It may take a renegotiation of the pay deal by the Taoiseach to save the Programme for Prosperity and Fairness (PPF) if "social chaos" is to be avoided. That is the opinion of the president of the Irish Congress of Trade Unions, Senator Joe O'Toole.

While the ICTU president and teachers' leader is well known for hyperbole, it still says a lot for the seriousness of the crisis that he will contemplate such a vista. He still believes there are other "non-nuclear" options.

One problem is that the Government probably won't have its anti-inflationary package ready before the executive of ICTU meets next Wednesday. Opponents of the PPF within the trade union movement have been quick to exploit the situation.

Yesterday, the annual conference of the Amalgamated Transport and General Workers' Union (ATGWU) passed a motion calling on ICTU to "convene a special recall conference" on participation in the PPF because of the inflation figures.

Proposing the motion yesterday was ATGWU executive member Mr Jimmy Kelly, who is also convenor at Waterford Crystal, and campaigned actively against the PPF and its predecessors. "Without index-linking, we didn't know what we were getting out of the deal," he says. Absence of a specific pay review clause was another weakness.

Like many opponents of the PPF, he identifies the failure to secure bigger flat-rate increases for the low-paid as a major defect and, like many shop-floor militants, he argues that 13 years of national agreements have emaciated the role of shop stewards who provided "the lifeblood" of the trade union movement.

"Those were four excellent reasons for rejecting the PPF but it was carried and that's democracy. But now inflation has wiped out the gains of the first phase of the agreement and I think that's an excellent reason to reconvene congress."

Mr Noel Murphy, the secretary of the Cork butchers' branch of the union, points out that many ATGWU members are earning only around £250 (€317) a week and will have to wait until October for the first phase. Meanwhile, they are surviving on the last phase of Partnership 2000, which was only worth 1 per cent.

Even taking tax cuts in the last Budget into account, these members are seeing nominal increases in take-home pay wiped out by the higher cost of living. As it happens, most members of Mandate, the largest union in the Republic opposed to the PPF, will not receive the first phase of the PPF until next January.

While some key items in the household budgets of the low-paid have gone down, such as food, clothing and footwear, transport costs have risen by 10.4 per cent; alcohol and tobacco by 12.5 per cent; and fuel and light by 7.1 per cent.

Not surprisingly, trade union leaders supporting the PPF have called for price controls in areas such as the licensed trade and increased subsidies for public transport to reduce fares.

Housing is of course an emotive issue for all PAYE workers. MSF national secretary Mr Jerry Shanahan says there should be 100 per cent capital gains tax on development land. He believes developers should be told bluntly: "Use it, or lose it".

MSF has tended to take an agnostic position on national agreements, judging them on their merits and relying as much on industrial muscle in the workplace as national agreements to look after members. The Irish Nurses' Organisation has a similar approach.

It says something for the concern generated by the inflation figures that issues such as Dublin weighting for its 11,000 members in the capital were never reached at this week's meeting of the executive. Instead, it empowered the general secretary, Mr Liam Doran, to recall the executive if necessary after next Wednesday's ICTU meeting to review its approach to the PPF. Mr Doran says the INO "fully supports" the Congress demands for immediate Government action.

He says the complacency of the Government over the past three months has been "deplorable" and has increased members' anger. With feelings running high, it will be harder to look at options cooly.

Senator O'Toole argues: "We do not necessarily need to go for the nuclear option of dismantling the PPF. There are other ways."

He says the priority must be to use the PPF to tackle "the twin problems of inflation and wage value erosion". "We are all concerned that the immediate impact of the high inflation figures will be to erode the gains in salary increases," he says. "We also remember the 1980s, when the result of chasing inflation with salary increases resulted in teachers and other public servants being about 10 per cent worse off in real terms at the end of the decade despite many apparently significant salary increases during the period. But we are not prepared to be martyrs for the cause either."

If the Government "can't see its way to finding a formula to control inflation and restore the value of the pound in our pockets, ICTU will have to trigger the central review process.

"It may be that the PPF cannot cope with the situation, but that will only arise if all the parties, especially the Government, remain inactive."

ICTU leaders will be putting pressure on the Government to live up to commitments made in the PPF. Senator O'Toole points out that the agreement itself states that "the programme is predicated on and dependent upon achieving continued strong non-inflationary growth".

"Further on it states fiscal policy must be conducted `in a fashion which is consistent with economic stability, in particular low inflation, and which will fully adhere to the spirit of the Stability and Growth Pact'." He says that Congress will be reminding the Minister for Finance, Mr McCreevy, "and the Government that they are also parties to the agreement and must ensure that their fiscal policy complies with the programme".

Besides cuts in indirect taxes and price controls, Senator O'Toole says Congress will want a declaration from the Government that it will use the December Budget to restore workers' earning power through cuts in income tax, which were promised in the PPF. He accepts critics will argue that this will "put more money into an already overheating economy" but "this need not occur if the Government shares the pain of inflation through taking an equal amount out of the economy by raising, as appropriate, capital gains taxes, corporation tax and general profits taxes". Combined with prices orders, Senator O'Toole believes this will "reverse and control inflation".

The other great hope of Congress leaders is the commitment in the PPF that, if annual growth rates exceed 5.6 per cent, and significant budgetary surpluses occur, it will be possible to accelerate progress towards "priority objectives". The obvious one for the public service unions, and one floated already by Senator O'Toole this week, is an acceleration of the benchmarking process for reviewing public-sector pay.

Senator O'Toole accepts this would have to be "paralleled with a similar development in the private sector", although it is hard to see at this stage how it could be done without the Irish Business and Employers' Confederation agreeing to some form of pay review mechanism as well. One way would be through the Central Review Mechanism of the PPF, which would effectively mean the Taoiseach, Mr Ahern, convening a special meeting of the social partners to renegotiate the pay elements of the PPF.

"If that does not prove effective, the alternative will be industrial relations chaos and the end of social partnership," says Senator O'Toole.