An over-reliance on job creation as a measure of economic success is limiting Wales' ability to improve productivity, business and policy leaders have warned.
At a roundtable hosted by Business News Wales and the Wales Productivity Forum, participants from business, education and the public sector said current approaches risk prioritising short-term outputs over long-term economic performance.
Phil Jones, chief executive of Business in Focus, said public policy in Wales has largely been shaped by a focus on employment as a primary indicator of success, with programmes often judged on jobs created and sustained.
He said that while these measures reflect wider social priorities, they do not necessarily capture how businesses are performing or investing for the future. Drawing on insight from SMEs, he added that many firms have focused in recent years on sustaining operations rather than investing for growth, with attention also placed on staff wellbeing and maintaining stability.
Rod Howells, executive director at BIC Innovation, said existing measures tend to focus on what is easiest to track rather than what delivers the greatest long-term value. He said there remains a gap in understanding productivity at both policy and firm level, with many SMEs interpreting it narrowly in terms of output rather than overall performance.
Chris Meadows, director at CSconnected, said the quality and sustainability of jobs should be considered alongside headline employment figures. He pointed to measures such as gross value added and revenue per employee as more meaningful indicators, particularly in advanced manufacturing, where productivity levels vary significantly. He also highlighted the importance of supply chain development, noting that much of the wider economic benefit from Welsh industries is realised outside the UK.
Rachel Lai, partner at Menzies LLP, said most business leaders are focused on day-to-day performance rather than national productivity measures, with attention centred on turnover, costs and profitability. She said this can limit engagement with the concept of productivity more broadly, particularly among SME directors.
She added that delays in decision-making, including around contracts and public sector processes, can constrain business activity and impact performance.
From an education perspective, Sharon James-Evans, principal of Cardiff and Vale College, said there needs to be more shared practical understanding of productivity across Wales. She said aligning skills provision with industry demand must be led by sector prioritisation.
Sharon said: “If everything's a priority, nothing's a priority.”
Professor Melanie Jones, lead for the Wales Productivity Forum at Cardiff Business School, said the lack of a consistent definition of productivity remains a fundamental issue, even among senior stakeholders.
She said productivity is well measured at a national level, typically through output per worker or per hour, but is not widely understood or used in practice by businesses. She added that stronger benchmarking against other regions could help firms better understand their performance.
Robert Lloyd Griffiths, chair of the Wales Productivity Forum and director for Wales of ICAEW, said Wales has consistently lagged behind other UK nations on productivity and that greater emphasis is needed at a national level.
He said improving productivity requires clearer alignment with wider economic performance and a stronger focus across policy and business.
Robert said: “Until we actually recognise that, we're going to be in a difficult situation.”
Participants agreed that improving productivity will require a clearer and more consistent approach to how it is defined, measured and communicated across government, business and education.
