The Government says it will accept the proposals for public service pay rises made by the Benchmarking Body once all trade unions concerned also accept the body's report.
A Government spokeswoman said last night that the Government would honour the agreement to pay the initial 25 per cent of the pay awards once the report had been accepted and "solid negotiations" were under way on the remaining 75 per cent.
Through these negotiations the Government hopes to achieve various public service reform targets in exchange for implementation of the report, which would cost €1.1 billion if conceded in full.
The Government expects talks to begin with public service unions within a fortnight on the implementation of the report.
Under the agreement setting up this process, 25 per cent of the awards was to be paid from December 2001. The remaining 75 per cent was to be the subject of talks on any linkages the Benchmarking Body made between increases and public service reform.
The Government yesterday took up a robust bargaining position, noting the "serious budgetary implications" of full implementation and saying more progress on public service modernisation was needed.
Earlier, the Minister for Finance, Mr McCreevy, declined to commit the Government to paying the initial 25 per cent immediately, saying that negotiations still had to take place.
Some €150 million had been set aside for benchmarking payments in the last Budget, he said, although the final report showed that paying for 25 per cent now would cost €275 million. About a third, he conceded, would be clawed back by tax revenues, so the Budget provision would come close to covering the 25 per cent.
However, the up-front 25 per cent depended very much on the negotiations and on the budgetary implications of the awards.
Mr McCreevy also declined to rule out income-tax increases to pay for benchmarking, saying this was "a budgetary matter that has to be considered at the time of the Budget". He maintained that he had stated this position each year since 1997. "Expenditure and taxation changes are always considered in the run down to the Budget."
In his speech to the Fianna Fáil Ardfheis last March, Mr McCreevy said: "I would pledge on behalf of Fianna Fáil that we will not increase direct tax rates if the Irish people re-elect us to government."