Small business lobby group Isme has questioned the concept of benchmarking public sector salaries and called for a review of the process.

The Government will shortly commence on a new round of benchmarking following the completion of the first round, which commenced in 2002 and awarded an average pay increase of 8.9 per cent to public sector and civil service workers at an annual cost of €1.2 billion.

Isme claims that public sector wages are now 41 per cent ahead of private sector equivalents "putting paid to the myth that the public sector has fallen behind".

It also argues that the recruitment of 26,000 people in the public sector in the last four years confirms there is no difficulty retaining and recruiting staff.

"The Benchmarking 2 process must be transparent, must insist on proper performance measurement and must recognise the realities of the globalised world in which the very small and very open Irish economy now operates," according to Isme.

The lobby group based its comments on a report that was commissioned by economist Jim Power. The lobby group's remarks drew an angry response from Impact, the largest public sector trade union.

It accused Isme of using misleading figures saying it arrived at its 41 per cent pay differential figure by not comparing like with like.

Bernard Harbor, the Impact information officer said that "benchmarking has brought an end to the much criticised system of public sector pay links and has delivered industrial peace in the public services".