On the eve of the Trades Union Congress conference in Blackpool, which opens today, Mr Mandelson told The Independent that he would side with the Confederation of British Industry against the TUC over a proposed EU directive which would force all companies employing more than 20 people to "inform and consult" their workers about major decisions affecting them.
Although Labour has accepted the Social Chapter, which gives the EU the right in principle to bring forward measures to protect employees, this proposed directive is the first specific test of the Government's commitment to it.
Mr Mandelson's decision to oppose the directive will anger the TUC, which he will address in Blackpool on Thursday.
In his first interview since joining the Cabinet, Mr Mandelson said that the Government would not give blanket approval to measures proposed by Brussels under the Social Chapter.
"We have signed up to the Social Chapter and we support it. But ... it is not a back-door means of winning rights through Europe that the Government here in Britain is unwilling to legislate upon."
Mr Mandelson insisted that the proposed directive was wrong because it was "not appropriate" to bring in such changes through the EU. "It is a matter for national governments," he said. However, Britain alone cannot veto the legislation.
He stressed that the unions could play as important a role as anyone else in Tony Blair's modernising "project", but warned they would damage their own image by knee-jerk criticism of the Government. He urged them to avoid 'the old slogans and old demands".
Mr Mandelson said it was "pretty daft" for union leaders to blame high interest rates and the strong pound for the closure of the Fujitsu factory in Mr Blair's Sedgefield constituency, when the company itself pointed to the collapse in the world market for semi-conductors.
"The casualty will be their own credibility and how seriously they will be taken in future," he said. "It is not an easy position for the trade union leadership to be in, but they are not going to make a successful impact by dumping reality and reaching out for old-style conference resolutions."
Mr Mandelson was "relaxed" about unions' predictions of strike action over the Government's squeeze on public-sector pay. "I would much rather have an intelligent, informed dialogue than an exchange of grand-standing and playing to the gallery," he said."
Speaking at the conference today John Prescott, the Deputy Prime Minister, is expected to mount a vigorous defence of the Cabinet's economic policy, but he faces an uphill task in trying to convince manufacturing unions.
In a manoeuvre calculated to win the approval of TUC delegates, however, Mr Prescott will make it clear that Mr Mandelson should not water down the Government's Fairness at Work White Paper. The Secretary of State has faced a growing clamour from employers who oppose plans to remove the limit on compensation for unfair dismissal.Reuse content