Trade unions from across the world met in Paris on Friday in a show of unity to call for a clampdown on "cold-blooded" investment funds which they see as a serious and growing threat to companies and jobs."We are looking at the feasibility of an international response that includes information and consultation rights for workers and appropriate regulation and taxation by governments," the unions said in a statement.Calls for tougher regulation of hedge funds, a trillion-dollar industry that has grown rapidly in recent years, have mounted in recent months. Concern has also grown because ostensibly conservative pension funds have joined the rush to invest in hedge funds despite their secretive trading practices.The value of corporate acquisitions by investment funds hit a record global total of nearly 600 billion dollars (455 billion euros) in 2006, over half of which were chalked up in the United States, up a hefty 70 percent from 350 billion dollars in 2005."Amid the spectacular growth of private equity deals and investment by hedge funds ... union concern has mounted at the employment impact of buy-outs by what are often shadowy investors using borrowed money," said the unions meeting in Paris on Friday. Union leaders from the European Trade Confederation, the International Trade Union Confederation, and others from the United States, Canada and Japan, were attending the event at the headquarters of the Organisation for Economic Cooperation and Development.Damon Silvers, of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), said that after buying out a company a private equity fund usually wants to sell it on three to five years later. "They cut jobs and stop investment in the productive capacity of the company and that has long-term negative consequences for the people," he warned."The workers who face this kind of buy-out must understand that the kind of employers they are dealing with is a particulary 'cold-blooded variety' that may not play by the rules that they have understood employers to play by in the past," he said. Peter Rossman of the IUF, an international union for workers in the food, agricultural, hotel, catering and tobacco industries, gave the example of Britain's Automobile Association (AA), a roadside car-repair company.It was bought last year by the private equity firm Permira."They have quickly eliminated close of one third of all the jobs, 3,500 jobs exactly (out of 13,000)," he said. "The employees have been pressed to work more hours, to the point that last December, the company declared that there will be no vacation time for employees until March." And on top of all that, he said, "there has been a noticable decrease in the quality of the service."Silvers of the AFL-CIO warned that there was much concern in United States about whether hedge funds were "contributing to a short-term mentality in the managment of American business that in the end make us less able to compete in the world economy where complexity and long term thinking are extraordinary important."US Treasury officials said last month that hedge funds did not require fresh regulation.In Europe, Nicolas Sarkozy, the rightwing candidate leading the polls for France's April-May presidential elections, said last month that if elected he would seek a European tax on "speculative movements" by entities such as hedge funds."Who can tolerate a hedge fund buying a company with debts, firing 25 percent of staff and then reimbursing them by selling it in pieces? Not me," he said in an interview.Finance ministers from the Group of Seven rich nations last month debated the risks to the global financial system posed by hedge funds and urged greater vigilance of the industry.
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