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Wales bottom of the UK productivity league table

Wales remains firmly rooted to the bottom of UK’s labour productivity league table, shows latest research from the ONS.

Output per hour in Wales was 17.2% below the UK average in 2018.

The research highlights the continued gap between the South East of England and London and the rest of the UK on productivity.

London at 31.6% above the UK average, and the south east, at 9.1%, were the only regions or nations in positive terrain.

Yorkshire and the Humber had the second highest deficit to the UK average behind Wales, at 16.5%.

The rest of the UK shows: Northern Ireland minus 15.6%, North East and East Midlands minus 13.5%, West Midlands minus 10.4%, South West minus 9.8% North West minus 8.4%, East of England minus 4.6% and Scotland minus 2.4%.

Productivity growth is important because increases allow salaries and profits to rise, standards of living to improve, providing tax receipts to invest in public services and infrastructure.

On output per hour growth in 2018 it expanded by 2% in both Scotland and the East Midlands. In contrast, output per hour fell by more than 2% in both Yorkshire and the Humber and Northern Ireland. In Wales there was a decline of 1%. In London it only grew 0.5%.

The gap between the highest and lowest productivity regions and nations has changed very little over the last 10 years.

On output per job, Wales is also the bottom of UK at minus 18.2% of the UK average. London at 40.5% and the South East at 6.1% were again the only regions above the average.

Director of IoD Wales, Robert Lloyd Griffiths said:“The chasm in productivity across the UK’s regions and nations is holding back our economy.

“Without significant investment outside London and the south east,  the rest of the country will continue to lag behind which is why it is so important that Wales gets more funding to invest in education, transport and digital infrastructure. We also need greater investment incentives for new and growing firms to help catalyse innovation and jobs growth in the here and now.

“The UK Government’s emphasis on ‘levelling up’ growth across the UK has hit the right note, but action is needed in line with the recommendations made by Professor Brian Morgan and the Hodge Project Research Team at Cardiff Metropolitan University.

They rightly say that improvements in our productivity are critical for company growth and survival. This means that better management practices are needed which is why as the IoD we continue to encourage and support our members to embrace best practice.”

To boost productivity the recent report from Prof Morgan makes a series of recommendations, including:

  • Providing management education and training for firms to address their productivity challenge and to improve management skill levels:
  • Helping firms to benchmark effectively against frontier (top performing) firms with regard to improving management practices and key performance indicators;
  • Supporting firms to reduce the continued digital and technological deficit within the Welsh economy;
  • Encouraging and assisting firms to export; and,

Improving inter-firm collaboration and networking activity by improving the performance of trade associations and other similar organisations.

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