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Private Equity hurts pensions

Published: 21 April 2007
Google translate: 

General Secretary Philip Jennigns brings delegates to their feet

Lothar Schröder

Bernard Roome



Per Paskesen

 Private equity has struck again - and this time the victims are future pensioners at Airwave, the company that provides the digital radio network for UK emergency services

Within 50 minutes of acquiring Airwave from Telefónica’s O2 in a £2bn deal, Macquarie Bank announced that they are scrapping the existing pension scheme - which gives workers a guaranteed benefit.

The news was given to the UNI Telecom World Conference in Athens, which heard a warning form UNI General Secretary Philip Jennings that no publicly quoted company in the world is safe from a private equity takeover - “mongrel capitalism” as he called it.

“We don’t accept that our Airwave members will lose an important benefit. Our members will take industrial action if Macquarie try and take their benefits away,” the CWU UK’s Bernard Roome told delegates in Athens. Affiliates CWU and Connect will work together with UNI to protect their Airwave members.



“We challenge the private equity brand,” said Philip. “For them four years is the long term and they load the companies they buy with the debt of the takeover, a 2% fee for the privilege of being taken over, 20% returns and even extra loans to fund dividends. How can you have a sustainable company for the long term on that basis? None of our jobs are safe.”

A fifth of all takeover activity last year involved private equity and they are busy in the US, Europe, Australia and South Africa.

“Once a company goes private it goes underground and you don’t know what they are up to. And private equity just doesn’t get Corporate Social Responsibility.”

The threats posed by private equity will be raised with governments during the G8 summit in June.

Philip recently met leading private equity company Blackstone in New York recently and exploratory discussions are underway to create a global forum to bring together private equity and global unions for exchanges.



Unions in TDC Denmark are in the middle of a private equity takeover by five funds, including Blackstone, and there is already pressure to cut jobs faster, reported Per Paskesen from DM. The takeover group promised “business as usual” but, said Per, “we have to improve our profitability and face reductions in the workforce, so it’s hardly business as usual”.

In Germany ver.di is already fighting moves by Deutsche Telekom to outsource more than 50,000 workers onto lower pay and conditions as Blackstone arrives with a 5% shareholding and a seat on DT’s management board.

20% of jobs went in one Blackstone takeover, said Lothar Schroeder from ver.di Germany. He warned that Blackstone will impose their own demands on Deutsche Telekom management. It will mean selling off the lucrative parts, less investment, cash optimisation to pay dividends and no social partnership.

“Blackstone work like other private equity groups - they make money by asset stripping. They are not interested in developing the activities of the company and protecting jobs,” said Lothar.

Blackstone’s Lawrence Guffey sits on the boards of both TDC and Deutsche Telekom. “We must bring guys like Guffey out of the closet so we know who are the enemies we face today,” said outgoing UNI Telecom President Larry Cohen.