A key finding of the report – one that was most widely reported in the media – concerns the quantitative employment impact of private equity. It shows that private equity transactions are typically preceded and followed by an abnormal depression in employment levels and that the latter only catch up with non-private equity levels after 4 to 5 years. Job destruction appears particularly severe in the services sector, where “the cumulative five-year impact is 9.7% lower employment” in private equity-owned companies than comparable non-private equity averages. The WEF study contradicts the enthusiastic private equity industry–backed “surveys” that are regularly posted on the web to show how private equity creates jobs.
Wednesday, 30 January 2008
TUAC response to WEF private equity report
Not surprising to see the unions pick up on the WEF report I posted about previously. It does blow a hole in the claims made by the private equity industry about job creation. Excerpt from the TUAC release below, full version here.