Wales faces productivity hit from skills gap
Skills mismatch and funding gaps are undermining Wales’ ability to improve productivity. Leaders from education, business, and industry gathered for a roundtable hosted by Business News Wales and the Wales Productivity Forum to discuss the disconnect between skills provision and employer demand.
System Not Aligned With Economy
The current system is not sufficiently aligned to the needs of the economy. Challenges span education, training, and workforce development, and a clear, shared direction on growth sectors remains missing.
Sharon James‑Evans, principal of Cardiff and Vale College, highlighted the strong and sustained demand for training and apprenticeships. She noted that providers are adjusting to a period of change as the system adapts to evolving skills needs. She stressed the importance of closer collaboration between education and industry, with clearer identification of priority sectors and stronger partnerships between employers and providers.
James‑Evans said there is significant potential to expand apprenticeship participation, particularly among small and medium‑sized enterprises. Demand for vocational routes remains consistently high, and she emphasized the opportunity to better support young people by strengthening pathways into education, employment, and training.
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Shorter Training Routes Needed
Participants recognised that simplifying funding arrangements for the scheme and improving consistency across the UK would make it easier for employers to engage. There was also discussion around the need for funding models to better reflect learner demand, enabling providers to plan with confidence and respond more flexibly to skills needs.
More broadly, the discussion pointed to a need for greater flexibility in how skills are delivered. Employers are increasingly seeking shorter, more responsive training routes that can be aligned to immediate business needs, rather than longer qualification‑based pathways. This reflects a broader trend where the traditional linear model of education is struggling to keep pace with rapid market shifts.
Chris Meadows, director at CSconnected, said there is a need to improve awareness of career opportunities in key sectors. This is particularly true in areas such as advanced manufacturing and technology, where roles are often not well understood by young people or educators. The lack of visibility can affect both recruitment and long‑term workforce development, with some industries struggling to attract talent despite strong growth potential.
Policy Needs Holistic View
The importance of skills was also linked to wider economic outcomes, including productivity, earnings, and health. A more highly skilled workforce was seen as essential for supporting higher‑value activity and improving long‑term economic performance. Participants stressed that skills policy cannot be considered in isolation.
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Evidence suggests early years development matters.
Confidence and broader non‑technical skills also shape future productivity. Links between education, health, housing, and employment were highlighted as important factors influencing both participation in the workforce and long‑term outcomes. There was also a focus on the need to support individuals earlier in life.
Overall, participants said that while Wales has strengths in its education and training system, addressing misalignment, improving access, and providing more stable funding will be essential to ensuring that skills can support productivity ambitions.
