One of the biggest challenges we face in improving productivity in Wales is not a lack of effort, but a lack of shared understanding. Too often, productivity is discussed in economic or policy terms that do not translate easily to the realities of running a business.
For many business owners, the language itself can be a barrier. Productivity can feel abstract, or even negative, particularly when a firm believes it is performing well at an individual level. When the message from policy is simply that “productivity needs to improve”, it can be heard as a judgement, rather than as support. Bridging that gap matters, because productivity at firm level is about understanding how to get more value from the resources a business already has, not about telling people they are falling short.
That is one of the reasons I chose to get involved with the Wales Productivity Forum. Businesses need practical help, not theory. They need tools, data and examples they can relate to. The work being done to analyse Wales-level productivity data and to develop a practical productivity toolkit is a real step forward, because it gives businesses something tangible they can use to understand their own performance and make informed decisions.
There are encouraging examples already. Through work carried out under Economic Intelligence Wales, we identified a group of what we described as “productivity heroes” – businesses that are growing both turnover and employment, while increasing productivity at the same time. From a policy perspective, that combination is often seen as the ideal. But the research also showed how difficult it is to achieve in practice.
That matters, because it tells us something important about policy design. Supporting productivity is not the same as supporting growth or job creation, even though the two are often grouped together. If we are serious about improving productivity, we need to be more intentional about it, rather than assuming it will happen automatically as a by-product of other interventions. We also need to do more to showcase those businesses that are managing to deliver both, so others can learn from their experience.
There is also a wider question about how productivity is embedded in policy. Internationally, there are examples of productivity being treated as a central consideration across government. In Wales, my view is not that we need to create another body or framework. We already have strong legislation that focuses on long-term wellbeing, and productivity aligns very closely with that agenda. The opportunity lies in ensuring that productivity is part of that existing framework, rather than something separate that competes for attention.
When it comes to practical levers, there are areas where Welsh Government has real influence. Skills is one of them. Businesses consistently raise concerns about economic inactivity and the availability of skills. Apprenticeships sit within devolved control and offer an opportunity to better align training with business needs and productivity outcomes, rather than focusing solely on educational attainment.
Public procurement is another area with potential. Businesses frequently highlight the impact that winning public sector contracts can have on their ability to invest, grow and improve productivity. There is an opportunity to think about how procurement can better recognise and reward productivity improvements in Welsh small businesses, strengthening them in the process.
As Wales begins the new Senedd term, productivity should be seen as a long-term challenge that requires long-term commitment. This is not an issue that fits neatly within a single political cycle. What I would like to see is the confidence to be bold and brave enough to put policies in place that may take time to deliver results, but that are designed to make a lasting difference.
Productivity is a persistent issue for Wales. Addressing it means supporting businesses to understand it, embedding it across policy, and making use of the levers already available. If the next Welsh Government can commit to that approach for the long term, it would create the conditions for more businesses and the wider economy to generate greater value from the work already being done.
Rhian Elston talks about this and more in the Unlocking Wales' Productivity Potential podcast episode The Productivity Challenge for the Next Welsh Government. Listen to the podcast here.
