Social democrat Employment Ministers call for action on private equity & hedge funds

5 December 2007

Employment and Social Affairs Ministers from the Party of European Socialists – including Portuguese Minister José Vieira da Silva and Italian Minister Cesare Damiano - today signed a letter calling on the European Commission to study the impact of private equity and hedge funds on jobs and workers rights, and possible regulation.

The letter, addressed to European Commission President José Manuel Barroso, states that “private equity and hedge funds pose an unnecessary threat to viable companies, jobs and workers’ rights” (through leveraged buy outs). It goes on to say “In too many cases companies have been bought with borrowed money, burdened with high levels of debt and interest rates, with assets sold off and workers made redundant.”

The letter points out that “Current European legislation on workers’ rights to information and consultation before a takeover, such as the European Acquired Rights Directive, do not effectively cover leveraged buy outs.” 

The letter calls on the European Commission to “carry out an impact assessment of these funds in Europe including on jobs, workers rights and corporate governance” and “study possible regulatory actions”.

Those signing the letter were PES President Poul Nyrup Rasmussen, José Vieira da Silva, Cesare Damiano, German Secretary of State for Labour and Social Affairs Kajo Wasserhovël  and ETUC General Secretary John Monks.

PES President Poul Nyrup Rasmussen said “There is a growing awareness that action is needed to prevent leveraged buy outs burdening healthy companies with high levels of debt and unnecessarily destroying jobs. The financial markets should support – and not undermine – the real economy, and this is not always the case at the moment.”  

The letter follows a resolution adopted by delegates from all European socialist and social democratic parties at PES Council meeting in Sofia that called for transparency of private equity and hedge funds and the setting of minimum reporting standards; the relevant authorities to consider limits on leverage to lower the risk of default; effective taxation of fund managers; and the G8 Task Force on financial markets to take into account the proposals above as well as the protection of workers rights in leveraged buy outs.

FOR MORE INFORMATION:
Julian Scola, Communications Advisor - Media & Campaigns
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