Unite: Three point challenge to private equity after unions

Unite: Three point challenge to private equity after unions’ case is vindicated

Unite: Three point challenge to private equity after unions’ case is vindicated

Three point challenge to private equity after unions’ case is vindicated

Union claims that private equity costs jobs have been vindicated by a report to the recent World Economic Forum at Davos and have now prompted a three point challenge to the industry.

Speaking ahead of today’s round table discussion between trade unions and private equity, Jack Dromey, Unite the union deputy general secretary, said the private equiteers needed to pay fair taxes, acknowledge that self-regulation was a non-starter and respect workers rights.

“2007 was the year when leading trade unions, including Unite, exposed private equity for costing jobs and for not delivering the higher than average returns they claimed. 2008 is the year for action,” said a forthright Mr. Dromey. “The World Economic Forum report by Harvard’s Josh Lerner singled out Unite and UK unions’ exposé as being correct. Private equity cannot hide behind its own bluster and an apologist media spin. They must act and positively respond to our three point challenge.

“Private equity should not pay less tax than their cleaners, should be properly regulated not regulate itself and workers should not be kept in the dark and then sacked after a takeover.”

A summary of the report to the Davos summit showed:

  • workplaces of firms taken over by private equity (PE) have 10% less employees 5 years after the takeover than if they had developed like similar workplaces not bought by PE: “the net impact on existing establishments is negative and substantial” (p.54)
  • firms taken over by PE have 3.6%-4.5% less employees 2 years after the takeover than if they had developed like similar workplaces not bought by PE (even after including the net effect of creating, buying, closing and selling new workplaces): “for a sample of surviving firms, we observe …a negative net impact on employment that is substantial but smaller than that from the establishment-level results that ignore greenfield entry.” (p.54)
  • firms taken over by PE have much higher rates of closure, opening, acquisition and disposal of workplaces, in the 2 years following a PE takeover, than comparable firms: “we observe more greenfield entry, more acquisitions, divestitures and establishment shut-downs” (p.54)

ENDS

For further information please contact the Unite press office on 020 7611 2550