Wellbeing of Wales, 2023 - A prosperous Wales
The report helps us assess whether we are making progress against the 7 national wellbeing goals.
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The goal for a prosperous Wales
Authors: Jonathan Price and Sue Leake
A prosperous Wales: An innovative, productive and low carbon society which recognises the limits of the global environment and therefore uses resources efficiently and proportionately (including acting on climate change); and which develops a skilled and well-educated population in an economy which generates wealth and provides employment opportunities, allowing people to take advantage of the wealth generated through securing decent work.
What have we learnt from the data in the last year?
The consequences of the war in Ukraine, compounding the challenges arising from the legacy of the pandemic, have dominated other factors impacting economic outcomes, including the transition to a new trading relationship with the European Union. The cost-of-living crisis, and its adverse effect on living standards, has of course been the most prominent of those consequences.
Wales, along with the rest of the UK, has experienced a cost living crisis: inflation has risen sharply to reach a high of 11.1% in October 2022, resulting in reductions in people's real incomes. As the increase in prices has been particularly concentrated in energy and food prices, the impact has been felt most severely by people on low incomes who spend a higher share of their budget on these goods, despite the measures put in place by the UK and Welsh Governments to protect the most vulnerable. ONS experimental statistics have shown that lower income groups have recently experienced higher than average rates of inflation.
Increases in interest rates have also adversely affected borrowers, and particularly mortgage holders. Many of the national indicators included in this chapter relate to earlier years and do not yet reflect the more recent effects of these factors.
Recent data for Great Britain has shown that real wages have fallen, although the decline has reversed in the latest data from spring 2023.
Between 2019-20 and 2021-22, 21% of all people in Wales were living in relative income poverty (after housing costs were paid).
Underlying Welsh economic performance continues to be weaker than the UK as a whole in terms of economic output (gross value added) and household income (gross disposable household income and median household income), but is broadly similar to some other parts of the UK with similar features and characteristics.
Labour market data from surveys can be volatile over the short term and it is important not to over-interpret recent reported changes. For a more rounded picture of the Labour market data from the Labour Force Survey and Annual Population Survey for Wales should be considered alongside other sources, including administrative data. With this caveat, labour market data suggests the pandemic has impacted Welsh economic performance in a way that is broadly similar to the UK (excluding London).
There was a slight fall in the employment rate in Wales in the year ending March 2023, whilst the UK rate rose slightly. Economic inactivity rose during 2022 and the beginning of 2023 with inactivity due to ill health at historically high levels.
A national milestone on participation in education and the labour market was set in 2021 which is that at least 90% of 16 to 24 year olds will be in education, employment, or training by 2050. Provisional estimates for 2021, show a decrease in young people’s participation in education and the labour market, driven by an increase in the economic inactivity rate (excluding students) for 16 to 18 year olds. It is too soon to assess the full impact of the pandemic on this trend.
A new national indicator on the proportion of employees whose pay is set by collective bargaining was introduced in December 2021. 52% of employees were covered by collective bargaining arrangements in 2022, where pay and conditions are negotiated between an employer and a trade union. This is slightly lower than in recent years.
In April 2022, the (full-time) gender pay gap was 6.1%, increasing from 4.4% the previous year. The disability pay difference was 9.7% meaning that disabled employees in Wales earned, on average, £1.32 less per hour than non-disabled employees. This has narrowed by £0.13 (1.7 percentage points) compared to the previous year.
In 2022, the ethnicity pay difference was £2.23 an hour (or 16.8%), meaning that Black, Asian and Minority Ethnic employees in Wales earned, on average, £2.23 less per hour than White employees. The pay difference has widened by £1.38 (9.9 percentage points) compared to the previous year.
Data on travel and journeys shows us that the volume of traffic has returned to levels seen before the COVID-19 pandemic, although bus journeys remain well below where they were. The vast majority (82%) of Welsh residents travel to work in a car, whereas the majority of young people aged 11 to 16 years old either walk to school or use public transport (68%).
The qualification profile of the Welsh working age population has been improving over time, up to 2021. Estimates for 2022 cannot be compared to previous years following changes to the questions on qualification in the source data.
What is the longer term progress towards the goal?
Progress towards the goal has been mixed, with improvements in overall labour market performance compared with the period prior to devolution but less progress in addressing poverty, low productivity and pay, and low income levels. Progress has been made on decarbonisation, but more rapid change will be needed in future to meet targets.
The war in Ukraine, following the pandemic, and the associated cost-of-living crisis have had a dominant effect on the most recent data, and the implications for longer term trends is unclear. For this reason, many of the following conclusions are drawn on the basis of pre-pandemic evidence or recent data which is not wholly compatible with data captured prior to the pandemic.
As across the UK as a whole, the growth in the economy and in real incomes has been very sluggish since the recession of 2008, reflecting weak productivity growth. While a slowdown in productivity growth has affected most developed countries over this period, the UK has been amongst the most severely affected.
These adverse outcomes in the most recent years follow the prolonged period of more than fifteen years – unprecedented in modern history – of very slow growth in real wages and incomes across the UK, including Wales.
