The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Equity analyst fingers unions

John Sweeney

After the blows many investment banks' reputations took in 2002, equity researchers might have been expected to keep their heads down. Not Steve Galbraith, who put his foot deftly in his mouth with a note advising clients to avoid investing in companies with highly unionized workforces.

"Look for the union label - and run the other way," Morgan Stanley's chief US market strategist argued, explaining: "Rigidity in labour costs, processes and pension requirements, while perhaps beneficial to employees, may prove toxic to shareholders." According to Galbraith, heavily unionized companies tend to underperform.

His remarks prompted outrage among unions, left-wing institutes and others eager to get involved who feel Morgan Stanley showed its true colours as an implacable foe of organized labour.

John Sweeney, president of the AFL-CIO labour federation (pictured), told the bank it was "attacking the fundamental structures of fairness in our economy". A lack of unionization had hardly prevented problems at Enron and Tyco, he said.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree