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Private equity buyouts destroy jobs - that’s the conclusion from researchers working separately for Birmingham University in the UK and reports on the preliminary findings of a World Economic Forum project on private equity and jobs in the USA.



The evidence has emerged as discussions continue between Global Unions - including UNI - and private equity groups on both sides of the Atlantic and as the WEF prepares for a debate on the issue at its next Davos session in January.



Global Unions want PE groups to sign up to global labour standards established by the International Labour Organisation and to respect collective agreements and to negotiate with unions.



The new research undermines the charm offensive recently launched by PE groups to prove to governments considering tighter regulations on them that they are (in the words of Blackstone chief Stephen Schwarzman) "a force for good within much of the global economy".



"PE groups like to promote themselves as benevolent job creators but that is not the reality for working people," said UNI General Secretary Philip Jennings. "Jobs, decent working conditions and pensions are often the first to go to meet the high returns demanded of companies by their PE owners and to pay the huge fees, dividends and even the take-over debt imposed upon them. This research confirms what Global Unions like UNI have been saying for some time."



Many governments are looking at the implications of the growth of private equity - including calls for tighter regulation and an end to unfair tax concessions. In the UK, PE groups have sponsored work on a voluntary code of behaviour to try and head off imposed controls. Millions of workers now work for PE-owned companies in the USA and Europe and, with more than $600bn raised recently, PE groups stalk new victim companies.



The Birmingham research reveals that a quarter of jobs over a four year period is cut as a result of a private equity buyout. Press reports on the “off the record” comments to the American Enterprise Institute last week on the preliminary research findings for the World Economic Forum identify years two and three after a buyout as the most vulnerable to job cuts. The final results of this research will be presented to the 2008 World Economic Forum in Davos.



"PE groups need to understand the message that - as owners - they have responsibilities as employers to respect collective agreements and the rights of workers," says UNI General Secretary Philip Jennings. "Employees are stakeholders too and the wealth they help generate should be shared far beyond the billionaire buyout boys."



The Birmingham research does suggest a revival in jobs under PE after five years - but that’s small consolation for redundant workers. Many PE groups will have sold off or taken public a company again before then.