Sunday, October 18, 2009

Maternity Leave and the pay gap....

There's been a fair amount of debate over the last few days after Nicola Pease's comments about maternity leave and the fact it may be indirectly hurting women's advancement in the work place.

Julia Llewellyn Smith has an article in the Telegraph today in which she discusses the impact of extended maternity leave on mothers. Much of the article is anecdote about mothers, who have high flying compensation packages and don't hesitate to exploit them to the full (while simultaneously complaining about welfare scroungers). The one piece of data though is "studies show three female doctors have to be trained to produce the same 'work time output' as two men."

We're constantly told that there is a pay gap between men and women - there are a number of reasons for this, and it's certainly not as simple as plain sexual discrimination. According to the NSO, there were 28.9 million people in employment in the UK last year. Let's assume that 15 million of those are men.

Wayne Rooney, John Terry and Frank Lampard between them earn over 400k a week - or alternatively, three footballers earn 20 million a year between them as a base salary (before bonuses or other endorsements). I make that those three men alone add £1.33 to the average male salary in the UK. When you include the rest of the Premier League - that suddenly adds a lot to the gap. But the fact that Premier League footballers earn a lot is hardly news - nor does it really make that much difference to what the man on the street earns. The reality is that the really well paid entertainment stars up the rate, and it does seem the bulk of them are men (women's football is not as well paid, and girl groups don't appear to have the staying power of boys groups - see the X Factor voting patterns).

But even when you bring it down to the level of somewhere like the NHS, where salaries are set according to bands which you have to work your way up through. The overall cost of hiring a man of 25 on 25k a year is less than that of hiring a woman of 25k. This is because the cost of hiring the woman is increased by her maternity benefits - this does carry a cost, in terms of paying her for the nine months she might not be working as well as paying her replacement. In addition, this is exacerbated by the pension costs - many women are entitled to receive pensions at 60, whereas men have to wait 65. As women tend to live longer, the cost of supplying a pension of X to a woman is more than it is for a man of the same age, never mind how much more it is if you allow the woman to claim the amount five years earlier.

None of this is to suggest that sex discrimination doesn't happen - but it's to point out that there are often hidden financial costs to legislation that is meant to level the playing field. As has been pointed out elsewhere (and in much fruitier language - don't read if easily offended) if the results of the legislation you pass creates perverse and unintended incentives, why then express surprise that people act on those incentives?

As for the idiotic idea that childless women should somehow be entitled to "maternity" leave, words fail me.

Tuesday, October 13, 2009

Cuts in public services.

Via a friend on Facebook, I was pointed to this article by Polly Toynbee in the Guardian. In which she asks why the public sector should pay the price when "reckless banks" are to blame for the deficit rather than "state extravagance"? She calls the idea that the state sector might be to blame "poisonous".

In a sense, she is right. The current recession isn't the fault of the state sector. However, the deficit quite clearly is.

Deficits occur because the government spends more money than it receives. (I know this should be obvious, but Toynbee appears to believe that taking money from people and spending it through an inefficient public sector somehow drives growth, so I can't assume anything). If we are run to deficit in the bad times (Keynsian economics), then the counter side to that is during the good times, you run a surplus, in order to be prudent and have some money in the bank to pay for the deficit in the bad times. The problem is that over the last 12 years, the government haven't felt the need to do that, spending it all on a splurge of increased public spending - believing the solution to any problem was a combination of top down targets and throwing more money at it - while simultaneously increasing the tax burden (the removal of the cap on NI, the increase in NI, the abolition of the 10p tax band) - all of which was presided over as Chancellor by the current Prime Minister (whose arrival in number 10 was greeted with such huge enthusiasm by Toynbee).

It may not be fair that the public sector might be carrying the can for a deficit that wasn't their fault - but nor is it fair that in the private sector there are hiring freezes and staff reduction programs in large companies for employees who aren't responsible for the recession either.