TALKS BETWEEN the social partners on a new national pay deal dragged on last night with no indication of a possible agreement.
Taoiseach Brian Cowen is available to broker a deal today if the gap between the sides can be narrowed.
The talks resumed yesterday afternoon in Government Buildings in advance of today's deadline for a new agreement between unions, employers and Government.
Director general of Ibec Turlough O'Sullivan confirmed on his way into the talks that there was still a large gap between the employers and unions on the shape of any new deal.
"It is probably the most challenging situation we have found ourselves in since the start of the partnership process in 1987/1988.
"As far as we are concerned, we need an agreement that helps the competitiveness of the economy because we are in severe difficulty. If we can do that, it will be worth the effort," said Mr O'Sullivan.
Liam Doran of the Irish Nurses Organisation said there was a lot of work still to do on all the issues that the unions brought into the talks.
"The background music hasn't been good. There are significant gaps to be bridged. We are going to have to do a lot of hard talking if any agreement satisfactory to the union side is going to emerge," said Mr Doran.
The president of the Irish Congress of Trade Unions, Peter McLoone, also said there was a lot of hard work still to be done if an agreement was to be reached.
The big issue dividing the two sides was pay, with the unions believed to be seeking a pay rise of about 5 per cent a year to compensate for inflation, with the employers insisting that such an increase cannot be afforded in the economic climate.
The current national pay deal provided for increases of 10 per cent over 27 months. The unions have argued that this award was effectively eroded by higher-than-anticipated inflation, leaving workers at a net loss.
The final 2.5 per cent public sector phase of this agreement is due to be paid in a month's time and all sides had hoped for an agreement today so that there would be clarity on pay policy for the next two to three years.
At the beginning of July, Ibec argued that the poor state of the public finances warranted a pay freeze for public sector workers but this was angrily rejected by union leaders, including the general secretary of Ictu, David Begg.
The chairman of the talks, the secretary general of the Taoiseach's Department, Dermot McCarthy, is believed to have proposed that if no agreement is reached by today the sides should defer a final decision on the fate of the agreement until September.
Some union leaders expressed the view that if a deal is not agreed by today there was little point in coming back for another session in September as economic conditions may have worsened further by that stage.