How ‘Productivity Heroes’ could transform the Welsh economy
Giles Thorley, Chief Executive, Development Bank of Wales
Productivity is a word that most people don’t think about. It’s something that’s often left to economists and their spreadsheets, certainly not of concern to a person totting up the weekly shop, or a small start-up wondering whether to take on a bit more debt to expand.
But productivity does matter, not only for the Welsh economy, but to ordinary people and how much money they have.
Wales produces around 15% less economic value for every hour worked than the UK average. In very basic terms, that means Welsh Worker A works an hour and generates around £30 of economic value, while their counterpart elsewhere in the UK, Worker B, generates about £35 for the same hour’s work.
And that’s not because Welsh Worker A is lazier, slower, or working fewer hours – the difference usually comes down to things like better equipment, better training, better technology, better management, or simply working for a business that’s found a smarter way of doing things.
Suddenly, once you think about it in those terms, the 15% productivity gap is no longer a dry statistic. It goes a long way to explain why wages in Wales have lagged behind the rest of the UK for a generation. In fact, closing that gap, is what will help Wales get higher pay, more resilient local businesses, and more money flowing back into the public services that people rely on.
That’s why our ‘Productivity Heroes’ research, written by the Enterprise Research Centre on behalf of Economic Intelligence Wales, is so important as it offers us evidenced recommendations on how to close the productivity gap between Wales and the rest of the UK.
This research has identified more than 1,700 Welsh businesses – known as ‘Productivity Heroes’ – that have grown their turnover, their headcount and their productivity simultaneously, rather than at the expense of each other, which can often be the case.
In 2024-25 alone, they generated £6.04 billion in turnover and created more than 5,200 jobs. Moreover, labour productivity across the group rose 24% since 2022-23, from around £133,000 to almost £165,000 of value per employee.
This is all incredibly encouraging, until you take into account that the total number of businesses meeting this bar actually fell over the same period.
Fewer companies are accomplishing what Wales needs them to be doing, but those that are, are doing it more intensively. Which is why our research is so important – it helps us to understand what these businesses have in common, so we can help other businesses to also become ‘Productivity Heroes’ and breathe extra life into the Welsh economy.
Researchers found three key characteristics. First, these businesses stay close to their customers, which could mean they build stronger deeper relationships with the people who already buy from them, rather than spend the bulk of their energy chasing new business.
Second, they invest in their people, not just their equipment. And, third, they adopt new technology, where appropriate. Businesses we’ve supported, like Halen Môn – Anglesey Sea Salt Company and Pontyclun’s KTV Working Drone, which cleans landmarks like the Principality Stadium with drones, are proof also that these ‘Productivity Heroes’ are not confined to the tech sector, contrary to popular belief.
What is remarkable is that these ‘heroes’ don’t necessarily have a superpower, or have had a stroke of luck, it has more to do with discipline. It’s about leadership that sets a clear direction, or capital that arrives at the right moment for investment.
The research points to the need for investment in leadership, skills, finance, innovation and infrastructure in order to turn an SME into one of these ‘Productivity Heroes’. There’s nothing particularly extraordinary about it, which is the very reason that I’m excited by this new research.
The Development Bank of Wales clearly has a role to play. Our job is to finance businesses with the potential to do what these 1,700 are already doing, whether that’s a micro loan to help a food producer meet growing demand, or a larger investment to help a manufacturer scale up production.
This research gives us, and other partners across the Welsh economy, a much sharper picture of what a bankable, high-potential Welsh SME actually looks like in practice – literally a framework for deciding where public and private capital should go.
So can ‘Productivity Heroes’ breathe new life into our economy? I believe they can. Not because Wales needs to find businesses with extraordinary powers, but because it needs more of the ones already showing what’s possible, and the investment to help them do it at scale.
They are proof of what’s possible, when the right investment meets the right ambition at the right moment.
That’s the job in front of us now as a development bank and as a nation.
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