An Post has told trade unions that the payment of the 3 per cent increase due to its 10,000 workers under the national pay deal depends on a successful outcome to the talks aimed at hammering out a rescue plan for the company, which haemorrhaghed €46 million last year.

The four unions representing its workforce formally asked for the increase before Christmas. Management this week told their representatives that the company could not afford to pay it.

The unions involved, the Communications Workers' Union (CWU), the Civil and Public Service Union (CPSU), the Public Service Executives' Union (PSEU) and the Association of Higher Civil Servants (AHCS), were reported to be discussing the issue yesterday. It is understood they are unlikely to respond before next week.

Under the terms of the current national agreement, Sustaining Progress, the increase is due since November 1st. A spokeswoman told The Irish Times last night that it would cost An Post an extra €18 million a year.

She argued that paying the increase would derail An Post's plans to reform itself and stop cash flowing out of the company. The spokeswoman explained that the company had budgeted for a €31 million operating loss this year.

However, she said that this depended on being able to negotiate and begin implementing its plans for reform by the middle of this year.

It is currently negotiating this with the unions. "If that happens, then our budget would allow for the payment of the increase under Sustaining Progress," she said.