FALLING productivity despite ‘phenomenally good’ employment figures is the crucial but absent debate in pre-election discussions, a leading economist has warned.
Institute for Fiscal Studies director Paul Johnson returned to his home town of Shoreham on Friday, giving a talk at the Ropetackle Arts Centre.
In his speech, he acknowledged improvements in the jobs market during the last parliament but the good news was tempered by falling productivity.
He said: “There are many more people in work than you would imagine, given the level of the economy.
“Some of that has been part-time, some has been zero-hours, some driven by people coming from outside.
“Actually, the majority is full-time, standard permanent work. But the flip side is not much productivity. We have got two million more people in work, so what on earth are they doing?”
Described as the ‘productivity puzzle’, the economist said the causes of the issue had been debated at length.
He said the effect of large numbers of people moving into relatively low-paid work and poor access to business finance may have contributed to the average productivity per person falling.
“Productivity is one of the biggest stories,” he said.
“It is the most important thing facing the economy. I don’t think it was mentioned in the leaders’ debates once.”
We have got two million more people in work, so what on earth are they doing?Paul Johnson, IFS
Turning to the economy, Mr Johnson said there appeared to be light at the end of the tunnel after a ‘dreadful’ few years.
He said: “We had pretty miserable growth for the first couple of years and something like decent growth over the last couple of years.
“The last seven years putting everything together has been the slowest recovery that we have had certainly in 100 years.
“We had a bad time in 2010 and 2011 but we are now growing more strongly than most other countries.”
Unemployment figures remain steady and low across the Herald and Gazette area, with those claiming Jobseekers’ Allowance in Worthing, Adur and Arun between 1.2 and 1.3 per cent in each area.
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