Problems with Partnership 2000 need to be resolved, according to the director general of the Irish Business and Employers Confederation, Mr John Dunne.

Speaking to IBEC's general council yesterday, Mr Dunne said the problems included the protracted and costly nature of public service pay settlements and the continuing drift in public expenditure. Referring to the midterm review of the partnership, Mr Dunne said it was of "critical importance" that the agreement stayed on course.

The drift, he added, was in large measure the result of the increase in public sector pay. "The Garda pay claim and other outstanding issues must be settled within parameters already established," he said. And he insisted that "once the slate was clean" no further special pay arrangements should be considered.

Mr Dunne also pointed out that, with reductions in EU transfers on the way, the "unsustainable rate of growth in public expenditure" in recent years must be reduced. "Current inflationary pressures add to this need to control public expenditure," he added.

Mr Dunne also welcomed the Government's recently announced measures to encourage unemployed people to take up work or training offers. IBEC has not yet decided whether it believes there should be another agreement. The key issue, he said, was whether a new agreement would help sustain and improve Ireland's competitive position.

Meanwhile, its general council yesterday elected Mr Richard Burrows, chairman and chief executive of the Irish Distillers Group, as president for a two-year term. Mr Donagh O'Donoghue, managing director of Thomas McDonagh Sons, was elected vice-president.