Although only a small country covering 20,732 square kilometres and accommodating a population of 2.9 million (about five per cent of the UK total), Wales has had a disproportionate impact on world culture. Its writers, poets and entertainers have created a distinctive Welsh ‘brand’ among the world’s national identities. Combine this with breathtaking scenery, an ancient language and a turbulent history, and it is not surprising that the country is a top tourist destination.
Although the vast majority of visitors to Wales are from other parts of the UK, over one million tourists from abroad visit the country each year. About 100,000 people (nine per cent of the workforce) are employed in the Welsh tourist industry, which contributes about £3bn a year to the Welsh economy. Further, the industry looks set to grow – employee jobs in hotels and restaurants alone increased by over 10,000 (15 per cent) between 1998-2004.
However, the tourist industry only accounts for about four per cent of the country’s GDP. Between 1995 and 2005, the economy generated 118,000 additional jobs, and the number of people employed currently stands at a record high of 1.3 million. Growth has been especially fast in financial services, research and development, computers and related activities, and other business services. Most of the country’s manufacturing industries continue to shed jobs, but there has been fast growth in aerospace.
Although the largest numbers of jobs created has been in education and health, the Welsh Assembly points out that alone among the UK’s regions and nations, Wales has succeeded in increasing its share of private sector employment in the total employment mix. The gap between Wales and other parts of the country has closed in a number of key indicators: the employment rate, for example, has risen from 67 per cent in 1995 to 72 per cent in 2005, with the difference in per centage points between Wales and Great Britain falling from 4.5 to 3.2.
This recent upturn in economic performance is especially welcome when set against events of the 1980s and 1990s. Already lagging behind Great Britain, Wales was hit especially hard by the recession of the early 1980s. Between 1978 and 1984, the Welsh economy lost about 130,000 jobs, many of them from traditional manufacturing industries such as steel. Such was the catastrophic scale of the collapse of its industrial base that a graffitist daubed the words ‘Wales is closed’ on the English entrance to the Severn Bridge. A fragile recovery was stalled by the recession of the early 1990s and later by the closure of most of its coal mining industry.
Despite recent improvements, Wales still lags the UK in certain key respects. Earnings are 93 per cent of the UK average. Gross Value Added (GVA) per worker (which measures the value of output of each person in an area) is 77 per cent of the UK average. Among the reasons is that although high-value-added industries in Wales have been growing rapidly in recent years, growth has been from a small base. There still aren’t enough highly paid jobs, and employment in the country remains disproportionately concentrated in relatively low-value-added activities. Wales needs to attract more head offices, more high-value-added services, and more hi-tech manufacturing.
Worst of all is the country’s relatively low level of educational attainment. Although a rate of 24 per cent of the working age population with qualifications at NVQ 4 or above doesn’t seem too bad when set against the national average of 26 per cent, there are huge disparities in this rate across the country. The rate rises to nearly 35 per cent in Cardiff, but falls as low as 14 per cent in Blaenau Gwent, and does not rise above 20 per cent in Bridgend, Merthyr Tydfil, Wrexham, Torfaen and Caerphilly. Almost all of these areas are in the West Wales and the Valleys Objective 1 area. There is a close correlation with low levels of educational attainment and worklessness. Against the regional average of nearly 72 per cent, the employment rate falls as low as 54 per cent in Merthyr Tydfil, to 55 per cent in Blaenau Gwent, and to 64 per cent in Caerphilly.
The future of Wales lies not only in attracting the high-value added activities of the 21st century, but also in targeting integrated regeneration packages at its most deprived areas to tackle skills deficits and worklessness.