The Welsh economy and the labour market

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Blackaby, David
Drinkwater, Stephen
Murphy, Phil
O'Leary, Nigel
Staneva, Anita
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This paper takes a brief review of the labour market performance of Wales over the last 20 to 30 years, and some of the challenges it has faced and will face going forward. These include, public sector pay and employment, the quality of education, trends to more flexible labour markets, and Brexit. Wales faced a major challenge of restructuring its economy following the decline of staple industries in the 1970s. During the 1980s and 1990s it was claimed (mainly by politicians) that the Welsh economy had been successfully transformed. The coal and steel industries, the back bone of the industrial economy in the late 1970s, had declined, and were being replaced by lighter and more buoyant manufacturing industries helped by the influence and relatively large amounts of foreign direct investment (FDI). The view did not go unchallenged, and it was often noted that Wales was near or even at the bottom of the regional economic league tables measuring economic prosperity. For example, in 1970 gross domestic product (GDP) in Wales was 92% of the UK average, and by 1983 it had fallen to 88%. As shown in Figure 1, it was down to 76% in 1997, reaching a low of 71% in 2010 before increasing slightly to 73% by 2016. GDP as a measure of economic welfare has been subject to controversy, but despite its many weaknesses remains a principal yardstick and starting point in assessing the level of economic activity and welfare in a country. Within Wales a substantial gap in levels of GDP per head exists between East and West. Proximity to Offa’s Dyke and its major lines of communication to neighbouring English centres of population are major characteristics of the more successful areas. In 2016 GDP per head of population was £19,140 in Wales whilst it was only £17,137 and £17,381 in Mid Wales and South West Wales respectively. However, the notion of an East-West divide is too simplistic since great economic inequalities exist between communities within regions.

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Welsh Economic Review

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© The Author(s) 2018. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Blackaby, D; Drinkwater, S; Murphy, P; O'Leary, N; Staneva, A, The Welsh economy and the labour market, Welsh Economic Review, 26, pp. 1-11