The small and medium-sized businesses' organisation, Isme, has called for 7,500 jobs to go in the public sector.

After a pre-budget meeting with Finance Minister Brian Cowen, the association said that the increasing cost of the public sector was "a tightening noose around the neck of the Exchequer and in turn the taxpayer".

In a pre-budget submission to Mr Cowen, the association made a number of recommendations on cost competitiveness; infrastructure; public sector reform; childcare, pensions and Vat.

It said that Ireland's high-cost environment needed to be addressed in a systematic way, particularly the Government controlled element.

The Government should commit to reducing public sector numbers by the net 5,000 promised in the 2003 budget. The number of jobs, Isme said, has actually increased by 2,500 in the period since the announcement.

Funding to local authorities should be increased to reduce the burden of raising finance through local charges, Isme said.

Employers should be allowed to provide subsidies to employees for childcare facilities that can be offset against their tax returns. Isme also called for a scheme for registered childminders similar to the "rent a room" scheme, allowing local childminders to earn a reasonable amount without being taxed.