THE European Union (EU) would resemble a “sweatshop” if the Tories succeed in using “reform” to remove workers’ rights, TUC general secretary Frances O’Grady will say today.

Ms O’Grady sets out the nightmare vision in a speech this evening as Prime Minister David Cameron attempts to renegotiate the terms of Britain’s EU membership ahead of a referendum.

She will warn that business leaders are lobbying for reforms to include the scrapping of rights for agency workers and the working-time directive, along with a moratorium on any new protections.

“We can all agree that Europe must create more jobs,” she will say in the first Ken Coates memorial lecture at Nottingham University. “But you don’t get that through deregulation or slamming the brakes on rights at work.

“Europe must become a good jobs factory. Without workers’ rights, it would become a sweatshop.”

Ms O’Grady’s speech comes after Confederation of British Industry (CBI) president Mike Rake called for “more flexibility.” Pressed on whether it should be easier to sack staff, he told BBC Radio 4’s Today programme: “Yes, of course, it is part of that.”

Mr Rake reiterated his position at the CBI’s annual bash, which was attended by Chancellor George Osborne.

But Ms O’Grady will say: “The government is playing with fire. They will not win blue-collar votes to stay in the EU by weakening workers’ rights.”

The TUC general secretary is also set to make her most critical assessment yet of the whole pro-business EU project. While the TUC opposed membership of the European Common Market in the 1975 referendum, its current policy is to campaign for Britain to remain within the EU.

However, Ms O’Grady will say: “Since before the crash, the EU, along with the IMF and European Bank, has pursued an agenda of austerity, liberalisation and deregulation — including taking a sledgehammer to collective bargaining in the programme countries.

“So the political class should not be surprised if workers around Europe start to wonder what’s in it for them?”

Ken Coates was a Labour MEP between 1989 and 1999, during which time he used his position as European Parliament employment committee chairman to campaign for full employment.