The Dragons' Den star said Britons were generally better off in this recession than in the last and raised questions over why the government adviser was fired.
Multi-millionaire Paphitis also said he would rather stick pins in his eyes than take a role advising the government on the economy.
"What has happened in this recession has never happened before," he said. "In the last recession, interest rates were up so, if you had a mortgage, all your income went on paying it. Now our mortgages have gone down because interest rates have gone down to practically zilch, so of course we have had more disposable income.
"So, technically, those of us who have a job and are still in in work, and not worried about losing our job, have actually been better off, so (Lord Young] was technically correct. So why did we fire him?"
Paphitis, whose business empire spans retail, property, finance and consumer goods and who has revived the fortunes of notable retail brands such as Ryman, La Senza Lingerie and Partners the Stationers, also said people should not be too worried about the so-called economic crisis.
"We have got to be careful we don't actually self-fulfil some nasty prophecies by getting miserable and worrying about too many things," he said.
"Unemployment is a key issue. If we can keep people in jobs we have got absolutely nothing to worry about. What we shall not be having is the same growth we have enjoyed recently."