AS the Government seeks to negotiate tight control on public sector pay in the talks on a new national agreement, the ESRI has strongly recommended much tighter control of spending in this area. In a new report on the labour market in Ireland the ESRI has come out in favour of a new agreement to replace the PCW, but has echoed the Government stance of "not at any price".

According to the report, which has yet to be published, public sector pay deals have competitive implications for the economy. It stresses that past deals have opened up a gap between pay in the public and private sectors.

The report notes that the upward trend in public sector pay began in, 1989 and, were it to continue, would create "serious difficulties" in negotiating a new agreement.

The report, one of 15 completed in each EU state for the European Commission, stresses that Ireland's recent good economic performance was greatly helped by the negotiation since 1987 of national agreements.

"The negotiation of a further national agreement with moderate wage provisions and without undue public expenditure commitments is vital if we are to continue to take advantage of the expected continuation of growth in the world economy."

The broad ranging report also makes recommendations in a number of other areas from education and training to employment subsidies. The ESRI finds that first and" second level education is under funded and average expenditure primary education is only half the average in OECD countries.

On top of that it finds that a "comparitively large" proportion of Irish expenditure is absorbed by teachers salaries.

It found there are "marked discrepancies" in per capita expenditures at different levels of education. The expenditure at primary level is, only one third of the expenditure at third level.

The report adds that this produces, an "unacceptable" number of early, school leavers. This has implications for the labour market and contributes to the inequity in access to higher education.

It recommends that increased resources be targeted specifically at the disadvantaged and lower socio economic groups would be the most effective and efficient means of reducing inequalities.

On employment, the surrey finds that participation in training programmes with weak market linkages, such as general training or direct employment schemes, has no lasting, effect on job prospects. In contrast, involvement in market oriented programmes such as specific skills training results in a higher probability of employment.

According to the authors, this suggests the need for the long term unemployed to progress through a series of schemes. But, it warns, this will require more resources than are currently available.

The report also finds that the current levels of continuing training are unlikely to be sufficient. The ESRI finds that both qualification and skills discrepancies between Ireland - and competitor countries have the potential to undermine competitiveness. It notes that there is insufficient commitment to management development in Irish companies. This reinforces the deficiencies, the report states, since poorly trained managers are unaware of the inadequacies of both their own skills and those of their workers.

The report also highlights the proliferation of employment subsidy type schemes run by different agencies as a matter of "particular concern". It adds that the current situation involves split responsibilities and overlaps which are not in the best interests of the unemployed.

On employment, the report finds that Ireland is one of the few countries in the EU where manufacturing employment is still expanding, mainly due to continuing inward investment.