'Unnecessary' EU law could hurt UK economy, warns CBI

The Confederation of British Industry launched a tirade against a proposed new European law on temporary workers today, accusing France and Germany of conspiring to damage UK labour market flexibility.

It blamed Brussels for producing a "badly crafted" directive that would slash the chances of work for thousands of British agency workers.

The claims sparked a fresh row with the trade union movement, which accused the UK's largest employers' organisation of "crying wolf".

The CBI also opened up a new front against the Government, criticising the education system for failing to produce school-leavers with the skills needed for the world of work.

In its annual report on the state of the labour market, the CBI said measures covering temporary jobs and working hours would impose extra costs on employers or prevent people putting in overtime.

Almost half of employers said they would offer fewer temporary work assignments because of a planned EU directive aimed at giving equal pay and improved employment rights to agency workers.

Three out of five firms said the directive would impose extra costs, making temporary workers less affordable, according to its survey carried out with employment agency Pertemps. Tim Watts, chairman of Pertemps, said: "Our competitors are sponsoring through Europe more restrictive legislation to impinge on our flexibility as a means of slowing us down and them catching us up."

John Cridland, the CBI's deputy director general, agreed there was a conspiracy to push through tough labour market regulations. "I certainly think that France and Germany are looking at a common set of European rules that means we have less of a labour market advantage," he said.

Moves to end the UK's opt-out from the working time directive, which aims to limit the working week to 48 hours, would cost thousands of people the chance to do overtime, according to the survey.

Mr Cridland said: "We reject charges that we are anti-regulation, what we oppose is bad regulation. This survey shows inappropriate and unnecessary EU rules threatening the freedom of individuals to work when and how they choose."

But the survey showed there had been little negative impact from two other recent labour market changes. The number of firms expecting an application for union recognition has fallen while the right to request flexible working had not been "overly damaging".

The TUC said the CBI had warned the creation of a national minimum wage would destroy thousands of jobs. "This is employers crying wolf once again," said a spokesman. "Directors endlessly repeating that regulation automatically destroys jobs does not make it true."

The CBI survey showed more than half of firms were unhappy with school-leavers' levels of business awareness. "The education system is clearly not delivering the outcomes that employers want," the report said.