Financialisation, ownership and employee interests under private equity at the AA, part two

• DOI: http://doi.org/10.1111/irj.12137
• Author: Ian Clark
• Date: 01 May 2016
• Published date: 01 May 2016

Financialisation, ownership and employee

interests under private equity at the AA,

part two

Ian Clark

ABSTRACT

This article examines a theoretically informed case study of the effects of

financialisation at the workplace. It focusesin particular on trade union de-recognition

and trade union recognition in the furtherance of ownership interests. The paper

reports on the continued diffusion of investor-owner interests under the private equity

business model which has recently witnessed the AA re-listed on the stock market. It

addresses two research questions. One, how are investor-owner interests secured by

trade union de-recognition and re-recognition? Two, how and why, as a de-recognised

trade union, does the GMB continue to campaign for and represent GMB members

in the AA when the IDU (the independent democratic union) has sole recognition

at the firm?

1 INTRODUCTION—FINANCIALISATION AND WORKPLACE

OUTCOMES—THE RESEARCH QUESTIONS

Financialisation can be defined as the costs and consequences of financial innovation

for firms and their employees in the non-financial sector of the economy. This article

provides a theoretically informed case study of financialisation at the workplace

where a firm is captured by a business model associated with new investor-owners

and the ideology of investor and shareholder value (I&SHV). Investor-owners, such

as hedge funds, private equity partnerships and sovereign wealth funds, use innova-

tive and sophisticated investment leverage in the forms of derivatives, junk bonds,

credit default swaps, mortgage backed securitisation of firm level assets and liabilities,

shorting and collateralised debt obligations to acquire (what become) portfolio firms.

More significantly these investor-owners and the ideology and motives and values

central to I&SHV witness the core of financialisation—the endogenous creation of

money, credit and debt—become rooted in the operation of non-financial firms. This

is a contagion effect of financialisation where investor-owners in non-financial firms

use unregulated financial processes associated with leveraged acquisitions to appro-

priate value from a portfolio firm.

A first research question focusses on how and why investor-owner interests pursue

union de-recognition and re-recognition and how direct ownership interests are expe-

rienced by the workforce at the AA. More specifically empirical material is advanced

to reveal how work intensification, performance management and required revenue

❒Correspondence should be addressed to Ian Clark, University of Leicester School of Management Ken

Edwards Building University Road, Leicester LE1 7RH, United Kingdom; email: ic70@le.ac.uk

Industrial Relations Journal 47:3, 238–252

ISSN 0019-8692

© 2016 The Author. Industrial Relations Journal Published by John Wiley & Sons Ltd

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution

and reproduction in any medium, provided the original work is properly cited.