I'm working my way through some revision today, trying out the exercises in Alan Agresti's excellent 'Categorical Data Analysis', because I've foolishly agreed to give a talk in May at a conference, and supplied an abstract claiming that I'll show X, Y and Z, when in fact I've yet to do A, B or C, and I'm realising that I've forgotten nearly everything I was taught about categorical data all those long, lonely decades ago. So back to square 1.
I'm finding it hard to concentrate though, and I'm loving the solidity of the word 'categorical' more than I'm into the statistical methods deployed to investigate such structures. My mind keeps wandering. I'm rolling 'categorical' around my tongue, and thinking of making a few such assertions. I feel an imperative to do so. Sorry.
It's as much Emily Thornberry's fault, this, as my inability to get to grips with multinomial likelihoods. She's the Labour member for South Islington, quoted in the Sunday Times this morning as saying: The richest have done best out of the good times. Now times are difficult, that needs to be shared. And who could argue with that? Ms Thornberry's idea is that 'the rich' should pay a higher proportion in tax now, to show they're feeling our pain. But who, exactly, is rich?
According to the Office for National Statistics, who released Labour Market statistics just last month, median public sector pay rose by 4% in 2008, while the private sector equivalent was 3.1%. This isn't a blip: it has been the trend since Labour came to power. Average pay in the private sector is now less well remunerated than in the public sector. These figures were the latest I could find on the ONS website, and so they don't take account of the news of those, such as the brave-minded men and women at companies like LDV, who are cutting their hours and their pay in an effort to stave off unemployment. To be specific: the weekly median level of full-time earnings in the public sector was £523 per week in April 2008. In the private sector the figure was £460 per week. These figures are gross, i.e. before tax.
These figures refer only to pay. They don't include pensions. I think there's a growing awareness of the pension apartheid system in the UK, which seems to boil down to: if you're in the public sector, you'll be fine; if you're in the private sector, you will have to work until you drop dead. If you are a man born in 1980, and you want an annual income of about £20,000 (in today's money) when you retire at 65 (as if!), and you don't have access to a public sector non-contributory scheme, then you should be saving about 485 quid a month. The median weekly income of retail workers is 285 quid.
What about jobs? I found this graph on the ONS website , which shows the changes in public sector employment levels, but to be honest, I find the accompanying text more illuminating:
Public sector employment increased by 14,000 (seasonally adjusted) in the third quarter of 2008 to 5.764 million.
Employment in central government increased by 15,000. Employment in public corporations decreased by 2,000 and in local government increased by 1,000.
The number of employees in the Civil Service remained the same.
Employment in the private sector decreased by 128,000 in the third quarter.
Now. I don't really care that much about money (just as well) and I'm far from thinking it's the most important factor in either a good or a happy life. But when I hear a Labour MP making the case to increase taxes on rich people, I think, with respect, that she's completely missing the point. This point is that the gap, for the economically active (I'm not talking about the underclass or the super-rich) isn't so much between the rich and the poor, or the lower-middle and upper-middle, or whatever. The lowest quality of life, of job satisfaction, of psychological security, is, among the economically active, to be found in the private sector. In comparison with their public sector counterparts, private sector workers earn less now, will receive less in retirement later (if they can ever retire) and have a significantly higher chance of unemployment.
So. My modest proposal. I do indeed think we should share the pain of the current recession, as per Ms Thornberry's suggestion. My proposal is that the maximum public-sector pay rise should be set at a percentile of the private sector income distribution: say 75%. If three-quarters of the private sector receive a pay rise of x% or less, then x% should be the maximum rise for the public sector. Note I'm not suggesting a pay reduction; just a slow-down in the rate of increase, until the income distributions of public and private are better matched than they currently are.
Secondly, any reduction in private sector employment should be matched by a parallel reduction in the size of the public sector workforce, at least while there remains anyone employed by any quango. Once all the quangos are closed, we can have a rethink. I'm not a small-state Tory so I don't have any desire to have the public sector made inefficiently small, and there are bits of it I'd happily see enlarged. But the quangos should go.
And finally, all final-salary, non-contributory pension schemes should be closed, at once, for new public sector employees, who should switch to the defined contribution schemes enjoyed by the private sector. That way, we'd all be sharing the pain induced by the Brown bust. Including whoever has the honour of becoming the next member for Islington South.