At the time of writing, the evolution of the cost-of-living crisis is highly uncertain, depending heavily on the global context, including developments in the Ukraine conflict. In addition, the UK Government could put in place further measures which mitigate some of the effects.
Recent research and analysis, including by the Bank of England, has indicated that negative effects on economic activity of the shift to new trading relations with the European are already identifiable, though many of the consequences will play out only over time.
Over the longer run, since 1998, Wales has broadly kept pace with the UK as a whole, but its economic performance continues to be weak compared with many other parts of the UK.
While Welsh performance on pay and productivity remains less positive than labour market performance, data indicates modest improvements in Wales’ relative productivity over the last decade, reversing deterioration prior to the recession of 2008.
The percentage of people living in relative income poverty has been relatively stable in Wales for over 17 years, with children more likely to be in relative income poverty than the population overall.
It is too soon to assess the effects of the pandemic on young people, though early evidence indicates that they have been disproportionately affected by the socio-economic consequences. There is evidence in particular that the disruptive effects on education have affected young people from disadvantaged backgrounds and that there have been continuing effects on school attendance. Depending on the effectiveness of mitigations in place, the adverse effects could play out in the labour market over coming years or even decades. Average household incomes in Wales are considerably closer to the UK average than gross value added (GVA) per head, with differences depending on the measure used and with the gap smallest when assessed for the median household.
The national milestone on employment (based on the Annual Population Survey) is to eradicate the gap between the employment rate in Wales and the UK by 2050, with a focus on fair work and raising labour market participation of under-represented groups. The historical gaps in employment and activity rates between Wales and other parts of the UK have narrowed since the period of devolution, with Wales out-performing some English regions over the medium term This represents a marked change from the period prior to devolution in the 1980s and 1990s
Wales has more people in low paid work than some other parts of the UK. In addition, the evidence on other aspects of the quality of work suggests a mixed picture in Wales.
The qualification profile of the Welsh working age population has been improving over time, with data up to 2021 showing an improvement in the share of people qualified at higher levels, but there was also an increase in the proportion of working age adults with no qualifications. Statistics for 2022 are, however, not comparable with previous years.
One of the national milestones on qualifications is that 75% of working age adults in Wales will be qualified to level 3 or higher by 2050. In 2022, 66.8% of working age adults in Wales were qualified to the level 3 threshold. The other national milestone on qualifications is that the percentage of working age adults with no qualifications will be 5% or below in every local authority in Wales by 2050. In 2022, three of Wales’s 22 local authorities have 5% or less of working age adults with no qualifications.
Attainment in secondary schools rose in the years before the pandemic. Public examinations were disrupted in 2020 and 2021 due to the COVID-19 pandemic, Data for the 2021/22 school year, which was a transitionary year in which pupils sat written exams with some adjustments, shows some continuing improvement compared to pre-pandemic years. However, children from deprived backgrounds still have poorer outcomes.
Management of the interaction between economic growth and the development of an innovative, low carbon economy is complex and poses challenges, but there are positive signs in some sectors.
Since the 2008 recession, investment in business innovation in Welsh firms has fluctuated, with some improvement in businesses being actively innovative recorded prior to the pandemic.
Travel makes a substantial contribution to carbon emissions, but there is no evidence of a shift away from cars as the main method of travel.
The pandemic appears to have accelerated the trend to remote economic activity, including working from home. In the year to December 2022 25% of employed persons did part or all of their job from home or another remote location.
Increased home working and internet retail may increase the challenges faced by some urban centres and may have implications for the housing market. Evidence from the UK as a whole indicates that the greater scope for home working may have encouraged more women to participate in the labour market.
GB data shows that traffic levels and public transport use have recovered following the pandemic but have yet to regain pre-pandemic levels, with bus use particularly impacted.
Economic performance
As across the UK as a whole, the growth in the economy and in real incomes has been sluggish since the recession of 2008, reflecting poor productivity growth. Productivity growth has also been weak over this period in most other developed countries, but the UK has fared particularly badly. The prolonged period of slow growth in productivity and real incomes is unprecedented in modern times.
Immediate prospects also appear poor, with high inflation reducing real incomes and the prospects of a continuing economic slowdown.
Over the longer run, since 1998, and taking economic indicators in the round, Wales has broadly kept pace with the UK. While its economic performance continues to be weak compared with many other parts of the UK, productivity data over the last decade gives some grounds for optimism. However, the gap with the UK as a whole remains large, and the UK itself does not perform strongly when productivity levels are compared internationally.
Gross value added (GVA) represents the value of all goods and services produced in an area. It is both the source of the real incomes people earn and the base on which taxes can be levied to fund public services.
While GVA per head of population in Wales has grown broadly in line with the UK since 1998, it remains lower than almost all other countries and regions of the UK.
Latest data (for 2021) shows that GVA per head in Wales was 74.1% of the UK average, the second lowest of the 12 UK countries and English regions, ahead of the North East.
Economic data does not yet permit a definitive assessment of Wales’s comparative economic performance over the course of the pandemic and during the cost-of-living crisis. In broad terms the relative scale of the impact of both events looks similar in Wales to the UK as a whole.
