News
Union spotlight at Davos on private equity raiders
Published: 26 January 2007
Google translate:
Share this article: 
 ITUC President Sharan Burrow (left) during WEF session: Breaking the glass ceiling
WEF copyright: swissimage.ch/Severin Nowacki photo |
 |
Global unions have used the gathering of top business and government leaders in Davos to highlight the threat to workers posed by private equity raiders in a wide-ranging attack on “corporate greed”. The growing influence of private equity companies - buying up public companies often with leveraged debt and “sweating” assets - was strongly attacked at the World Economic Forum. “Private equity is fuelling insecurity but is insensitive to this, to people and to communities. Private equity is bending rules in a way that will provoke a backlash,” said UNI’s General Secretary Philip Jennings. He accused the equity funds of crippling the businesses they buy with too much debt, fees and dividends and driving down working conditions to help pay for it all. “It’s like a slasher movie - you slash jobs, health, pensions and working conditions. This in turn impacts on communities, services and customers - for whom you care little. The deal takes precedence,” he told businessmen in Davos. “Your philosophy is buy it, strip it and flip it.” |
| And there are long-term question marks over their growth. “How loyal will you be when companies cannot meet their debt re-payments? We are in uncharted waters. What happens when you hit the reef?” “At a time when we are looking for companies to be more transparent you are taking corporate governance underground. Does this mean you have abandoned any sense of broader responsibilities?” said Philip. In the UK about ten per cent of workers are now employed by firms organised on a private equity basis and in the US top private equity firm Blackstone is now on the top 15 employers in the country. Their reach and their ambitions are growing, helped by historically low interest rates. Blackstone has just made a $38.3bn offer for Chicago-based Equity Office, the largest owner of office space in the USA. “They are like global vacuum cleaners hoovering up assets any place, anywhere, any time and we want to bring them out of the shadows,” Philip told a press conference in Davos. He said global unions will be pressing the European Union and the G8 to force private companies to abide by established rules of corporate governance - and warned of union pressure on these companies through union influence on pension fund investments. The London Guardian newspaper quotes Richard Lambert from the UK’s employers organisation the CBI as saying private equity capital could be “extremely efficient” but that the growing importance of private equity companies would inevitably lead to more public scrutiny of their activities. |
|
 Philip Jennings during WEF session: Global business - saviour or scapegoat?
WEF copyright: swissimage.ch/Remy Steinegger photo |
 UNI's Philip Jennings (second from right) during WEF session: Global business - saviour or scapegoat?
WEF copyright: swissimage.ch/Remy Steinegger photo |
|
ITUC President Sharan Burrow said corporate greed was the “gorilla in the room” at the WEF’s annual, cloistered get-together in Davos. Business leaders need to wake up to growing inequality, she said. Top pay in the United States has gone from 30 to one (when compared to the pay of an average production worker) to 500 to one in the last 35 years, said John Evans, who is General Secretary of the Trade Union Advisory Committee to the OECD in Paris. “The share of corporate profits taken as personal compensation by the top five executives in the 1,500 largest US public companies has doubled - from 5% to more than 10% of total profits over the past decade - to a total of more than $40bn a year. That leaves less for reinvestment, for wage increases for ordinary workers, for shareholders or to fund pension plan liabilities.” * Last November UNI hosted a global unions conference in Nyon that highlighted the damage these secretive private equity groups are inflicting, pledged to drive private equity companies “out of the shadows” and called for tougher regulation. |