The economy is set to grow faster than anticipated when the national pay agreement was initally negotiated, the State's largest union, Siptu, said today.
The union's Chief Economist, Mr Manus O'Riordan, said that while the rate of inflation has come down "it is set to accelerate once more in the latter half of this year".
"These, rather than a spin on wage negotiations that have yet to commence, are the real facts to be gleaned from the ESRI's latest forecasts," he added.
The Economic and Social Research Institute's latest commentary said wage increases should be limited to about 3 per cent per annum for the 18 months covered by the second half of the Sustaining Progress national pay deal.
The economic think-tank's senior researchers argue that wage increases of any more than 4 per cent per annum would severely damage the Republic's competitiveness and limit economic growth.
The institute's call for pay restraint comes as the Irish Congress of Trade Unions (ICTU) pushes for national wage increases based on anticipated inflation levels and productivity growth. Under the ESRI's forecasts for the economy, this would result in wage growth of about 4.5 per cent per annum over the final 18 months of the three-year Sustaining Progress agreement.
But Mr O'Riordan said positive economic data "seem to have been lost sight of in today's hype and spin".