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The Budget 2015: To see a continued recovery, the UK needs a turnaround in productivity

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Over the most recent quarter, the number of full-time employees increased by 139,000, while the number of part-time employees rose by 24,000. There has also been a decline of 42,000 in the number of self-employed workers, but an increase of 24,000 in the self-employed working part-time.

According to Osborne, unemployment is at its lowest rate since 1975.

In his last Budget speech he said: “We are reminded that the most important consequence of our plan is more people in work – with each job meaning a family more secure. The pace of net job creation under this government has been three times faster than in any other recovery on record.”

Some 1.3m more people are in work and labour market statistics show a 24 per cent fall in the claimant count in just one year, and the fastest fall in youth claimant count since 1997.

For the first time in 35 years, the UK boasts a higher employment rate than the US.

“That’s what we mean when we say we’re getting Britain working,” Osborne explained. Osborne: “This Budget does more to back business and make work pay, so we create full employment.”

It was also boasted that Yorkshire has created more jobs than the whole of France. Some 80 per cent full-time and 80 per cent skilled.

Last month, some concern was raised about the increase in unemployment of young workers.

Geraint Johnes, director at Lancaster University’s Work Foundation, suggested: “While unemployment continues to rise for 16 and 17 year olds, the latest data shows a renewed fall in unemployment for those aged under 24. Taken as a whole, this data suggests a labour market that, in aggregate, is continuing to recover well; equally encouragingly, they indicate that the market is, slowly but surely, regaining a degree of normality, with people continuing to move toward more secure employment.”

Read more about youth unemployment:

Johnes added: “There have been big gains in employment over the quarter in several industries, notably construction (32,000), real estate activities (34,000), administrative and support services (41,000), and accommodation and catering services (24,000).

“Meanwhile employment has declined in the health sector, and in arts, entertainment and recreation services. Vacancies continue to rise, providing a further sign of a healthy recovery.”

But not everyone is convinced by Osborne’s speech.

A key out-take of Osborne’s speech is the dominance of low wage or part-time jobs and the switch from employment to low-paid self-employment. Many of the new jobs being created are dominated by minimum wages, zero-hours contracts and short-term working. 

This could mean that as the personal tax threshold increases, a rising amount of workers are earning below the personal tax threshold. 

Pay has been a hot topic in recent months, with the apparent restoration of growth. The latest figures continue to show rising pay in real terms. But following what Johnes suggested was “a very prolonged and severe decline,” the rate of increase “has appeared to slow somewhat”. 

The year-on-year change in total pay in January was just 1.1 per cent. This fall is accounted for by the end-of-year bonuses in the financial sector. 

“Excluding the effect of bonuses, the annual rate of pay growth is steady at 1.6 per cent,” said Johnes.

“While we might expect to see a continued recovery in pay over the course of the next year, sustaining such an increase will need the long awaited turnaround in productivity to be realised. Productivity – what businesses can do and what the government can do to restore it – really poses the biggest question that the chancellor needs to address in his Budget. 

“If productivity can rise at a steady state once more, the budgetary plans of all parties start to look as though they can be achieved. But if it cannot, meeting deficit targets will be an impossibility.”

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