, according to the department’s web site.
“There were 17 business plans presented for the contest, and eight of them won,” said Yevgeny Yurchenko, an inspector at the employment center of Moscow’s northeastern district.
In order to get the grant, candidates had to present a business plan for a sector deemed a priority for the city. A committee of independent experts considered each business plan and chose the most promising.
“I quit my last job six months ago and have been living on unemployment support of 850 rubles [per month] since then,” said Marina Kapitanovskaya, 53, one of the winners of the contest.
Kapitanovskaya, a psychologist by training, plans to start a business as a consultant of feng shui — a Chinese aesthetic used to decorate living spaces to increase the spaces’ positive energy. She plans to offer interior design advice as well as provide photographs for decorations.
“I’m going to provide photos I took myself, as well as those taken by some of my friends. I will probably hire employees within a year,” she said.
Muscovites are now warming to the idea of entrepreneurship — a concept that they formerly approached cautiously, if at all.
“People are ready to start up their own businesses now, and we don’t have to convince them that it’s beneficial like we did before,” said Tatyana Maduntseva, head of the employment center.
The new grants come in addition to other incentives that the city has used to boost entrepreneurship. Moscow employment centers currently reimburse an entrepreneur’s registration expenses for up to 25,000 rubles.
Nevertheless, there are still several obstacles standing in the way of would-be small business owners, the most imposing being a dearth of financing, said Natalya Chudakova, a board member at Opora, a small business lobby group.
“It’s much easier to start a business with government support than to develop it by one’s own funds,” Chudakova told The Moscow Times.
In January, the government unveiled a 43 billion ruble ($1.5 billion) employment stimulus package to fund region-specific job retraining programs, relocation assistance, small-business development and job creation.
The country’s jobless rate was 7.7 percent in October, up from the September figure of 7.6 percent, the State Statistics Service said last month.
Prime Minister Vladimir Putin said last month that the government would give 36 billion rubles in 2010 in order to boost employment.