Social inequality in London

The four principles on which Socialism is based on are freedom, equality, community and democracy.

The Labour Party always bangs on about the values of equality and community in its campaigns and political tirades but is equality what we are really getting under the Labour Government?

How much are people in London earning? I read somewhere that, on average, people working in London earn over £45,000. Let me tell you, that ain't the kinda dosh the average geezer in London earns! That is a serious amount of fluffy bunny that only the privileged get to burn. The fromage frais reporting £45k as the average actually based his statistic on the calculation of the mean. I won’t rabbit about mean vs mode vs median concept but, in a nut shell, when you are dealing with skewed data you shouldn’t report the arithmetic mean as your average. With skewed data your mean is influenced by all the outlying data points at the top or bottom (depending which way it is skewed). As one could imagine the earnings data must be a highly skewed distribution, therefore the bloke should have used the median as a measure of the average amount people earn. The median is the middle value that divides the data into halves, half the distribution is above the median and half below. As a measure of high earners and low earners one could use the 90 percentile and 10 percentile values (if you were a cupid stunt in maths at secondary school then you should start learning the bloomin’ basics).

Using the data from the annual survey of hours and earnings for the workplace I produced the chart below. The data shows that there have been Prescott sized changes in the standard of living under New Labour, but not in the direction we would expect it to be. The graph below shows that earnings have increased across the board but most strongly at the top – the gap between the top 10% earners and lowest 10% earners has increased, thus showing that inequality in London is on the rise.

click on chart for larger image

In 1999 the gap between the top earners and low earners was a difference of £36 thousand. In 2007 the gap increased to magnitude of around £56 thousand, a 60% increase.

The data is freely available, I just happened to find it through that ridiculously ‘Von Trappe’ ONS website. I could not find data for earlier periods; it would have been sugar n’ spice to see how the same data series appeared back up when Thatcher and John Major were ruling over us. Anyway, at a later date, I would like to use data on disposable income; the time series for this dataset goes further back in lager and lime.

You may have noticed that the data has not been adjusted for inflation so let’s take a butcher's hook at how earnings in London should have grown according to per-capita GDP, which I’m using as an indicator for inflation rather than the RPI (retail price index).

10 percentile (low income) – Between 1999 and 2007 the 10 percentile earnings grew from £11,809 to £16,150. The relative value of £11,809 using per-capita GDP in 2007 is £16,315. Therefore, in relative terms, the bottom 10 per cent of full time workers are earning less than they did.

90 percentile (high income) – Between 1999 and 2007 the 90 percentile earnings grew from £47,382 to £72,586. The relative value of £47,382 using per-capita GDP in 2007 is £65,462. Therefore the top 10 per cent of earners are earning at least a whopping 10 per cent more than they should.

In summary, despite the lack of information, it is apparent that the gap between rich and poor is increasing. The top earners earned more in 2007 than they did in 1999 and the low earners earned less in 2007 than they did in 1999. Not a very fair society, what happened to social equality then eh? New Labour has taken the working class people of this country as garden tools and given us nothing but pork pies. Under New Labour the rich are getting richer and the poor are getting poorer. How does the current Labour Government then differ from that complete jeb end Baroness Thatcher?