U.S takeovers can boost UK pay packets

Apr 19 2006 by Nic Paton Print This Article

Being taken over by a U.S multi-national can be good for your pay packet, according to new British research.

The study by academics at Nottingham University found skilled workers in British firms taken over by U.S firms on average reported earnings rising by 8 per cent two years after an acquisition.

It was even better news for unskilled workers, who often saw their pay rise by as much as 13 per cent.

Intriguingly, the effect was only felt after a U.S takeover, with takeovers by multinationals from continental or European Union countries having no effect at all.

There was no evidence for any causal effect on wages, skilled or otherwise, following acquisition by multinationals based in the EU.

The research was presented at the Royal Economic Society's 2006 annual conference at the university.

It was studying whether acquisitions of UK companies by foreign multinationals are a threat to domestic labour.

The results suggested the wage benefits were directly linked to the nationality of the foreign acquirer and the skill group of the workers.

Assuming that an acquisition did not change any of the main characteristics of the takeover target (at least in the short run), a possible effect of the foreign acquisition on wages in the domestic target could simply be attributed to the change in ownership from domestic to foreign, the research argued.

The change in earnings levels was "robust and economically significant", the study concluded.