Welsh performance on GVA per head is mainly a reflection of relatively low productivity levels. Productivity, measured as GVA per hour worked continues to be lower in Wales than almost all other parts of the UK. In 2021 it was 84.1% of the UK figure, an increase of 0.7 percentage points over the previous year.
Data covering the most recent decade confirms modest improvements in relative productivity (GVA per hour worked), perhaps reversing a trend of deterioration prior to the recession.
Figure 1.1: Welsh gross value added per hour worked, relative to the UK, 1998 to 2021
Description of Figure 1.1: A line chart showing that GVA (gross value added) per hour worked in Wales relative to the UK (current price index UK = 100) has been stable since 1998, with Welsh productivity remaining below the UK average.
Source: Welsh Government analysis of Regional labour productivity, UK, 1998 to 2021, Office for National Statistics
Innovation in businesses
The latest information from the UK innovation survey, for a period prior to the pandemic (2018-2020), indicates that 44% of Welsh businesses are innovation-active. This means that they are undertaking activities such as introducing new or significantly improved products, services, processes; or business structures or practices; or investing in research and development or training.
Since the 2008 recession, investment in business innovation has fluctuated. The latest period (2018-2020) shows an improvement from 34% of Welsh businesses being innovation-active in 2016-18; and represents the eighth highest proportion of innovative firms of the 12 countries and regions of the UK. Data from the pandemic period is not yet available.
Spending on research and development in Wales remains relatively low compared to many other parts of the UK.
Household income
Household income is a better indicator of people’s prosperity and material wellbeing than GVA. Average household incomes in Wales are considerably closer to the UK average than GVA per head, but there are differences depending on the measure used, with the gap narrowest when median incomes are considered. Data for gross disposable household income (GDHI) is currently available only up until 2021, so this section focuses on longer run trends.
The national indicator on income uses the measure gross disposable household income (GDHI). On this measure Wales, according to the most recent data (2021), is at 83% of the UK figure, having fallen from 88% at its peak in 2003. This relative fall has partly been driven by a steep increase in household incomes in London, which has helped to drive up the UK average.
Whilst Wales has the third lowest GDHI per head of the UK countries and regions, it is broadly comparable to areas of the UK with similar characteristics.
Figure 1.2: Gross disposable household income per head, Wales and UK, 1999 to 2021
Description of Figure 1.2: A line chart showing that gross disposable household income (GDHI) per head has increased overall in Wales and the UK since 1999, with the value for Wales remaining below the UK across the timeseries.
Source: Regional Gross Disposable Household Income, Office for National Statistics
Please note that comparisons between 2020 and 2021 for GDHI per head estimates are classed as unreliable due to a discontinuity in population data for some areas, caused by differences in the timing of census updates.
Labour market
Over the last year, changes in the Welsh labour market have reflected the recovery from effects of the pandemic. Looking over the medium term, the performance of the labour market in Wales has improved relative to the UK in comparison to the position prior to devolution.
Whilst the Labour Force Survey (LFS) remains the main source for headline labour market indicators at a Wales level over the last year, the LFS data has been particularly volatile, making it difficult to draw conclusions about broad trends. The larger sample of the Annual Population Survey (APS) allows for estimates at a local authority level and for sub-groups of the population, and is the source for the national indicators and related national milestones. As most labour market data is survey-based and volatile, short term changes should not be over-interpreted. The national milestone on employment (based on the APS) is to eradicate the gap between the employment rate in Wales and the UK by 2050, with a focus on fair work and raising labour market participation of under-represented groups. According to the APS, the employment rate for people aged 16 to 64 in Wales was 73.0% in the year ending March 2023 whilst the UK rate was 75.4%. Since 2001, the employment rate has increased by 5.9 percentage points in Wales and by 3.1 percentage points in the UK.
COVID-19 had adverse labour market effects which have disproportionately affected groups that were already disadvantaged. This includes people in low paid jobs, in less secure employment, young people, people reaching the end of their working lives, and people in various groups that were already experiencing labour market inequalities. However, many of the adverse effects have subsequently reduced or reversed. Further analysis of the impact on inequalities is included in the More Equal Wales chapter.
Data from more timely administrative sources indicates that the labour market in Wales has generally tracked the wider UK (excluding London). Data from the PAYE real time information shows that the number of paid employees has generally increased in recent years, though it fell during the pandemic and then recovered. The most recent data shows that, since the start of 2020 (before the pandemic) the number of paid employees has increased more in Wales than the UK as whole. This data set does not include those that are self-employed, but paints a picture which contrasts with that painted by the most recent APS and LFS data.
Figure 1.3: Employment rate for people aged 16 to 64, year ending March 2005 to March 2023
Description of Figure 1.3: A line chart showing the employment rate for those aged 16 to 64 has generally increased since the year ending March 2011 in both Wales and the UK. Over the last three years (since the start of the COVID-19 pandemic) the rate has been more volatile for both areas. The UK rate has remained higher than the Wales rate since the year ending March 2005.
Source: Annual Population Survey, Office for National Statistics.
Figure 1.4: Economic inactivity rate (excluding students) for people aged 16 to 64, year ending March 2005 to March 2023
Description of Figure 1.4: A line chart showing the economic inactivity rate (excluding students) has steadily decreased since the year ending March 2005 in both Wales and the UK, however over the last three years (since the start of the COVID-19 pandemic) the rate has increased for both. The Welsh rate has always been higher than the UK rate, with the size of the gap fluctuating over time.
Source: Annual Population Survey, Office for National Statistics
Participation in education and the labour market
A national milestone on participation in education and the labour market was set in 2021 which is that at least 90% of 16 to 24 year olds will be in education, employment or training by 2050.
Provisional estimates for 2021 show that 84.5% of 16 to 24 year olds were in education, employment or training, down from 85.4% in 2020. The decrease was largely driven by an increase in the economic inactivity rate (excluding students) for 16 to 18 year olds. Data for later years, when available, will give an indication of the longer term impact of the pandemic on this trend.
Using the main measure of young people in education, employment or training, there had been decreases in both the 16 to 18 and 19 to 24 age groups between 2019 and 2021, with the overall decrease for those aged 16 to 18 (1.9 percentage points) being greater than the overall decrease for those aged 19 to 24 (0.2 percentage points). For 16 to 18 year olds, this followed a period where the proportion remained stable at around 89-90% between 2012 and 2018.
The effect of the 2008 recession was felt more sharply by the 19 to 24 age group. However, between 2012 and 2017, the share in education or the labour market gradually increased for this age group. At the end of 2021, the rate stood at 83.7%, nearly 7 percentage points higher than in 2012.
More recent figures on young people in education, employment or training are available from a secondary, less robust source. These suggest an increase in participation in 2022, more so for the 16 to 18 age group.
Figure 1.5: Percentage of young people in Wales in education, employment or training, 2004 to 2021 [Note 1]
Description of Figure 1.5: A line chart showing that the percentage of young people in Wales aged 16 to 18 years in education, employment or training has remained relatively steady since 2004, whilst the percentage of those aged 19 to 24 years fell below 80% between 2009 and 2014 but has since recovered to 84% in 2021.
Source: Participation of young people in education and the labour market, Welsh Government
[Note 1] Chart axis does not start at zero.
Fair work and earnings
A national indicator on the proportion of employees whose pay is set by collective bargaining was introduced in December 2021, based on data from the Annual Survey of Hours and Earnings (ASHE). Some 52% of employee jobs were covered by collective bargaining arrangements in 2022, where pay and conditions are negotiated between an employer and a trade union. This is lower than in recent years, however it is considerably higher than the majority of the other UK countries and England regions, and reflects the relatively higher share of employees in Wales who work in the public sector and in manufacturing.
One of the national indicators on fair work and earnings was amended in December 2021 and now considers the percentage of people in employment, who are on permanent contracts (or on temporary contracts, and not seeking permanent employment) and who earn at least the real living wage. The real living wage is calculated by the Living Wage Foundation who determine the methodology. It aims to reflect the cost of living.
In 2022, 68% of those people on permanent contracts (or on temporary contracts, and not seeking permanent employment) earned at least the real living wage, slightly lower than in 2020 and 2021, however higher than between 2015 to 2019. This is based on the real living wage for 2022-23 as published in September 2022.
Figure 1.6: Percentage of people in employment, who are on permanent contracts (or on temporary contracts, and not seeking permanent employment) and who earn at least the real living wage, 2012 to 2022
Description of Figure 1.6: A bar chart showing that the number of people in employment earning the real living wage in Wales has fluctuated between 65% and 70% across the last ten years, with 68% earning at least the real living wage in 2022.
Source: Welsh Government analysis of the Annual Population Survey
Data from the National Survey for Wales suggests that the percentage of people satisfied with their job remains broadly unchanged, standing at 83% in 2022-23. Job satisfaction tends to increase with age.
A national milestone has been set, to eliminate the pay gap for gender, disability and ethnicity by 2050. Over the long-term, the gender pay gap (on a median hourly full-time basis and excluding overtime) has narrowed. In April 2022, the (full-time) gender pay gap was 6.1%, up from 4.4% in the previous year. The gap widened in the UK to 8.3%.
The gender pay gap for all employees remains considerably higher at 11.4%. This is because women fill more part-time jobs, which in comparison with full-time jobs have lower hourly median pay.
These gaps do not take into account differences in education levels and experience, which vary across genders and affect earning levels.
Figure 1.7: Percentage difference in median hourly full-time earnings between men and women, 1999 to 2022 [Note 1]
Description of Figure 1.7: A line chart showing that the difference in median hourly full-time earnings between men and women has decreased over the last 20 years for both Wales and the UK. Wales has had a narrower gender pay gap than the UK since 2013.
Source: Welsh Government Analysis of the Annual Survey of Hours and Earnings, Office for National Statistics
[Note 1] A pay difference greater than zero means men’s earnings are higher than women’s.
In 2022, the disability pay difference in Wales was £1.32 an hour (or 9.7%). This means that disabled employees in Wales earned, on average £1.32 less per hour than non-disabled employees. The pay difference has narrowed by £0.13 (1.7 percentage points) compared to the previous year. Since 2019, the disability pay difference has seen an overall decrease of £0.44 (5.4 percentage points).
