Trade union leaders said today they will remain in talks with the Government and employers over a new partnership agreement despite anger over last week's Budget.
Explaining the unions' willingness to stay at the discussion table, ICTU general secretary Mr David Begg said employers were prepared to accept union demands for higher living standards with their own requirements of retaining competitiveness.
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The Budget has made pay negotiations with employers "more difficult", according to Mr David Begg, ICTU general secretary.
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Inflation remains a serious concern, Mr Begg said, and he warned that if inflation did not ease during the life of any new deal, the unions would expect the Government to pay compensation for that element of the deal.
Talks held separately between the secretary general at the Department of the Taoiseach and both unions and employers last night revealed a significant gap between their positions. The Government regards partnership as a cornerstone of economic stability and is keen a new deal is secured.
The current Programme for Prosperity and Fairness (PPF) runs out t the end of this year and although the Government played a significant role in securing the agreement, particularly through income tax reductions, today's tighter financial situation means they are not in a position to offer the same level of assistance.
Indeed, Government policy may prove to be the biggest obstacle to agreement this time around. Cutbacks in promised services have angered unions, as has the abolition of the first-time buyers' grant and the failure to extend the medical card to 200,000 people as promised at the General Election.
Cutbacks in the Community Employment Scheme are also contentious.
Mr Begg has said the Budget has made pay negotiations with employers "more difficult".
Employers, meanwhile, believe they have come off worst from the PPF and are keen to secure guarantees on a maximum level of pay rises in any new accord. They also want a six-month pay pause.
The Irish Business and Employers Confederation's (IBEC) director general, Mr Turlough O'Sullivan, has told Government that a "substantially different model" of partnership is required if employers are to sign up to a new pay deal.