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Sweden Has Come Up With An Unusual Way To Encourage Entrepreneurship


If you dream about opening your own business, you might want to consider a move to Sweden. Their employers must grant a leave of absence up to six months to an employee who wants to start a company. If that company fails, the employee goes back to their old job. The safety net is one reason Sweden has become a leading startup hub. Maggie (ph) Savage reports from Stockholm.

MADDY SAVAGE, BYLINE: The Swedish capital is living up to its reputation as one of the snowiest cities in Europe right now. And many entrepreneurs are jetting off to work remotely wherever they can find sunshine.

JESSICA PETTERSON: My name is Jessica Petterson. I usually live in Stockholm. Right now, I'm here in Sri Lanka, working remote for a month.

SAVAGE: She has a permanent job at a children's charity in Sweden but has long-craved the chance to work more flexibly. So last year, she started a business offering virtual assistance to nonprofit organizations, which she can manage from anywhere in the world. Her employer agreed to hold her job open while she got started.

PETTERSON: I'm actually not sure if I would have dared to try to start this business if it wasn't for this opportunity to take this leave. It's quite a risk to start all over, no income whatsoever at the beginning.

SAVAGE: Her story isn't unusual in Sweden, where anyone with a permanent position has a legal right to take unpaid leave for six months to launch a company, providing it doesn't compete with their usual employer.


SAVAGE: To find out more, I braved the snow and made a visit to Samuel Engblom at the Swedish Confederation for Professional Employees, which represents white-collar workers. Hi there.

SAMUEL ENGBLOM: Hello, and welcome to our offices. The idea is to promote mobility in the labor market. We want people to change jobs, and we also want people to start companies. I mean, you can promote entrepreneurship by making it more profitable, but you can also promote entrepreneurship by making it less insecure.

SAVAGE: Global observers argue that one of the benefits of Sweden's unpaid leave system is that it recognizes it's more than just financial risk that puts off entrepreneurs. Career risk is also a key factor in whether or not people take the plunge in launching a business.

TING XU: Regardless what you do after you fail as entrepreneur, when you go back to the labor market, you might have a hard time finding a job as good as the old one.

SAVAGE: That's Ting Xu, an assistant professor at the University of Virginia whose work focuses on entrepreneurial finance.

XU: Many countries - they spend a lot of money - subsidize financing to entrepreneurs. However, reduce in risk can be just as important as providing finance. But what we cannot quantify is what's the cost of providing these leaves, right? I think that's the harder part.

SAVAGE: And many critics argue it would be just too expensive having to bring in temporary workers and losing staff they value who go off to start their own businesses. Even so, there are signs that Swedish employers are starting to export the concept.

MAX FRIBERG: My name is Max Friberg, today running a business software company called Inex One.

SAVAGE: He took unpaid leave from a consulting firm to start his company, which is based at this buzzing coworking space in the Swedish capital. Now, he's considering offering staff in the U.S. the same opportunity when the firm opens its next office in New York.

FRIBERG: We see that as the competitive advantage - being able to offer some of these European-style benefits. And we've seen some companies, and most recently Spotify from Sweden, now doing that very successfully with flexible parental leave and holidays.

SAVAGE: It's too early to tell if unpaid leave policies will end up playing a big role in the global race for tech talent. But at a time when much of the world is shifting towards temporary contracts and the gig economy, the Swedish approach certainly stands out. For NPR News, I'm Maddy Savage in Stockholm. Transcript provided by NPR, Copyright NPR.

Maddy Savage