As many as 4,500 temporary positions in the North-East and thousands more across Yorkshire are threatened by a proposed EU law on agency workers, according to figures from the latest Confederation of British Industry (CBI)/Pertemps employment trends survey.

More than half of companies in the North-East said they would significantly reduce their use of temporary agency workers if the UK adopted the proposed EU Agency Workers Directive.

The directive gives temporary agency workers the same working conditions as those on permanent contracts.

Once a six-week qualifying period has been served, temporary staff will be entitled to the same benefits as permanent staff in terms of pay, holiday, benefits and allowances.

This week, the Trades Union Congress holds its annual conference, where unions are calling for a law on agency workers rights. Meanwhile, EU Governments met yesterday to discuss the Portuguese presidency's proposals to revive the controversial directive.

The CBI said the directive as drafted would heavily reduce the key benefit of flexibility which such workers offer to firms, undermining the incentive to employ them.

The survey found there were more than 11,000 temporary jobs across the North-East, forming a small but economically important section of the workforce and offering flexibility to businesses at times of a surge in demand.

Neil Carberry, the CBI's head of employment policy, said: "Many North-East firms rely on the flexibility temporary staff provide during times of high demand for their products or services.

"The jobs generated are also a source of convenient, quality employment for large numbers of people in the North-East. The Government must stand firm against the combined drive from the unions and from Brussels to revive this damaging directive."

Construction equipment firm Komatsu, based in Birtley, near Chester-le-Street, said putting temporary staff on an equal footing with permanent employees after only six weeks would affect its ability to recruit.

Human resources manager Tracey Wilson said: "In order to remain competitive in the global marketplace, we need to be able to recruit suitable, temporary employees to boost the workforce at times of increased demand.

"Our training for new production staff takes more than six weeks, due to the complexity of the skills we require and our strong focus on quality."

As well as threatening jobs, 54 per cent of employers in the North-East said the directive would increase costs, 69 per cent said it would reduce flexibility and 62 per cent thought it would add to bureaucracy.