Unleashing the Welsh economy
Unleashing the potential of the Welsh economy, and creating good, well-paid jobs.
Productivity gap and pay
The charts show two measures of Wales' economy: the productivity gap with the UK and real wage growth.
The first chart shows the Gross Value Added (GVA) per hour worked in Wales compared with the UK, which is a measure of labour productivity.
A value of 84.9 (where the UK = 100) indicates that output per hour worked in Wales was 84.9% of the UK average in 2023.
The second chart shows annual changes in earnings in Wales and the UK after taking inflation into account.
Positive values indicate that earnings are increasing faster than prices, while negative values indicate that inflation is outpacing earnings.
Productivity and wage data explained
Description of productivity gap chart: The productivity gap chart shows that productivity in Wales remained below the UK average throughout the period shown. Wales' productivity compared to the UK has been broadly consistent and was 84.87 in 2023.
Data comes from the subregional productivity tables published by the Office for National Statistics (ONS). These statistics are classified as official statistics in development. Productivity data is currently available up to 2023.
Description of real wage growth chart: Real wage growth in Wales and the UK fluctuated between July 2019 and July 2026. Growth peaked in July 2021 at around 5.1% in Wales and 4.6% in the UK, before turning negative in July 2022 (-3.4% in Wales and -2.4% in the UK). Growth recovered in subsequent years. In July 2026, real wages increased by around 1.3% in Wales compared with around 1.1% in the UK.
- Data on earnings come from HM Revenue and Customs' Pay As You Earn (PAYE) Real Time Information (RTI) system, published by the Office for National Statistics (ONS). The latest month is based on a flash estimate, with approximately 15% of pay records estimated.
- Real wage growth is calculated by adjusting earnings growth using the Consumer Prices Index including owner occupiers' housing costs (CPIH).
- These statistics are classified as accredited official statistics.
View the subregional productivity on the Office for National Statistics (ONS).
Why productivity growth matters
Productivity growth is important to support better living standards for the people of Wales over the long term. An economy with healthy productivity growth creates more value from the skills, time and resources available to it. This helps businesses grow, creates jobs and raises living standards.
Improved productivity growth can lead to positive consequences, such as:
- increases to wages and household incomes
- more opportunities for people to find secure, well-paid work
- businesses finding it easier to grow, invest and compete
- higher levels of innovation, entrepreneurship and business growth and activity
- more private investment in communities, transport, energy and digital infrastructure, and assets that support growth
- quicker economic growth across Wales
It can attract investment, strengthen local economies and provide a stronger foundation for public services and long-term prosperity. Low productivity can mean businesses find it harder to be competitive, there are fewer opportunities to find work and slower growth in wages.
What we're doing to improve the economy
To support productivity growth and improve living standards across Wales, the government is focusing on:
- establishing a Welsh National Development Agency to support Welsh businesses innovate and grow
- seeking to increase the money available for business growth using the Development Bank of Wales
- investing in skills and training that works for every learner, using the Skills Audit and Skills Summit, to reflect real job opportunities and support our productivity goals
- investing in transport networks and digital broadband, and understanding energy network requirements to support long-term economic growth
- keeping more public spending in Wales to support Welsh businesses
Together, these actions aim to halve the productivity gap between Wales and the UK in 10 years to create a stronger, more productive economy that delivers higher wages, and better living standards across Wales.