News

Austrian union GPA-DJP (Gewerkschaft der Privatangestellten, Druck, Journalismus, Papier) issued a press release recently challenging comments made by finance minister William Molterer about granting private equity firms tax relief as an investment incentive. The UNI affiliate came out against the finance minister’s suggestion that private equity firms should be granted tax exemptions if they sell companies or parts of companies. Private equity as a rule, already uses debt leverage to avoid paying tax as a means of generating return. General Secretary of GPA-DJP, Wolfgang Katzian says private equity should have tighter tax regulation on it rather than a tax credit.



Most private equity strategies use the debt system to gain tax benefits resulting in reduced tax income for the community in which the company operates. Offering further tax benefits to private equity investment by not having to pay capital gains tax deprives the community of even more income. Furthermore private equity owned companies offer less secure employment and often employment reduction, they are less inclined to invest in long term research and development and are not obliged to be operationally transparent, unlike their publicly listed competitors.



Private equity acts on its own self investment interest and contributes little to the workers and community it operates in. UNI Global Union supports the challenge of Austrian affiliate GPA-DJP and urges the government to reconsider its position before developing any legislation to this order.



GPA-DJP’s is campaigning to make investors aware of private equity companies’ lack of social and labour conscience. As part of their strategy, they have created a network of their member’s who sit on pension fund boards, to inform them of the risk of investing in private equity firms. The union has met with the network to gather information about the pension funds current investment portfolio in private equity. An information session was also given to bring to the fore the selfish profit driven agenda and risk of debt collapse associated with private equity investment. The Austrian union aims to meet regularly with this group. The opportunity will be further exploited to discuss worker related issues with private equity investment including socially responsible investment.



This is an encouraging initiative that some UNI affiliates are exploring with their respective pension funds. Initial results from a study commissioned by UNI into pension funds and their relationships with unions, shows that many unions across the world have some form of influence on pension fund boards. This indicates an opportunity for unions to use their connections to highlight such important issues as risky private equity investments in the interests of protecting the investments of members and the workers of private equity run firms. Private equity councils across the world still refuse to acknowledge a code of conduct for labour rights.