Pensions, and the Eurozone crisis.
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What is the main topic discussed in this episode?
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Hello. I'm back from fighting the good fight against zombie statistics, the rogue numbers that never die, for a new series of More or Less. This week, we'll hear about the bureaucrat facing a life sentence for his alleged statistical crimes. He describes statistics as a combat sport. Armed with my fighting slide rule, I can hardly disagree. And we'll discover a statistic so dubious we made this German man laugh.
This story is so ridiculous. LAUGHTER
But first... This week's mass walkout by public sector staff over changes to pensions has been described as the biggest strike since the winter of discontent in the 1970s. Union leaders said workers were sending a strong and united message to the government, as thousands of nurses, teachers, council staff and others manned hundreds of picket lines. And yet, puzzlingly, in Prime Minister's questions that afternoon, David Cameron seemed to be announcing public sector pensions were rising.
A nurse retiring on a salary of just over £34,000, today she would get £17,000 pension, in future she'll get over £22,000 pension. A teacher retiring on a salary of £37,000 would have got £19,000, will now get £25,000.
If that's the case, why were so many people persuaded to strike? Of course, the devil's in the detail, the detail that David Cameron didn't mention. Mr Cameron's examples were based on a hypothetical teacher and nurse beginning work at the age of 25 and continuing full-time until retirement age. But here's the catch. Under the current system, that means working for 35 years until the age of 60. Under the new pension deal the government is proposing, it means working for 43 years and retiring at the age of 68, and for obvious reasons, expecting a shorter retirement too, which does save money. Nor did Mr Cameron mention that public sector workers, such as this nurse and teacher, are expected to chip in an extra 3.2% of their annual salaries on average.
The unions are chiefly upset over two issues. Public sector workers will be expected to retire much later and to contribute more to the cost of their pensions. David Cameron rather elegantly demonstrated that if you gloss over both of those concerns, everything's nifty. While the Prime Minister was talking about how large public sector pensions are, the unions were focused on how small they are. Unison, for example, has been handing out leaflets this week saying the average pension for NHS workers is £7,000 a year, and for local government workers it's around £4,000 a year. Now, Unison are trying to pull a reverse David Cameron here, making the pension look as stingy as possible. The key way to do this is to concentrate on the average pension.
That figure will include the pensions of people in a wide range of jobs, both full-time and part-time, and people who've worked in their public sector job for just a short time in between private sector jobs, as well as people who've taken long career breaks. These people will, of course... dramatically reduced the average. The Prime Minister's numbers do the opposite. They'll assume the teacher and the nurse has worked a full career in the public sector without a break. You're listening to More or Less with me, Tim Harford. Now, speaking of taking a break, shares in Thomas Cook plunged recently by 75% on the news that the packaged holiday company was in crisis talks with its bankers. Those talks successfully concluded, shares in Thomas Cook then increased by about 200%.
So here's a mathematical teaser for you. If a share priced at, say, £100 falls by 75% and then increases by 200%, what will the share price be at the end of its rollercoaster ride? More of that later. First, a remarkable story in the Financial Times this week explained that Andreas Georgiou, the head of Greece's new independent statistics agency, is facing an official criminal investigation for his supposed statistical crimes. I asked the economist Professor Yanis Varoufakis of the University of Athens what Mr Georgiou had been accused of.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–5:37
2
Why are public sector workers striking over pension changes?
5:37–9:32
3
How did David Cameron’s pension examples mislead about retirement outcomes?
9:32–16:52
4
What statistical tricks do unions use to make pensions look small?
16:52–23:41
5
Why is the Greek national statistician Andreas Georgiou accused of ‘crimes against numbers’?
23:41–28:46