European Union interior ministers have clashed over how to punish those who employ illegal immigrants.
All the EU’s Mediterranean countries, where most illegal immigrants arrive by sea, voted for strict measures against bosses.
But countries, including Germany, Sweden and the Netherlands argued it should be for member states to decide.
European Commission Vice President Jacques Barrot said tough sanctions would encourage more legal migration.
“Working visas make Europe attractive. Europe is especially attractive for immigrants who can show high qualifications. We are in competition, it needs to be pointed out, notably with the United States,” he said.
Under the controversial plans, employers breaking rules would be forced to pay for immigrants to be sent home.
Currently, it is estimated around 8 million people are working illegally across the Euro bloc.
In recent years the EU has beefed up the fight against the problem, but member states have struggled to find a common European policy.