The idea of deferred compensation has been around for some months. The Government is under severe pressure to compensate workers for inflation, which is running at higher levels than wage rises, and various deferred payment schemes have been proposed.

The broad thrust of all is to devise a plan where workers would get compensation for higher-than-expected growth and inflation, but without adding to domestic demand and creating an inflationary spiral.

To do so compensation would be deferred for a set amount of time.

The time limits suggested vary from around three years to 40 or more for new entrants to the workforce.

The ESRI first called for tax cuts to be promised but put off until the economy had cooled down. It later expanded the idea to include some form of savings bond, cashable further down the line.

The trade unions have also been examining such a proposal and SIPTU's general president, Mr Des Geraghty, suggested the idea of a £500 (€635) bond. A pensions bond has also been suggested.

The Tanaiste, Ms Harney, favours a voluntary scheme, where significant tax relief on savings would be available.

The Fine Gael finance spokesman, Mr Michael Noonan, wanted the bulk of tax relief to be paid as a bond.

It seems the Department of Finance is examining all these options in the context of the Budget and the Taoiseach, Mr Ahern, has indicated he is broadly in favour.

All the ideas except that concerning tax relief seem to mean an increase in Government debt. The Government would in effect be borrowing from the people. There could be questions here about how good Government debt is as a savings vehicle and what interest rate would be paid.

But, in general, the idea of deferred compensation is good, according to Prof John FitzGerald of the ESRI.

It compensates workers and social recipients for inflation without fuelling domestic demand.

The problem has always been that this could be difficult to sell politically. Most workers simply want more money now, not in three years, never mind when they retire.

In contrast, the idea of giving tax relief for savings on a voluntary basis would have serious implications for income distribution according to Prof FitzGerald, although much depends on the fine print of whatever scheme, if any, is chosen.