UK Unions Slam Walker Commission for Silence on Worker Rights
Trade unions in the UK have criticized the report commissioned by the UK Venture Capital Association - the Walker Review of Disclosure and Transparency in Private Equity published earlier this week – for the voluntary, "self-regulatory" character of its proposals and have highlighted the report's silence on crucial issues concerning worker and trade union rights in the companies targeted for takeover
The report, assembled by the former chairman of Morgan Stanley International and leading private equity professionals, was produced to deflect growing calls for regulatory measures to govern the operation of the buyout funds by offering instead a "Code of Conduct". Final recommendations will be issued following a three-month "consultation period". (Click here to download the full text of the Walker report in pdf format).
Unions have tentatively welcomed the proposals for greater disclosure while criticizing their non-binding character. TUC General Secretary Brendan Barber stated that “It will do nothing to end worries about the wider economic instability threatened by the growth of highly leveraged buyouts. And most importantly it will do little to reassure the staff of private equity takeover targets that the quest for short-term returns will not continue to threaten their jobs, pensions and working conditions,”
The T&G section of Unite stressed that "If private equity’s consultation fails to address the issue of workers rights it will have failed." Walkers proposals for more "communication" with staff were "vague to the point of being -meaningless", said Assistant General Secretary Jack Dromey, adding "Workers should be fully informed and consulted on the plans for their futures before a takeover and their terms and conditions protected on transfer. They should be able to apply for a blocking injunction if private equity doesn’t come clean.”
In a presentation earlier this year organized with the Party of European Socialists at the European Parliament in Brussels, the IUF insisted on binding regulatory measures in this regard "to render the buyout fund as an employer visible, accessible and legally responsible for collective bargaining. In the EU this means amending the Acquired Rights Directive to take account of a wholesale transfer of share ownership in the context of the sale of a business." Unions also had to demand legally binding measures to
- establish in European law the right of workers to take solidarity action within and across borders as a necessary self-defence mechanism in response to the free movement of capital across frontiers
- increase regulatory oversight in light of the heightened systemic risk generated by the growth of the junk bonds and other high-risk debt-based instruments which are funding the buyouts. The European Central Bank should be required to make a quarterly or monthly report on the overall exposure of their respective banking systems to leveraged buyout-related risks (the full presentation is available by clicking here).
According to the Financial Times, the UK private equity industry has been granted a "potential reprieve" by the July 10 decision to delay publication of the report of the Treasury Select Committee investigating private equity until the autumn. Because the report - to which unions made substantial submissions - is expected to be highly critical of the operations of the buyout business, the FT observed that "This timing means the MPs’ main recommendations are unlikely to surface in time for the party conference season, and hence will not fuel the unions’ campaign for a tax and regulatory clampdown on the industry."