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Radio 4’s Any Questions panel on Friday night included the Shadow Health Secretary, Andy Burnham, and the Liverpudlian businessmen, Tony Caldeira.  Among the topics was the minimum wage. Mr Caldeira owns a textile firm which makes cushions. It started as a market stall in Liverpool and is now the largest manufacturer of cushions in the country, employing hundreds of people. Mr Burnham’s only jobs before becoming an MP, were researcher to Tessa Jowell and special adviser to Chris Smith.

Yet Mr Burnham was arrogant enough to tell Mr Caldeira how to run a business. Mr Caldeira felt he could absorb a 10 per cent pay rise for the minimum wage, to £7 next year. Mr Burnham declared that that wasn’t high enough – we needed to “go further” to a Living Wage.

Mr Caldeira said there would be a problem:

A 20 per cent increase, to Living Wage, would close both of my companies. It would mean my business would become uncompetitive.

Mr Burnham felt he had the answer:

“How about we have a flatter structure in companies top to bottom? How about we pay for it with people at the middle and the top earning a
little bit less. Aren’t companies better places to work if people are treated fairly?”

Mr Caldeira responded:

“Of course. But if you can’t compete, the companies don’t exist. You can’t have anybody there if the salaries are uncompetitive.”

So Mr Burnham thinks that Mr Caldeira could just cut the salary of his better paid staff – the product designer or sales director, or general manager, or accountant or lawyer. The managers would need to take a sharp pay cut – not “just a little bit less” – to absorb the 20 per cent pay rise for the larger number of ordinary textile workers. Of course those staff would not just shrug off their salaries being slashed, they would be snapped up by rival firms.

Probably Mr Caldeira could close down his firms and still have a perfectly comfortable lifestyle from the money he has already earned. He could move to a villa somewhere and put his feet up. Far worse would be the situation for the hundreds of ordinary workers who would lose their jobs. Such would be the perverse outcomes of Mr Burnham’s class war.

If Mr Burnham feels that the Caldeira Group would be most successful with a “flatter structure” then let him set up a cushion business and see if he can compete.

No doubt some staff at Caldeira earn far more than others. Is that fair? Yes because their salaries reflect their value to the business. It doesn’t mean they are morally superior, or more entertaining to chat with in the pub, or better as parents or spouses.

A bit of chit chat over the airwaves from the Greenbank High School in Southport might not do any harm. The difficulty would be if we had a Labour Government with the misguided anti business mentality that Mr Burnham demonstrates.

In its public pronouncements Labour is usually careful to focus on unpopular businesses – the newspapers, the bookmakers, the banks, the builders, the energy companies. But when it comes down to it they really don’t understand or appreciate business at all.

 

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