The proposed EU Directive on Temporary and Agency Workers was narrowly defeated at a meeting of employment ministers in Brussels on Wednesday, with the UK leading the opposition.

The directive would have forced employers to offer the same pay, holiday and pension entitlements to temporary and permanent staff, after six weeks of casual employment. Business leaders argued this would undermine the economy and risk up to a quarter of a million jobs in the UK.

Unite's Tony Dubbins, chair of the Trade Union & Labour Party Liaison Organisation (TULO), said that the UK government was "increasingly isolated" on the issue both at home and abroad.

"Its blocking position is neither sustainable or excusable. There is simply no justification for a Labour government to deny agency and temporary workers the same rights as directly employed staff," Dubbins said.

"By opposing this directive when most European countries already have day one rights, the UK government is yet again making UK workers second-class citizens in Europe."

Unite assistant general secretary Tony Burke said members were "really angry" that a Labour government had played a key role in defeating the efforts of thousands of agency workers to get full employment rights.

He added that earlier this year, the union had provided evidence to the government that employers were misusing temporary staff and using agency workers to undercut the pay and conditions of permanent staff.

"The government has caved in to scaremongering from employers. We are still seeing abuse of agency staff and the replacement of permanent workers by lower-paid agency workers," Burke said.

"What is more depressing is listening to ministers endorsing the bosses' argument that the UK economy can only succeed by having fewer employment rights for UK workers than EU competitors."

Burke said the issue would not go away and Unite was beginning to organise in the graphical sector.

The union had a code of good practice agreed with print industry body BPIF, covering the agreed use of agency workers to cover peaks and troughs in workloads, a maximum working week and equal treatment.

Burke said the union intended to press both agencies and employers to use these industry agreements but would prefer legislation.