The public sector cannot continue to operate in a “parallel universe” where pay rates and numbers have increased while private businesses are suffering cutbacks and closures, small business lobby group Isme said yesterday.

Following publication of its pre-budget submission, chief executive of the Irish Small and Medium Enterprises Association (Isme) Mark Fielding said the Government needed to make public sector cuts. With the public sector pay bill now accounting for 35 per cent of Government spending, the country cannot afford its expansion.

Restoring competitiveness was crucial to the survival of thousands of businesses throughout Ireland, he said.

“Surely, it makes more sense to assist companies in retaining employment than to allow unemployment to increase,” he added.