This has not been a good week for the Welsh economy with the latest labour force survey figures showing that Wales had the rate (71.8%) in the º£½ÇÊÓƵ as opposed to an average for the rest of the economy of 76%.
Whereas the rest of the º£½ÇÊÓƵ has grown its employment rate as compared to the same period last year, this also represented a decrease of 2.2% for Wales.
It also had the highest unemployment rate in the º£½ÇÊÓƵ (5%) and had experienced the largest annual increase in those out of work. It also saw the highest growth (1.1%) in the economic inactivity rate across the º£½ÇÊÓƵ compared with the same period last year,
Given that the economy is slowing down with some suggesting that the º£½ÇÊÓƵ will fall into a recession by the end of the year, the situation is likely to get worse. But what can the Welsh Government do to deal with this situation?
It is easy for the First Minister in the Senedd to blame the Westminster government for the current economic situation facing the º£½ÇÊÓƵ. However, that ignores the fact that the north east of England, which does not have additional devolved powers, did not receive billions of pounds in economic aid for two decades and is poorer than Wales, saw the largest increase in the employment rate in the º£½ÇÊÓƵ as compared with the same period last year.
Unfortunately, the impression for many in the business community is that there is a real disconnect with the Welsh Government and that this has worsened considerably in recent years. This reached its nadir during the recent pandemic when many in the hospitality industry felt they were not being listened to by those in power and that their legitimate concerns were not being considered properly.
This breakdown in the relationship between business and government seems to have continued since and it would be difficult to point out exactly where there have been any genuine attempts to change the direction of the Welsh economy over the last few years.
For example, when the Welsh Government announced the introduction of eight laws for the coming year, which included expanding the Senedd and council tax re-evaluation, not one of them was focused on boosting the Welsh economy or in supporting Welsh businesses to become more competitive.
Whilst the Welsh Government’s new transport plans have the potential to have the biggest effect on businesses going forward, there seems to be have been little engagement with the business community over the impact that reductions in speed limits and changes to road investments will have on the Welsh economy.
Of course, there are strong arguments from politicians in favour of these changes but many businesses I have spoken to have suggested a streak of arrogance in not only how they have put this message across but also a disregard on how this could affect many individual firms and their workforce.
Perhaps today’s politicians just don’t care about what businesses think but the simple fact remains that it is the private sector that creates wealth and jobs and whilst some may think that profit is a dirty word, it is that profit that supports public services across the nation and is responsible for 70% of all Welsh jobs.
Having worked with some incredible businesses over the last three decades, I know that we have some amazing entrepreneurs and founders who could, with the right environment and support, make a real and significant difference to their sectors and the Welsh Government has a powerful role to make that happen.
Those of us who backed the case for devolution a quarter of a century ago did so partly because it gave Wales the opportunity to be different and to forge a new economic path that would have the enterprise, innovation and creativity of its people and businesses at the heart of the future of the nation.
Initially, the passion and interests of the then First Minister Rhodri Morgan put the economy at the heart of Welsh Government policy, which was continued by his successor Carwyn Jones and his irrepressible Economy Minister Edwina Hart.
Yes, Rhodri was criticised for setting a target for the Welsh economy to achieve 90% of the º£½ÇÊÓƵ’s economic prosperity but at least it was an ambition for the nation, something which we seem to have lost sight of since, and frankly, many of today’s Senedd members seem to have little concern for.
Given the economic headwinds which, given the current labour force trends, seem certain to negatively affect the Welsh economy more than any other part of the º£½ÇÊÓƵ, the Welsh Government can either bury its head in the sand and attempt to blame Westminster or it can rise above such petty political squabbling and ensure that it maximises its powers and leverage to support Welsh businesses.
Why not start by getting ministers talking, listening to, and engaging with those entrepreneurs across the nation who have built up successful firms and have so much to contribute to creating a sustainable Welsh economy. Having an honest two-way conversation could go a long way to ensuring that both sides know what is needed and, more importantly, what can be achieved.
And whilst they may not like what they hear, our politicians will know that there is a genuine desire to do what’s best not only for their businesses but for Wales as a whole and that’s not a bad place from which to start the conversation to ensure the best outcome for everyone.
