Raising productivity key to higher Welsh wages, says minister

Plans to boost Wales' economic productivity would raise Welsh workers' wages, the country's enterprise minister has said.

Adam Price said he wants to halve the productivity gap between Wales and the rest of the UK within 10 years, the first major Welsh government target on the economy since the turn of the century.

Productivity is the efficiency with which things are done - a factory making 100 products an hour with 10 staff is more productive than one making 90 with 10 staff.

Welsh productivity is 15% below the UK average, according to the new Plaid Cymru government, and Price said he aims to make Wales the easiest place in the UK to start, grow and invest in a business.

But details on how the target will be measured and monitored will not be announced until later this year.

Reform economy spokesperson Jason O'Connell said that Plaid was "responsible for the decline of the Welsh economy over the past 27 years, having consistently propped up Labour in government".

Labour has accused Plaid Cymru of making up economic policy as it goes along.

Welsh Conservative enterprise spokesperson Janet Finch-Saunders said that the new Welsh government should "be relentlessly pro-business by investing in critical infrastructure in roads, rail and broadband".

In an interview, with BBC Radio Wales Breakfast, Price said: "In the most concrete terms possible it [productivity] is the decisive factor in wages."

"That means if we close this productivity gap between Wales and the rest of the UK – we want to halve it over the course of 10 years - then without a shadow of a doubt that will be felt in people's pay packets in every part of Wales."

He said that skills along with digital, energy and transport infrastructure would be "critical" to Wales' economic success and that a planned new development agency would be a "bridge" between government and business.

The new Plaid Cymru Welsh government is planning a national skills audit, but it has been less clear on its plans for two of Wales' most notorious road bottlenecks.

The first minister has said there should be a "roads-based" solution for congestion on the M4 around Newport, without specifying a preference, and told the Senedd on Tuesday that a new crossing for the Menai Strait was "part of the considerations".

Plaid's election manifesto pledged to immediately prohibit large steel pylons with a "clear presumption" to lay cables underground or wooden overhead alternatives.

Some of the party's opponents have claimed that the policy would deter energy investment.

Price appeared to draw inspiration from the Basque Country, one of Spain's autonomous regions, which data suggest has a higher productivity rate than the Spanish and EU average.

After quoting a Basque phrase, "we build the road as we travel", he was asked if he was making things up as he went.

He replied: "It's the opposite of that.

"We've announced in lightning speed… less than three weeks in, the most ambitious goal we have had for two decades."

In the early 2000s the then Welsh Labour government had a target of raising Welsh GVA - a key measure of productivity - to 90% of the UK level, but the target was not met.

Halving Wales' productivity gap in a decade is an important, but challenging, target which could help drive higher wages and economic growth.

At the moment Wales has lower wages on average than other parts of the UK and low wages tend to be an obstacle to efficient production because they can disincentivise firms from investing in new technology.

Upskilling a workforce is a key part of breaking this cycle - so the new Welsh government's target implies more and better training, apprenticeships and educational performance.

Better infrastructure is also important.

Resolving transport choke points are obvious examples of the challenges ahead, but so is connecting new renewable energy provision to the national grid.

While the erection of metal pylons in rural Wales is deeply controversial, some would argue that the new government's blanket opposition to them represents a self-imposed obstacle to creating a more business friendly economy.