Horrified business leaders yesterday slammed moves to scrap Britain's opt-out from the 48-hour working week - warning it would harm UK competitiveness in cut-throat global markets and deprive employees of badly needed income.
Euro-MPs in Strasbourg voted 355-272 against the opt-out, won by John Major 12 years ago and a bone of contention in Europe ever since.
However, the final decision still rests with European ministers, who will deliver their first verdict on the vote result at talks next month
Sir Digby Jones, directorgeneral of the CBI, said the vote proved that the European Parliament had learned nothing about the challenge of globalisation.
"Presumably these are the same MEPs who will be complaining about employers relocating to China and India in the years to come," he added.
"I want to hear from the trade unions just who is going to compensate families for lost income - I'm sure it won't be the Government or indeed the unions themselves.
"The Parliament has just voted to take Europe's economy backwards. If implemented, this Directive would restrict the UK's highly flexible labour market and undermine the EU's declared aim to become the most competitive economy in the world by 2010. If we allow Britain's economy to become hidebound in this way, emerging economies like China and India will walk all over us. This now becomes the first test of our new government's resolve to reform Europe. The crunch decision rests with the European Council meeting in June - and we expect to see the UK's representatives holding robustly to their position."
David Frost, director general of the British Chambers of Commerce, said: "This vote is a blow for business and for Europe's future prosperity.
"It flies in the face of the EU's decision to focus on growth and jobs and sends a strong message that the European Parliament is not interested in improving Europe's competitiveness."
David Yeandle, of the Engineering Employers Federation, added: "MEPs had the chance to prove their commitment to the cause of Labour market flexibility and economic growth. Unfortunately, most of them have fluffed their lines."
Nick Goulding, chief executive of the Forum of Private Business - which represents 25,000 small to medium-sized firms - was equally scathing.
"Labour MEPs have sold British business down the drain," he said bluntly. "They have rejected sensible and reasoned Government policy."
Louise Beard, chief executive of the Coventry and Warwickshire Chamber of Commerce, hit out at the decision and its implications on employers and employees.
She said: "While some flexibility might have been included in the Working Time Directive with the extendedreference period, this is a massively retrograde step.
"We feel there was absolutely no justification in scrapping the opt-out. It will damage prosperity at a time when we are having to fight in a cut-throat global and largely unrestricted market, it limits the choice of both employers and employees."
Tony Woodley, general secretary of the Transport Union, insisted: "The opt-out is harming the health and safety, family life and productivity of British workers.
"MEPs have done the right thing for British workers who have been put under unacceptable pressure to sign away their rights in the past by employers.
"The UK has the longest working hours of any EU country and it's about time that those in a position to affect legislation took a stand."