SMEs in Wales lose £1.36bn every year due to productivity gap
Productivity in the UK is under increasing scrutiny following the latest ONS figures, which identified a 0.5 percent fall in productivity in the first quarter of the year.
Despite this productivity gap, NatWest’s research found SMEs in Wales are uncertain about the actions they need to take to boost business productivity.
Even though 60 percent of SME decision makers in the region believe improving productivity is important, 41 percent don’t know what productivity means in practice, making it difficult for them to identify the steps to improve.
NatWest’s research, ‘Addressing the regional and sector productivity gap’, analysed the productivity of SMEs around the UK to identify potential changes SMEs can make to improve their productivity.
Despite the significant potential gains for the Welsh economy, the research found that Brexit and political uncertainty mean tackling productivity falls to the bottom of a list of key business priorities, and 21 percent of businesses which see productivity as important, have targets in place to improve productivity.
Investing in employee benefits packages, technology and equipment and workplace culture were the measures most likely to have the greatest impact on improving productivity in Wales.
Despite this, 37 percent of SMEs in the region said that they invest in technology and equipment, and 25 percent said they invest in their workplace culture. Similarly, 25 percent invest in employee benefits packages above the statutory minimum.
In terms of potential gains for the local economy, Wales has the second smallest productivity gap. The region with the least to gain from productivity improving measures is the North East (£1.10bn). ■