One sign of the troubled economic times in Europe has been the predicament of the Socialist and Labor Parties. They cannot ignore the need for budget-cutting and reducing sovereign debt. On the other hand, this policy translates into wage freezes and spending cuts and hits their constituency hard. The unions, the erstwhile supporters and frequently bankers of these parties, have expressed dismay over what they consider betrayal by "their" political leaders.

This tension was apparent when the general secretary of the Unite union, Len McCluskey, wrote an article in the Guardian taking Labour leader Ed Miliband and the shadow Chancellor Ed Balls to task for endorsing a 1% pay ceiling on salary increaseses - and justifying the policy by saying that it was necessary to combat joblessness.

McCluskey claims that this policy is a throwback to the National Government of 1931. During the Great Depression,  Labour Prime Minister Ramsay MacDonald and his Chancellor of the Exchequer took a minority of Labour MPs and formed a National government with the Conservatives, a government that also practiced austerity. For Labour, this represented the ultimate betrayal and they expelled Macdonald from the party.

For McCluskey to invoke this episode means that the unions are extremely bitter.

McCluskey reminded Ed Miliband that he would not have won the Labour leadership race without the support of the trade unions. Ed Miliband's opponent in that race was his brother David, an ally of Tony Blair and an adherent of New Labour.

Ed Miliband and Ed Balls were allies of Blair's successor, Gordon Brown, who was considered more in line with traditional Labour ideology. McCluskey warned Ed Miliband that his leadership was being undermined because he had surrendered on policy, saying "Having won on the measures, new Labour will likely come for the man sooner or later."

Miliband replied to McCluskey claiming that the union leader's views were wrong, while the leadership was right and responsible. The decision to prioritize jobs over public sector pay was a tough decision, but a correct one. Labour did not mimic the Conservative government. It criticized the government for going too far and too fast, but neither would it advocate reversing the cuts unless "we know where the money is coming from."

Mary Riddle, a columnist for the Telegraph, who supports and is close to the Labour Party, argues that the rift between Miliband and McCluskey is actually beneficial to Miliband. The trade unions do not have a better alternative leader to Miliband or Ed Balls. The open rift between Miliband and McCluskey helps Labour shed the image that it is the captive of the trade unions, which will help the party with public opinion.

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