In 2022, the ethnicity pay difference in Wales was £2.23 an hour (or 16.8%). This means that Black, Asian and Minority Ethnic employees in Wales earned, on average £2.23 less per hour than White employees. The pay difference has widened by £1.38 (9.9 percentage points) compared to the previous year which has been caused by a decrease of £0.44 in average hourly earnings for Black, Asian and Minority Ethnic employees in addition to an increase of £0.94 in average hourly earnings for White employees.
It is worth noting that due to the high volatility in the data for the ethnicity pay difference in Wales, short-term changes should be considered alongside longer-term trends where possible. Since 2019, the ethnicity pay difference has seen an overall increase where average hourly earnings for White employees have gradually increased and average hourly earnings for Black, Asian and Minority Ethnic employees have remained relatively stable.
Poverty and deprivation
Last year the Department for Work and Pensions (DWP) did not publish the usual range of poverty and material deprivation data because of data quality issues with 2020-21 data, due to the COVID-19 pandemic. For 2021-22 data, although there remains some impact on quality due to the continued reliance on telephone interviews rather than face-to-face interviews, the DWP have assessed the data quality to be more robust.
Household income distribution
Single year figures for the whole of the UK show an increase in real terms median household income between 2020-21 and 2021-22. The increase was 0.5% before housing costs (BHC) and 1.6% after housing costs (AHC). The growth in UK household income (BHC) varied across the income distribution:
- the household incomes of individuals in the bottom quarter of the income distribution showed real terms reductions.
- those between the 25th and 75th percentiles recorded increases in real incomes.
- there was a more mixed picture for the highest income quintile.
Relative income poverty
People living in relative income poverty are those who live in a household where the total household income from all sources is less than 60% of the average UK household income (as given by the median).
For regions and countries of the UK, the latest data point published this year is for the period between 2019-20 and 2021-22. Estimates do not include 2020-21 survey data in calculations, as data for that year is judged to be of too low quality, as mentioned above.
Between 2019-20 and 2021-22, 21% of all people in Wales were living in relative income poverty (after housing costs were paid).
The percentage of people living in relative income poverty has been relatively stable in Wales for over 17 years, with children more likely to be in relative income poverty than the population overall. Although rates of people living in relative income poverty in Wales decreased in the most recent period across the age groups, none of these changes were statistically significant.
Figure 1.8: Percentage of each age group in Wales living in relative income poverty (after housing costs), three-financial-year averages
Description of Figure 1.8: A line chart showing people in Wales living in relative income poverty (after housing costs were paid) from 1998 onwards. The percentage of people living in relative income poverty has been relatively stable in Wales for over 17 years, with children more likely to be in relative income poverty than the population overall.
Source: Welsh Government Analysis of the DWP's Households below average income dataset, based on the Family Resource Survey
[Note 1] Estimates for periods which span 2020-21 do not include the data collected during 2020-21 in calculations. For the latest two periods shown, estimates formerly calculated as 3 year rolling averages are based on 2 year rolling averages that omit the 2020-21 survey data. 2020-21 estimates are unreliable as they are based on data collected during the first year of the COVID-19 pandemic, when lockdown rules severely disrupted the data collection.
Material deprivation
Material deprivation is a measure of living standards, and a person is defined to be living in material deprivation if they are not able to access a certain number of goods and services. Low income households are those that had a total household income below 70% of the UK average household income, before housing costs were paid.
The continuation of COVID-19 pandemic restrictions into 2021-22 affected the measurement of material deprivation, as it did in 2020-21. The restrictions that remained in place affected people’s access to some social opportunities or services, regardless of deprivation or financial constraint. This means that statistics for both years are not directly comparable with the pre-pandemic period.
Figure 1.9: Percentage of people in material deprivation (for pensioners) and combined relative low income (for children and working age adults) in Wales, financial years 2010-11 to 2021-22
Description of Figure 1.9: A line graph showing that the proportion of working-age adults living in low-income households which were materially deprived and of pensioners who were materially deprived both fell prior to the pandemic. The trend for children living in low-income households which were materially deprived has fluctuated much more.
Source: Welsh Government Analysis of the DWP's Households below average income dataset, based on the Family Resource Survey
[Note 1] Estimates for periods which span 2020-21 do not include the data collected during 2020-21 in calculations. For the two new data points, estimates formerly calculated as 3 year rolling averages are based on 2 year rolling averages that omit the 2020-21 survey data. 2020-21 estimates are unreliable as they are based on data collected during the first year of the COVID-19 pandemic, when lockdown rules severely disrupted the data collection.
[Note 2] For 2021-22, estimates of material deprivation are not strictly comparable with the pre-pandemic period. Several of the questions asked as part of the material deprivation measure were affected by pandemic-related restrictions on access to social opportunities and services.
In the years prior to the pandemic, the proportion of working-age adults living in low income households which were materially deprived followed a downward trend from 18% in the period between 2010-11 and 2012-13, to 13% in 2017-18 to 2019-20. There was also a decrease in material deprivation among pensioners (income is not considered for this measure), although less steep. There was a decrease in the earlier part of this period for children, but after the period ending 2016-17 rates of combined low income and material deprivation for children fluctuated.
