Part-time workforce at record high

Official figures showed a 148,000 quarterly rise in part-timers to 7.82 million, the highest level since Office for National Statistics records began in 1992.

A record 27 per cent of the total workforce was now in part-time employment, the category accounting for the vast majority of the 160,000 rise in total employment – the biggest quarterly jump since August 2006.

The figures overshadowed a 34,000 fall in unemployment to 2.47 million in the three months to May.

But the number of people out of work for more than a year reached a 13-year high and those classing themselves as "long-term sick" reached 2.04 million, the highest level since March 2007.

In the Yorkshire region unemployment stood at 245,000, down minus 8,000.

Worries over the impact of public sector cuts following Chancellor George Osborne's savage Budget will fuel fears of a "jobless recovery".

Leaked Treasury documents in the wake of the Budget predicted the loss of 600,000 public sector jobs over the next five years.

But downward pressure on salaries was also shown by the sharp slowdown in average earnings growth, which fell from 4.1 per cent to 2.7 per cent in the quarter to May.

Workers are now worse off in real terms with the official rate of inflation, as the Consumer Prices Index remained stubbornly over three per cent so far in 2010.

Private sector pay growth was down from 4.4 per cent to 2.8 per cent, declining more sharply than a fall from 4.1 per cent to 3.2 per cent seen by public sector employees.

Vacancies in the three months to June rose by 10,000 to 486,000, the largest increases seen in retailing and motor repairs where there were 95,000 posts on offer.

The senior economic adviser to the Ernst & Young Item Club, Hetal Mehta, said: "While employment was up and inactivity fell in the three months to May, there are still clear risks ahead as the public sector begins to shed jobs.

"It remains highly debatable whether the private sector is sufficiently strong to offset the drag from the public sector."

Employment Minister Chris Grayling said there was "still a huge amount of work to do" to revitalise the economy.

He added: "What concerns me in today's figures is that, while there are more jobs in the economy, there is too little evidence of them being taken up by the five million people who were stranded on out-of-work benefits under the previous government."

Labour Shadow Work and Pensions Secretary Yvette Cooper said: "These figures show just why it is dangerous and callous to cut support for jobs and the economy.

"May's small fall in unemployment is welcome and reflects the extra support Labour put into the economy as it started to come out of recession.

"But there's still little sign of private sector job growth, with jobs in areas like construction still being heavily hit. And this is before the big spending cuts and the surge in young people leaving education this summer.

"Cutting 90,000 youth jobs and hundreds of thousands of public sector jobs while the private sector is still so fragile will condemn many people to a lifetime on the dole.

"In the 1990s the Tories said unemployment was a price worth paying to cut inflation – now they clearly think it's a price worth paying to bring down the deficit."

n The number of UK jobs generated by foreign investment jumped by a fifth last year to 94,000 - despite a dip in the number of projects, official figures showed yesterday.

A record 54 foreign countries pumped cash into the economy, with the US still topping the list but with China becoming a more significant investor.