US, European Unionists Call for International Action on Buyouts
The UK Guardian reported on May 23 on calls by UK and US trade unionists for global regulatory action on leveraged buyouts.
According to the Guardian, writing on the European Trade Union Confederation (ETUC) Congress in Spain, UK TUC general secretary Brendan Barber stated "We need a Europe-wide campaign led by unions to secure proper rules. A new super-rich elite can suck value out of companies without even paying proper UK tax on their windfalls or disclosing what they are doing. Meanwhile, the rest of us face possible reduced returns on our pension investments, the risk of economic slowdown if the takeover debt bubble bursts, and - if we are unlucky enough to work for a takeover target - real threats to jobs, pensions and living standards."
US AFL-CIO Treasurer Richard Trumka, describing union initiatives in the US and pledging support for action in europe, told the Congress "In the late 1980s and early 1990s, the largest leveraged buyout (LBO), RJR-Nabisco, resulted in 43,000 lost jobs. Another large LBO of that era, Safeway, began with mass layoffs in the late 1980s and ended with an attack on employer provided health care that led to a prolonged strike in Southern California in 2004. In 2005, a private equity firm bought up a whole string of largely mothballed coal mines, reopened the mines and then took those mines public as International Coal Group. The International Coal Group bragged about its safety record in the public offering, then six weeks after the offering closed, twelve miners died in the International Coal Group’s Sago Mine.
So the booming growth of private equity funds, the magnitude of their financial resources, and their disregard, if not disdain, for the labor movement, is the real issue for us – the predatory role of private equity players like Blackstone, KKR and Texas Pacific. Their business strategy puts them inherently at odds with the workers’ interest in maintaining living standards, and at odds with our members’ interest in having employers and pension funds that focus on long-term value."
The Guardian wrote that "Poul Rasmussen, leader of the European Socialist Party, said the European trade union movement should use the G8 summit next month to press for global action against private equity.
An ETUC delegation received a favourable reaction from Angela Merkel, German chancellor and EU president, especially on enforcing new transparency rules for private equity. She largely blamed EU inaction on Tony Blair, saying he had blocked measures to limit private equity firms."