Workers 'worse off under private equity'
Companies that are taken over by private equity firms leave their employees demoralised and financially worse off, according to a new report by The Work Foundation published today.
Where private equity groups bring in their own executives - so-called management buy-ins - around a fifth of jobs are cut within six years of the deal, while the remaining staff end up an average of £231 worse off than other private-sector workers.
The record of management buyouts, where the existing executives remain in place, is slightly better, with the overall workforce usually expanded after a round of initial job cuts. Nevertheless, workers are still on average £84 worse off each year compared to other private-sector employees.
The report said private equity takeovers also often destroy relations between management and their staff. Just one in 10 managers in private equity- owned firms said they were positive about the role of trade unions in the workplace, while some 40 per cent said they were "hostile" towards unions.
The Work Foundation, an independent think tank, concludes its report by calling on the Government to tighten workplace regulations to provide more protection for employees in the event of takeovers. The report also calls for tighter tax rules to prevent private equity firms from offsetting large portions of their debt interest against tax, and demands that the private equity industry becomes more transparent.
Will Hutton, chief executive of The Work Foundation, said: "Private equity firms pride themselves on their ability to squeeze performance from the organisations they own, and they turn up the pressure on individuals in order to do so. We are concerned that often, the price that is paid by workers is too high and that levels of trust between workers and managers suffer."
By James DaleyPublished: 26 March 2007
Thanks to: news.independent.co.uk
