Given this, one would have expected senior officials within the Department of Economy and Transport, in drawing up its plans for the Economic Renewal Programme (ERP), to have carefully considered all information regarding job creation and then developed their plans accordingly.
However, it would seem that someone forgot to read a statistical article, which is ironically on WAG’s website, which examines changes in employment by business size for the period 2003-2006. Unfortunately, this has not been updated by WAG statisticians but it nevertheless demonstrates the different roles of large and small firms to employment growth within Wales.
According to the data, SMEs (small to medium-sized enterprises) accounted for 56 per cent of the increase in employment during this period. If we examine the impact of large firms on employment growth, what we find is that the so-called “anchor companies”, so beloved by the CBI, accounted for around 13,700 new jobs, which is roughly a third of the job growth within all Welsh-based businesses.
However, nearly 10,000 jobs were also created by large firms not headquartered in Wales, which include multinational banks such as HSBC and retail giants such as Tesco.
Many would argue that the primary aim of economic development policy, at least at a political level, is to encourage wealth and employment across all parts of the nation.
As we all know, two thirds of Wales – West Wales and the Valleys – is classed as being amongst the poorest in Europe and is in receipt of around £2 billion of Convergence funding to close the prosperity gap. Given this, it is worth examining the relative impact of SMEs and large firms on employment growth in both the relatively prosperous parts of Wales, which include Cardiff, Newport, Monmouthshire, Wrexham, Flintshire and the Vale of Glamorgan, with the poorer region of West Wales and the Valleys.
The results are startling.
It demonstrates that within the poorest areas of the Welsh economy, large firms only accounted for 29 per cent of all employment growth between 2003 and 2006. This is despite a grant regime that is more generous than for any other part of Wales. In contrast, for those more prosperous parts of Wales that have a limited ability, due to European regulations, to offer grants and support to business, large firms accounted for 63 per cent of all employment growth.
Simply put, the SME sector has been critical in creating jobs within the poorest parts of our economy whilst the majority of large firm employment has been created within those areas of Wales that have limited provision for grants.
Given such facts, one would have thought that the natural policy implication would be to support and strengthen the SME sector within those more deprived areas, whilst continuing to operate a laissez faire policy towards companies within the more prosperous areas such as Cardiff, focusing on other factors such as the quality of life, access to the university, and relatively good infrastructure.
Yet, for some reason, it would seem that those who have written the ERP have largely abandoned those job creators within our poorer communities and, worst still, will only be providing grants to large companies that seem to create the majority of jobs within our prosperous areas?
Does that make any sense at all when the vast majority of job losses during the recession were in areas such as the South Wales Valleys?
Given that there is a desperate need to create more jobs within such communities, one would have thought that WAG would do everything in its power to ensure that the job creating parts of the economy within those poorer areas are given every support possible to continue this role.
Yet, small business support has been largely abandoned within the ERP and grants limited only to those large companies who have created less than a third of jobs within the Convergence area. For example, the £30 million growth programme to help SMEs expand their operations within the poorest parts of Wales has recently been abolished by WAG officials.
As I have stated time and time again, small and large firms are critically important to the Welsh economy. It is shame that the CBI in Wales have ignored that fact and continue to push the line that it is only anchor companies that can revitalise the Welsh economy.
More worryingly, senior policymakers within WAG have simply not done their homework in developing a new economic strategy that addresses the different needs of the regions of Wales and, as a result, those areas in desperate need of regeneration will face the consequences, in years to come, of such a limited vision for the Welsh economy.