As explained above, the latest estimates are for the period between 2019-20 and 2021-22 and are not directly comparable with the pre-pandemic period. For this period, 13% of children, and 11% of working-age adults living in Wales were living in low income households which were materially deprived. 7% of pensioners living in Wales were in material deprivation (income is not considered for this measure).
In 2022-23, 3% of households said they had received food from a food bank due to a lack of money in the last 12 months, with a further 3% saying they hadn’t but had wanted to.
Persistent poverty
A person is considered to be in persistent poverty if they are in relative income poverty in at least 3 out of 4 consecutive years. Data from the Understanding Society survey shows that an individual in Wales had a 12% likelihood of being in persistent poverty between 2017 and 2021 (after housing costs were paid). A child in Wales had a higher likelihood of being in persistent poverty at 17%.
Income spent on housing costs
A national indicator on the percentage of households spending 30% or more of income on housing costs was added to the national indicator set in December 2021, based on data from the DWP Family Resources Survey. Data collection for the Family Resources Survey was impacted by the COVID-19 pandemic during 2020-21 so survey data for that year is not included in the calculations for the most recent period (2019-20 to 2021-22) as it is judged to be of low quality.
For the latest period for which sufficient data is available (2019-20 to 2021-22), 18% of households spent 30% or more of their income on housing costs. This percentage has been fairly consistent at 19% since the period 2011-12 to 2013-14, but varies by housing tenure. It is too early to say whether the change indicated in the most recent period is a genuine decrease or whether it is due to the greater volatility as a result of the reduced survey sample size.
In the period to 2019-20 to 2021-22, only 2% of households who own their own home outright and 14% of those who own a home with a mortgage spent 30% or more of their income on housing cost. Percentages are higher for the other two tenures: 36% for private rented households, 43% of those in social rented housing.
Rising household energy costs have been a notable feature of the last couple of years and this has led to an increase in the percentage of households in fuel poverty. Whilst the 2021 headline figure was that an estimated 14% of households were living in fuel poverty, this is estimated to have risen to as much as 45% by April 2022. The percentage of households in severe fuel poverty is estimated to have risen from 3% to 8% over the same period.
The significant increases in fuel prices are a major factor in escalating costs for both households and businesses with all types of fuel reaching a peak in 2022. Compared to 2010, costs in 2022 were 95% higher for electricity, 67% higher for gas, 24% higher for solid fuel, and 46% higher for liquid fuel. A number of support schemes were introduced, such as the Energy Price Guarantee and the Winter Fuel Support Scheme in Wales, to reduce the impact of these increases on households and businesses.
Fuel poverty affects different households disproportionately, with those living in the oldest dwellings (pre-1919) more likely to be in fuel poverty (22% of such households in 2021), and almost three quarters (74%) of all households on the lowest 10% of incomes in Wales likely to have been in fuel poverty in 2021.
Qualifications
The qualification profile of the Welsh population has been improving over time, up to 2021. Data for 2022 is not comparable with previous years due to changes to the questions on qualifications in the Annual Population Survey, which now reflect the current qualifications framework.
Skills and qualifications are the biggest single influence on people’s chance of being in employment and on their incomes.
In 2022, 43.3% of working age adults (aged 18 to 64 years) were qualified to at least higher education level (level 4). This proportion was nearly 14 percentage points higher in 2021 than when comparable statistics were first produced on the 18 to 64 working age adults definition in 2008.
One of the national milestones on qualifications is that 75% of working age adults in Wales will be qualified to level 3 or higher by 2050. In 2022, 66.8% of working age adults in Wales were qualified to the level 3 threshold.
Between 2008 and 2021, there were large falls in the share of working age adults with no qualifications. This proportion stood at 8.3% in 2022. The proportion of working age adults qualified to at least level 2 (equivalent to 5+ GCSEs at grade A* to C) stood at 86.6% in 2022.
Older adults are more likely to have no qualifications than younger adults.
There are higher proportions of males than females with no qualifications in age groups up to and including 35 to 49 year olds. Females are more likely to hold qualifications at or above level 4.
Figure 1.10: Highest level of qualification held by adults of working age, 2008 to 2022
Description of Figure 1.10: Qualification levels in Wales have steadily increased since 2008, though there is a break in the series between 2021 and 2022 due to comparability issues.
Source: Welsh Government Analysis of Annual Population Survey, Office for National Statistics
[Note 1] Previously published estimates for 2020 and 2021 have been revised following a reweighting of the Annual Population Survey.
[Note 2] Estimates for 2022 cannot be compared to previous years following changes to the questions on qualifications in the Annual Population Survey.
The other national milestone on qualifications is that the percentage of working age adults with no qualifications will be 5% or below in every local authority in Wales by 2050. In 2022, three of Wales’s 22 local authorities have 5% or less of working age adults with no qualifications – Powys (3.3%), the Vale of Glamorgan (3.8%), and Monmouthshire (4.0%). The proportion of working age adults with no qualifications was highest in Blaenau Gwent (15.5%) and Merthyr Tydfil (14.9%).
