‘Welsh SMEs must do more to bridge productivity gap’

BUSINESSES in Wales could add up to £1.36bn annually to the economy if they introduced a series of measures to improve productivity, according to new research commissioned by NatWest Bank.

Despite this productivity gap, NatWest’s research found SMEs in Wales are uncertain about what they need to do to boost business productivity. Even though almost two-thirds (60%) of SME decisionmakers in the region believe improving productivity is important, two-fifths (41%) don’t know what productivity means in practice, making it difficult for them to identify the steps to improve it.

The £1.36bn gap was calculated by identifying the difference in productivity between SMEs which introduce productivity-improving measures and those that have considered but haven’t yet implemented them.

NatWest’s research, carried out by Cebr and entitled Addressing the Regional and Sector Productivity Gap, analysed the productivity of SMEs in the UK to identify potential changes they can make to improve their productivity.

Despite the potential gains for the Welsh economy, the research found Brexit and political uncertainty pushed tackling productivity to the bottom of a list of key business priorities, and just a fifth (21%) of businesses which see productivity as important have targets in place to improve it.

Investing in employee benefits, technology and equipment and workplace culture were the measures most likely to improve productivity in Wales. Yet just over a third (37%) of SMEs in the region said they invest in technology and equipment, only a quarter (25%) said they invest in workplace culture, and a quarter (25%) invest in employee benefits packages above the statutory minimum.

Adrian Aurelius, chair of the NatWest Cymru regional board, said: “From talking to hundreds of our business customers every year in Wales, we know that many small to mid-size businesses struggle to understand how best to improve productivity...

“It’s crucial that banks, government and business leaders tackle this problem head-on and start putting measures to improve productivity into practice. Our NatWest Productivity Blueprint, created in partnership with business leaders across the country, will help our customers identify what measures they can put in place to improve their business’ productivity and performance.”