Unite set to grow in strength as it begins merger talks with TSSA

Len McCluskey's union enters negotiations on a formal merger with the Transport Salaried Staffs’ Association and more could follow.

Labour Day brings notable news from the trade union movement. Unite and the Transport Salaried Staffs’ Association (TSSA) have announced that they have begun merger talks to form the UK's "first-ever cross-transport union". If successful, the TSSA, which has 23,000 members to Unite's 1.5 million, could become a new section of Unite by February or March next year. The TSSA was previously in merger talks with the RMT but according to Union News, "failed to resolve differences over the TSSA’s continued Labour Party affiliation and RMT’s backing for non-Labour candidates in parliamentary elections.

Unite itself was formed in 2007 through a merger of Amicus and the Transport and General Workers' Union and when I interviewed him last week, Unite general secretary Len McCluskey told me that he was "open to a merger in principle with every union", describing it as part of Unite's "strategy for growth". 

I’'m open to a merger in principle with every union, well, maybe there'’s one or two that I wouldn'’t, but I’'m not going to name them. But yes, of course, we will talk to any union...I'’ve already had discussions with several unions since becoming general secretarty and that is part of Unite’'s strategy for growth”.
After McCluskey's attack on the "Blairite" shadow cabinet ministers last week, the move has prompted concern among some on the Labour right, with one "Blairite" telling the Times: "It concentrates more power in [McCluskey’s] hands,” said one Blairite last night. “TSSA is a union with lots of middle class, professional workers who would not conform to Len McCluskey’s view of the world. They are the sort of people who vote for Labour, the Tories and the Lib Dems.

"The attempts by McCluskey to drag us back to the dark ages have been very disappointing."

But most in Labour are far more troubled by the possibility of another merger, that between the PCS, led by Mark Serwotka (who blogged brilliantly for the NS earlier this week on welfare reform), and Unite. 

At their annual conference this month, PCS members will vote on whether to begin merger talks with Unite to form a super union of 1.75 million members. The prospect of Unite, Labour's biggest donor, combining forces with a union that is not affiliated to the party has concerned Labour MPs, who fear it could lead to a reduction in funding. Unite was responsible for 28 per cent of all donations to the party last year and has donated £8.4m since Ed Miliband became leader. 

When I spoke to McCluskey he refused to rule out the possibility of a full merger.

“The PCS have their conference in May and my understanding is they'’ll be discussing the whole question of the future of PCS, so I suspect what we all should do is wait for the outcome of that conference. From Unite’'s point of view, we are always engaged in discussions with sister unions about whether there’'s a legitimacy for us to work closer on the one hand or, indeed, merge together on the other hand. There'’s certainly no formal discussions taking place with PCS and I think we should just allow their democratic process to happen and we'’ll see what comes out of that and then Unite will react to it.”
Of the concerns expressed by some in Labour, he said: 
I’m open to a merger in principle with every union, maybe there’s one or two that I wouldn’t, but I’m not going to name them. But yes, of course, we will talk to any union. As I said, I’ve already had discussions with several unions since becoming general secretary and that is part of Unite’s strategy for growth.
A Unite-PCS merger would be the most significant event in the trade union movement for years, so the the latter's conference will be worth following closely when it opens three weeks today. 
Unite general secretary Len McCluskey. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Europe: as the politics subside

How long can a resurgence of investor interest in Europe last?

Might Europe be the place to be?

I think European equities tick a lot of the right boxes right now. Economies are recovering – indeed the first quarter of 2017 saw Europe once more grow faster than the US, having outpaced the world’s largest economy in 2016. Valuations are not excessive, either relative to the region’s history or the US equity market. Like almost anything, I believe European equities also look compelling relative to bonds. The final part of the jigsaw puzzle might have been earnings growth, but here too Europe is, at last, getting close to achieving a gold star.

Most of this has been known for quite a few months now and is part of the explanation for the better performance of Europe year to date. Even the euro has strengthened against the US dollar, from about $1.05 at the start of 2017 to $1.12 at the time of writing. Politics looks more settled, after the surprises of the Brexit vote last year in the UK and the election of Donald Trump in the US Presidential election. Perhaps a comment I made at the beginning of 2017, that “by the end of 2017 the UK and the US might look to have been the exceptions” when it comes to successful populist votes, seems more prescient.

Now that the political backdrop is perhaps more settled, with the UK’s potentially tragic Brexit decision an exception, how long can a resurgence of interest in Europe last? One threat is the gradual move towards ‘tapering’ by the European Central Bank (ECB) of its unprecedented quantitative easing program, and the support this provides economies by injecting cash to drive down the cost of borrowing and increase consumer and business spending. But it is already clear that this will be a very slow process. The economic recovery in Europe remains quite slow and inflation, outside the UK, is well below the ECB’s target of ‘below or close to’ 2%. At the same time, the damaging effect of negative interest rates needs to be avoided.

 

What could derail this market?

The one exception to what looks to be a relatively rosy scenario, in my view, remains the UK. The Brexit ball is rolling onwards, following the invocation of the now infamous Article 50, but the calling of a General Election was another distraction. The UK is still no closer to knowing what sort of Brexit is desirable, or more likely, economically feasible. Once the reality of debt, demographics and a weak currency become clear, I suspect that the UK market will continue to struggle against other European peers.

Elsewhere in Europe, economies look well set, and I suspect that more capital spending and investment are likely to be incentivised with tax cuts in Europe, again outside the UK. In this scenario, those capital investment-related names such as Siemens, Legrand and Atlas Copco should continue to do well. Luxury names, and auto makers, many of which have rallied hard so far in 2017, are likely to struggle due to subdued consumer demand. Financials have also seen mixed performance so far, with insurance underperforming banks. This seems an anomaly given the paramount importance of long-term savings to cater for retirement.

It would be entirely healthy for European markets to drift through what will hopefully be a quiet summer, without shocks such as Brexit to contend with. I think all seems well set though for European markets to trade higher than current levels by the end of 2017.

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