Impact of Private Equity on Employment and Co-Determination : The Case of Germany

Studies of the effects of private equity in the United States have shown that the short-term, return-oriented business model can put a strain on industrial relations between employers and employees. This is similarly assumed to be the case for the coordinated market economy in Germany. Firstly, the article shows for the years 2013 to 2018 the volume of employees affected by private equity takeovers in Germany and the industries in which these employees work. Secondly, it examines whether equal co-determination, which German law requires of companies with more than 2,000 employees, is avoided or ignored by private equity companies to a greater extent than by other types of employers. Thirdly, the change in the activity of works councils whose companies have been taken over by a private equity firm is considered. Overall, it is becoming apparent that private equity companies are more restrictive at the company level than other types of employer and that it is becoming more difficult for works councils to adequately represent employees’ interests