London, April 25:

Private equity firms are reshaping the American economy to the detriment of workers and local communities, one of the largest trade unions in the US said yesterday after publishing a report into the industry’s growing influence.

The almost two million-strong Service Employees International Union (EIU) said the booming private equity buyout industry had turned back the clock on community involvement and workers’ rights. In a dossier documenting private equity deals in the US over recent years, the union highlighted buyouts that it argued left companies ‘hollowed out’ or even bankrupt. Others saw gains that were paid exclusively to the new private equity owners.

Claims that the private equity industry created jobs and boosted the economy were unfounded, said the union, pointing out that there was little quantitative research in the US to support the view. It said the only detailed study was carried out in Britain and while it showed that buyouts increased the number of jobs in 60 per cent of cases after six years, almost all workers suffered cuts in pay.