Unions have been urged to embrace rather than "push back against the forces of globalisation" by attempting to regulate multi-national companies.
Addressing the TUC congress, Richard Lambert, director general of the CBI, said moves for increased taxes and trade restrictions would be "disastrous" for the UK and have serious consequences for growth.
Instead, he called on union members to work with businesses in embracing globalisation, promising it would be possible to sustain growth while promoting social cohesion.
While acknowledging unions and the CBI frequently disagree, "in big picture terms" they have vital common interests, Mr Lambert argued.
'All of our customers are international and we need those transport links to be as efficient and effective as possible'
In a stark warning to unions, he said new technologies make it easier for companies to move production abroad if other countries can offer lower costs.
He said: "The UK's relatively flexible labour markets are a key source of competitive advantage within the EU".
Mr Lambert was fiercely criticised by delegates for his instance that the opt-out from the European 48 Hour Working directive and opposition to the Agency Workers Directive are vital for maintaining the UK's competitiveness.
Responding to questions from the floor, he argued the UK underperforms in manufacturing output and the Working Time Directive opt-out is necessary to boost the country's attractiveness to foreign companies - many of whom rely on the opt-out to respond to changes in demand.
Mr Lambert backed TUC general secretary Brendan Barber in calling for tougher enforcement of existing labour laws - adding this would provide many of the protections demanded by agency workers.
Arguing there should be "no hiding place" for companies operating outside the law, he said: "Responsible employers recognise the importance of the national minimum wage and accept that employment tribunals provide and essential recourse for those denied their basic rights."
He also echoed Gordon Brown, in calling for more investment in training and education, warning there is an "urgent need" to strengthen the UK's skills pool.
But, he said UK companies already surpass Germany and America in investing £33 billion a year in training. However, Mr Lambert said a large proportion of this is still being spent on remedial skills, transferring the blame to the government for failing to equip school leavers.
Greater investment by government, businesses and individuals would allow the UK to "raise our game in what's become a much more intensely competitive global labour market," he said.
The TUC is using this year's congress to highlight persistent inequality in the UK. Nodding to the theme, Mr Lambert said: "No one wants to live in a society divided between the extremes of gated communities and the under-privileged and under-employed.