Figure 1.11: Proportion of working age population with no qualification by local authority, 2022
Description for Figure 1.11: A bar chart showing the proportion of the working age population with no qualifications in each local authority in 2022. The proportion is less than 5% in Powys, The Vale of Glamorgan and Monmouthshire, but is over 15% in Blaenau Gwent.
Source: Welsh Government Analysis of Annual Population Survey, Office for National Statistics
Attainment in schools
Attainment in schools rose in the years prior to the pandemic, although children from deprived backgrounds still have poorer outcomes.
In the 2021/22 academic year, 54% of pupils aged 4 were at a stage of development in mathematics that would be consistent with or greater than their age according to the Foundation Phase framework, with 87% of pupils within one stage of the development consistent with their age. In language, literacy and communication in English, 53% of pupils were at a stage of development that would be consistent with or greater than their age, with 85% of pupils within one stage of the development consistent with their age. These figures are lower than in 2019. The picture is different for language, literacy and communication in Welsh, where 27% of children were at a stage consistent with their development. This is due to children from non-Welsh speaking families being enrolled in Welsh medium schools.
Following the cancellation of public examinations in summer 2020 and summer 2021, all grades that would have been awarded following an examination were replaced with the centre assessed or determined grade. The 2022 examination period was a transitionary year, where relevant qualifications sat by Welsh pupils returned to written examinations. This was not a complete return to pre-pandemic examinations. To compensate for any disruption to the school timetable, pupils who sat exams in 2022 were given a wider choice of questions from the syllabus, with Qualifications Wales setting results broadly midway between 2019 (the last time examinations were sat) and 2021 outcomes.
From 2018/19, when written exams were last sat, to 2021/22 the percentage of entries awarded A* to A and A* to C grades at GCSE have increased. In this period the percentage of A* to A grades increased from 19.5% to 25.9%. However, this is a decrease of 3.6 percentage points compared to the results obtained in 2020/21, where qualifications were awarded based on centre determined grades. A similar pattern was seen at the A* to C grade range.
There remains a gap in educational outcomes of children in school eligible for free school meals and those who are not. The gap in entries achieving A* to A grades at GCSE has widened in the last seven years, with the gap in entries achieving A* to C grades being relatively stable. Data up to 2019 indicates that the gap in educational outcomes widens as pupils get older.
In 2021/22, the gap between pupils not eligible for free school meals (FSM) and pupils eligible for FSM awarded GCSE grades A* to A narrowed to 19.2 percentage points, from 21.3 percentage points in 2020/21. The gap had previously been relatively stable at around 14.7 percentage points between 2015/16 and 2018/19 before widening in the most recent 3 years.
In 2021/22 the gap between pupils not eligible for FSM and pupils eligible for FSM awarded grades A* to C widened to 27.8 percentage points, returning to a gap similar in size to the years leading up to the pandemic after a fall to 27.3 percentage points in 2020/21.
Figure 1.12: Gap between percentages of pupils eligible for FSM and pupils not eligible for FSM achieving A*-A, A*-C and A*-G at GSCE, 2015/16 to 2021/22 [Note 1]
Description of Figure 1.12: A line chart showing the gap between percentages of students eligible for free school meals and students not eligible for free school meals achieving A*-A, A*-C, and A*-G at GCSE from 2015/16 to 2020/21. Between 2020/21 and 2021/22, the gap increased for the A*-C and A*G grade ranges but decreased for A*-A.
Source: Examination Results, Welsh Government
[Note 1] Between dashed lines indicate when qualifications were awarded using centre assessed or determined grades.
Greenhouse gas emissions from business
Managing the interaction between economic growth and an innovative, low carbon economy is complex and poses challenges, but greenhouse gas emissions from the business sector remain much lower than in the 1990’s.
Overall, greenhouse gas emissions have fallen by 35% since the base year (1990). Emissions from the business sector accounted for just under a quarter of Welsh territorial emissions (24%) in 2021; the second largest source of emissions in Wales after the energy supply sector. Emissions from the business sector have decreased by 29% since 1990 predominantly due to a reduction in emissions from the iron and steel industry. The majority, around 60% in 2021, of business emissions come from the iron and steel industry.
Figure 1.13: Greenhouse gas emissions from the business sector, 1990 to 2021
Description of Figure 1.13: A line chart showing the volume of territorial greenhouse gas emissions (megatonnes) in from businesses in between 1990 and 2021. Emissions from Welsh businesses have fallen by 29% since the base year (1990).
Source: Welsh Government Analysis of National Atmospheric Emissions Inventory, Department for Business, Energy and Industrial Strategy
[Note 1] Values for 1991, 1992, 1993, 1994, 1996 and 1997 have been estimated.
[Note 2] The sector definition of the greenhouse gas inventory (GHGI) varies from both the Low Carbon Delivery Plan (Carbon Budget period 1, 2016-2020) and the Net Zero Wales Plan (Carbon Budget Period 2, 2021-2025).
