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19th Mar 2024

EU trade unions to fight 'casino capitalism'

  • Some private investors of treating Europe like an "adventure playground", says John Monks (Photo: ETUC)

Trade unions across the EU are preparing themselves to go on the offensive against the "big beasts" of private equity and hedge funds, believing their profit-oriented drive is undermining the bloc's social fabric.

"No one wants just a single market, they want something else out of Europe – some security against the big beasts that are in the single market like private equity and hedge funds," the head of the European Trade Union Confederation John Monks (ETUC) told EUobserver.

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Speaking ahead of the ETUC's four-yearly congress beginning in Seville today (21 May), where new financial capitalism and the fate of the European social model is set to be a major topic of discussion, Mr Monks accused these large-scale private investors of treating Europe like an "adventure playground."

"Until six months ago, nobody knew that one sixth of the private sector in Britain is owned by private equity. We are not so sure about the figures for Europe except we know it's there and we know it's growing."

Referring to "casino capitalism," he said venture capitalists were only interested in buying a company, boosting the share price and selling, "leaving companies weakened by big debt." They also tend to "strip assets" and cut back on "development, training and all the things that make for a good long-term company."

These new capitalist forces and their possible consequences have moved swiftly up the political agenda in recent years, particularly as financial markets become more integrated and the risk spreads across borders.

Critics say they often operate beyond normal regulations and are not transparent. The issue first generally entered the public consciousness in 2005 when Franz Muntefering, now German vice-chancellor, referred to hedge funds - which borrow large sums to bet in financial markets – as "locusts" waiting to swoop in and strip German companies of their assets, causing major job losses.

This year it is once again being tackled at the highest political level – both in the EU and the G8 club of richest nations – with Germany, currently heading both organisations, saying there has been progress towards having a code of conduct for hedge funds.

For his part, Mr Monks says it is a "public relations" battle as hedge funds and private equity deny the locust caricature, and say they contribute to the growth of the European economy.

According to Mr Monks, however, trade unions have been too much on the defensive in the past and will now use the current more advantageous economic climate to put their case.

"Economies of the eurozone are beginning to do better. The unions are much more powerful when unemployment is falling and once there is the beginning of labour shortages."

"We'll be banging on [Charlie] McCreevy's doors about this issue all the time," he added accusing the EU's internal market commissioner of having given private equity a "certificate of approval so far."

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