One feature of the global economy in recent years has been the increasing number and importance of new investment funds (private equity (PE), hedge funds (HFs), and sovereign wealth funds (SWFs)), which are sometimes referred to as alternative investment funds (AIFs). This increase has paralleled fundamental changes in financial markets and has generated heated debates on the impact of these funds on restructuring practices, employment levels and industrial relations. Fund managers have claimed that they play a valuable role in rejuvenating underperforming companies, thereby contributing to long-term employment growth. By contrast, many employee representatives and those on the political left have argued that these new funds secure returns at the expense of labour.
However, the evidence base for assessing the effects of these AIFs on labour outcomes remains controversial. Therefore, in 2009 Eurofound included the issue of the impact of new forms of ownership and governance on employment in its new programme ‘Social Dialogue and the Employment Relationship: Evolution in European and National Industrial Relations Systems’. The programme states that ‘developments in financial markets, (more specifically private equity, hedge funds, and sovereign wealth funds, hereafter mainly referred to as investment funds) have given rise to new forms of corporate ownership. The mode of ownership can be expected to have a significant impact on the relationships between all stakeholders within and outside the firm. They almost certainly have consequences for a wide range of employment and social outcomes. These employment and social outcomes include working conditions, social dialogue, human resource practices, restructuring practices, and the overall level of employment. The impact of investment funds is likely to vary between Member States, depending upon both the regulation of the funds themselves and the particular labour market and industrial relations context in the States in which they operate
The impact of investment funds on restructuring practices and employment levels presents the results of a project that brought together researchers from several European countries to assess the effects of investment funds on labour outcomes.