A decision to bring in hundreds of Italian and Portuguese contractors to work on a new £200 million plant at the giant Lindsey Oil Refinery at North Killingholme, North Lincolnshire, sparked protests in Scotland, Wales, Northern Ireland and other parts of England in support of jobs for British workers.
Prime Minister Gordon Brown was told his infamous phrase about creating British jobs for British workers had come back to "haunt him".
A Labour MP tonight launched his own inquiry into whether European laws had been broken by excluding British workers from contracts, while the union at the centre of the dispute announced plans for a huge demonstration in Westminster.
Thousands of workers at sites including power stations and oil refineries took unofficial strike action today and there was speculation the dispute will escalate on Monday and spread "like wildfire" across the country if the deadlock is not broken.
Up to 1,000 demonstrators staged a protest for the third day in a row at a new £200 million plant at the giant Lindsey Oil Refinery at North Killingholme, North Lincolnshire, where the row started.
There were sympathy strikes at the giant Grangemouth oil refinery in Scotland, the Aberthaw power station near Barry in South Wales, a refinery in Wilton, Teesside, Kilroot power station in Carrickfergus, Northern Ireland, a gas terminal at Milford Haven, West Wales, the Fiddlers Ferry power station near Warrington and a number of other smaller sites.
Around 100 Italian and Portuguese workers are on the North Killingholme site, accommodated in large, grey barges moored in Grimsby docks, and are expected to be joined by 300 more next month.
Cleethorpes MP Shona McIsaac (Labour) said the decision to hire foreign workers was like a "red rag to a bull" to local unemployed people.
Total said the Irem contract involved no anticipated redundancies from the existing contractor workforce and stressed that local companies would be providing additional support services to the project.
Unite joint leader Derek Simpson said: "Unite has raised the growing problem of UK workers being excluded from important engineering and construction projects at the highest levels of Government.
"Unite is consulting its lawyers on the potential illegality of some employer's practices in the engineering and construction industries.
"The Government must act urgently and insist that companies involved in engineering and construction projects give UK workers equal opportunities to build Britain's infrastructure."
He called for urgent meetings with the Government and employers to discuss the "exclusion" of UK workers from some of Britain's major engineering and construction projects.
The GMB union said economic freedoms could not have priority over "fundamental social rights and social progress", and in the case of conflict, social rights should take precedence.
Kathleen Walker-Shaw, the union's European officer, said: "All workers across Europe need to be reassured that they have equal treatment in the job market, and that means equal access, with jobs being widely and transparently advertised and filled fairly, where pay, conditions and respect for collective bargaining are not undermined at other workers' expense."
Labour MP Nigel Griffiths (Edinburgh South), a former construction minister, said he will launch an inquiry to see if the Italian contractor involved in the dispute had broken European law by excluding British workers.
"If they have been telling the unions that under no circumstances will they recruit UK workers, that is a breach of European law."
Tim Finch of the Institute for Public Policy Research said: "British jobs for British workers was a careless slogan that is coming back to haunt the Prime Minister.
"With free movement of labour inside the European Union, jobs cannot be ringfenced for UK-born workers, and in just the same way, Italian companies are free to hire UK firms and our workers to fulfil contracts in their country. The free market in the EU has been a source of greater trade and prosperity and protectionist measures would be disastrous in the current climate."
Godfrey Bloom, UK Independence Party MEP for Yorkshire and the Humber, said Gordon Brown's pledge of British jobs for British workers was "in shreds".
Asked if the Prime Minister now regretted his "British jobs for British workers" slogan, a Downing Street spokesman said: "I do not see a reason for regret in that the action we have taken has meant that we are now putting in place measures to ensure that British workers can have access to the vacancies that exist in the system."
The contract being filled by foreign workers at the centre of the dispute had been agreed "some time ago when there was a shortage of skilled labour in the construction sector in the UK.
"That obviously is not now the case and we will be speaking to the industry in the next few days to ensure that they are doing all they can to support UK economy."
TUC general secretary Brendan Barber said: "With big job losses announced every day, workers are fearful for their jobs. Refinery workers are understandably and rightly angry at employers who have not given British-based workers the opportunity to apply for new jobs. The employer will be in breach of the law if they restrict any future vacancies to workers of a particular nationality or location.
"But unions are also clear that the anger should be directed at employers, not the Italian workers. No doubt some of the more distasteful elements in our towns and cities will try to use the fears of workers to stir up hatred and xenophobia, but I am confident that union members will direct their anger at the employers who have caused this dispute with their apparent attempt to undercut the wages, conditions and union representation of existing staff."
Union leaders and representatives of engineering construction firms and contractors will meet in London next week in a bid to find a way of resolving the row, it was revealed tonight.
The so-called National Joint Council will meet on Wednesday. This will be followed by a meeting of union shop stewards a few days later.
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