CBI director general Digby Jones

A key business leader has told trade unions to stop fighting "yesterday's battles".

CBI director general Digby Jones said on Monday the obstruction of public service reforms and the election of radical left-wing leaders was driving unions away from industrial decision making.

In an interview with the Press Association, Jones said he genuinely wanted to work with employees' representatives but feared it was becoming increasingly difficult.

"The ball is in their court," he said. "I hope we can work together, but if all we are going to get is a return to the ideals of the 1970s, it is very sad.

"I wish trade unions would fight today's and tomorrow's battles and not yesterday's," he added.

And he said that instead of embracing the need for restructuring, unions often responded by threatening strikes."The government knows it has to reform public services and business is quite prepared to play its part," he said.

"What we need is those involved in public services to put the consumer first and not the deliverer."The private sector knows that unless the customer is first, second and third, they never make any money. I would love to see the trade unions putting the customer first."

Jones also warned on Monday that Britain was in danger of losing the "jewel" in its economic crown of labour market competitiveness.

He was commenting on a new report from the CBI's Business Group showing employment regulations and low level of basic skills had eroded the UK's international advantages.

"Labour market flexibility has been a jewel in the crown of the UK economy for 20 years but other countries are threatening to steal that jewel," he said.

"In areas where the UK is strong we are moving in the wrong direction.

"In areas where the UK is weak, our improvement is only patchy.

"The price could be extremely high because our competitors are closing the gap."

Commenting on the CBI's stance, union leader Sir Bill Morris accused Jones of "whinging".

"Those who make no claim to be users of our public services can perhaps be forgiven for not noting the progress made in public service reform," he said.

"With agreements such as Agenda for Change, far from blocking progress unions are supporting reform and now have to defend these measures under threat from foundation hospitals.

"When we speak up for public services, we do so as triple stakeholders. It is the trade unions who are committed to improving and sustaining our public services because our members fund them, provide them and depend upon them."