A final effort to save the Programme for Prosperity and Fairness began last night with direct talks between unions and employers at Government Buildings.
The unions are pressing for direct compensation from employers for the erosion of incomes caused by inflation, while the employers are seeking guarantees of industrial peace if compensation is given.
The employers are thought to be willing to make some offer, preferably a lump sum, that would not have ongoing implications for the competitiveness of individual enterprises.
The unions are still thought to be seeking a percentage increase or a shortening of the PPF. Accelerating the PPF would also have the advantage of speeding up the benchmarking process for the public service unions.
The talks follow separate meetings the Taoiseach had on Tuesday night with unions and employers. He is understood to have told the unions they faced a huge credibility problem because of the recent rash of strikes in the public sector.
He is understood to have criticised employers for not being more proactive in tackling the issues or in showing greater commitment to implementing the gain-sharing provisions of the PPF.
Mr Ahern is concerned to have the review concluded before next Wednesday's Budget. If talks are continuing they will cast a cloud over what may well be the last Budget before an election. The uncertainty of such a situation would also undermine the impact of the Budget on economic policy.
Yesterday Mr Ahern pointed out that the PPF review talks had gone on now for "three solid months" and he was anxious to bring them to a conclusion. He described them as difficult and complex.
"Obviously the unions feel they were sold short on inflation, though they don't accuse anyone of bad faith, and neither was there. The employers have a position where many of their members have paid, while many others couldn't pay because of difficulties that some have because of vulnerability in market positions," the Taoiseach said.
"The only way I can think we can finalise negotiations is to have a standard position so that we know what the position is in the private sector and the public sector, particularly with the public service unions.
"It is proving difficult to find a formula that can resolve these issues, and I stated last night that all of these negotiations are themselves only useful if their conclusion is deliverable."
Talks resume this afternoon.