Mode of travel
Some forms of travel, including road traffic, make a substantial contribution to carbon emissions. There is no evidence of a shift away from cars as the main method of travel in Wales.
Following a sharp decrease in travel in 2020 as a result of the COVID-19 pandemic, road traffic volume in 2022 in Wales almost returned to pre-pandemic levels. Road traffic volume in 2022 increased by 10% compared to 2021, and 24% compared to 2020.
Compared to 2020-21, local bus journeys more than doubled in 2021-22, the largest increase since records began, however, this represents a 42.5% decrease in passenger journeys compared to 2019-20 (pre-pandemic levels). The total distance travelled in 2021-22 by local bus increased by 27.9% compared to the previous year.
More timely GB data indicates that traffic levels and public transport use have recovered following the pandemic but have yet to regain pre-pandemic levels, with bus use particularly impacted.
A national indicator on the percentage of journeys by walking, cycling or public transport was added to the national indicator set in December 2021. This data will be sourced from a National Travel Survey for Wales which is currently under development. In the short-term, data from the Labour Force Survey on usual mode of travel to work and data from the Student Health and Wellbeing Survey on mode of travel to school can be considered.
As in most other parts of the UK outside London, private road transport remains the dominant mode of travel and accounts for the overwhelming majority of commuting journeys in Wales. In 2021, 82% of commuters in Wales used a car as their usual method of travel to work, slightly higher than prior to the pandemic.
Figure 1.14: Usual mode of travel to work by Welsh residents, 2021
Description of Figure 1.14: A pie chart showing that the majority (82%) of Welsh residents travelled to work by car in 2021. 9% of residents walked, with 4% using a bus or coach, and 2% using rail services.
Source: Transport Statistics Great Britain: Usual method of travel to work by region of residence
[Note 1] Respondents were asked what their usual method of travel was, assuming coronavirus restrictions were not in place.
[Note 2] Categories that have been supressed due to low quality have been included in the “Other” category.
The two most common modes of travel to school reported by young people aged 11 to 16 years old in 2021/22 were public transport and walking (both 34% of students), followed closely by private transport (30%). Active travel to school (e.g. travelling to school by walking or cycling) was reported by 35% of young people.
In the 2022-23 National Survey, people were asked about environmental behaviours as part of every day life. 28% of people avoided or cut down travelling by plane and 40% avoided or cut down travelling by car. Of those reducing car travel, 18% said that concerns about pollution/limiting the effects of climate change was the main reason and 12% said that helping them keep fit was the main reason. Cost was given as the main reason for 43% of people. However, there is as yet no evidence of such behaviours resulting in an identifiable change in overall travel patterns.
There has been a considerable increase in the number of newly registered ultra-low emission vehicles in Wales in recent years. In 2022, there were over 8,000 newly registered ultra-low emission vehicles, a 34% increase compared to the previous year.
At the end of 2022, there were over 22,700 licensed ultra-low emission vehicles registered in Wales. Over time, reduced reliance on petrol and diesel vehicles and increased use of ultra-low emission vehicles could contribute to a reduction in emissions.
Further reading
Inflation and cost of living for household groups, UK (Office for National Statistics) provides information on the impact of inflation on different types of households.
Labour market overview, provides a monthly update on the Welsh labour market.
The Welsh economy in numbers dashboard shows trends in the key economic outcomes for Wales, compared to the UK.
Transport Statistics Great Britain (Department of Transport) is an annual compendium of transport statistics, including data for Wales on a number of topics.
Data is also available from the Census of Population on highest qualification levels. Census in Education in Wales (Census 2021) provides a summary of the data for Wales. The statistics available from the Census are not directly comparable to those presented in this Wellbeing of Wales report. As well as the different data collection modes, these statistics are based on working age adults (aged 18 to 64) whereas those from the Census are based on all usual residents aged 16 and over.
Information on the awarding of grades for school and college qualifications (GCSE, A Level, AS , Skills Challenge Certificate and Welsh Baccalaureate) in the years impacted by COVID-19 is available in the statements below:
Data sources
The following data sources were used in this narrative.
Economic performance
Regional and sub-regional productivity in the UK: July 2022 (Office for National Statistics)
Household income
Gross disposable household income (Office for National Statistics)
Labour market
Labour market statistics (Annual Population Survey)
Regional labour market statistics in the UK Statistical bulletins (Office for National Statistics)
Participation in education and the labour market
Participation of young people in education and the labour market
Fair work and earnings
Calculate the Real Living Wage (Living Wage Foundation)
Percentage of people moderately or very satisfied with their jobs by age (StatsWales)
Annual survey of hours and earnings: 2022
Poverty
Qualifications
Highest qualification levels of working age adults by year and qualification
Education
Academic achievement of pupils in Foundation Phase baseline assessment and at Key Stage 3, 2022
Examination results: September 2021 to August 2022
Businesses
Emissions of greenhouse gases by year (StatsWales)
Travel
Transport Statistics: Great Britain 2021 (Department for Transport)
Student Health and Wellbeing Survey 2021/22 (School Health Research Network)
Public service vehicles (buses and taxis)
Ultra-low emission vehicle statistics (Department for Transport)