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Cardiff Business School

Productivity is key to improving the well-being of future generations in Wales

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The persistently poor performance of Wales in terms of productivity is not simply a depressing economic statistic – it impacts the lives of everyone.

There is a tendency to think of productivity as an abstract economic measure with little relevance to people’s everyday lives.

Yet, productivity, in being a key driver of living standards, should matter to everyone in Wales. The Wales Productivity Forum explains why...

  • for employees
    • productivity growth means higher pay and a reduced need to work longer hours.
  • for businesses
    • increasing productivity is a means to reward existing employees, reduce the price of goods and services, invest in the future and generate new jobs.
  • for public services
    • increasing productivity means enhanced provision and reduced waiting lists and overcrowding.
  • for governments
    • higher productivity provides the additional resources to improve public services and achieve social goals, like protecting the environment and reducing inequality.
  • for local areas
    • productivity growth offers a mechanism to address regional inequalities.
  • for Wales
    • national productivity gains mean more effective use of resources, enhanced prosperity and improved quality of life.

“We know that issues such as the stagnation of real wages, waiting lists in the NHS and reduced living standards are at the forefront of the minds of people in Wales. What is less well understood is that productivity growth, by making more effective use of our resources, lies at the centre of addressing these challenges.”
Professor Melanie Jones Professor of Economics

The large and persistent productivity gap between Wales and the rest of the UK therefore requires urgent and collective attention. Productivity growth is key to achieving the aims of the Well-being of Future Generations Act in Wales.

Decision makers in Wales are already encouraged to consider the long-term impact of their choices, but productivity needs to be at the heart of this. In raising productivity, we can improve the quality of jobs and public services, and make resources available to achieve our social and environmental goals.

“We need to support and encourage both small and large businesses to better understand and measure productivity within their organisation, so that it becomes possible to track and target productivity growth.”
Rhian Elston (Wales Investment Director, Development Bank of Wales), Wales Productivity Forum Member.

How can this be achieved?

The Wales Productivity Forum makes five overarching recommendations to enhance productivity growth in Wales. We argue that improving productivity in Wales requires:

  • better understanding of what it means to be productive at the individual, organisational and national level.
  • a commitment from both the Welsh and UK Government to a stable and long-term strategy supporting sustainable productivity growth.
  • greater recognition of the importance of productivity growth within the public sector.
  • shared responsibility and coordinated action, with the measurement and targeting of productivity by businesses, public service providers and local and national policymakers.
  • ongoing and independent scrutiny, advice and evaluation of progress.

“The NHS faces a long-term challenge as our population grows older. Funding the growing demands on our system will not be feasible for the taxpayer; and the workforce we need will not be available. Delivering productivity improvements will be critical to partly address this challenge.”
Huw Thomas (Hywel Dda UHB – Director of Finance), Wales Productivity Forum Member.

Find out more about Wales' Productivity Challenge.