The European Private Equity and Venture Capital Association (EVCA) claims that private equity ownership has a positive impact on employee relations, most notably in traditionally liberal market economies such as the UK.
A study carried out in association with the Centre for Management Buy-Out Research (CMBOR) – canvassing 190 human resource professionals and company executives in the first half of 2008 – assessed the quality of employee relations, with a focus on earnings, occupational pension schemes, employee consultative committees and trade union relations.
According to the EVCA, private equity involvement had an overall neutral or positive effect across all criteria, compared with the company’s situation prior to private equity investment.
Real earnings of non-managerial employees increased in 51% of cases, with 47% experiencing no change. Unionised workforces remained static post-buyout at 71%. Availability of occupational pension schemes increased from 76% to 81% post-buyout. Consultative committees increased from 50% to 63%.
“This study looks beyond private equity’s effect on absolute employment levels, to the changes in employee relations across a range of measures,” said Mike Wright of CMBOR. “While companies may experience redundancies or employment growth during various points in their life cycle, the fair treatment of stakeholders should transcend economic cycles.”