Sainsbury's has faced takeover interest from private equity groups

But The Work Foundation adds that when a private equity group installs a new management team, the firm's workforce and pay are likely to be reduced.

Private equity groups use a mixture of their own money and debt to buy firms which they feel are underperforming.

They usually look for a profitable sale within three to seven years.

Asset strippers?

As they do not have to keep shareholders happy or meet stock market disclosure rules, private equity firms argue that the companies they control are more able to make difficult or long-term decisions.

Critics dismiss such firms as asset strippers, but Gordon Brown has praised their ability to create jobs quickly and contribute to the economy.

Sainsbury's and Boots have recently attracted interest from private equity groups, while Birds Eye and the AA have been taken over by such firms in recent years.

'Profit boost'

"A sizeable tranche of corporate Britain is falling under private equity, but the industry operates with near zero levels of public accountability," said Work Foundation chief executive Will Hutton.

"Private equity firms pride themselves on their ability to squeeze performance from the organisations they own, and they turn up the pressure on individuals in order to do so.

"When private equity backs an incumbent management team the result can be improved productivity and higher employment.

"But we are concerned that often, the price that is paid by workers is too high and that levels of trust between workers and managers suffer."