Talks between the Government and unions on cutting €2 billion in exchequer spending this year are continuing at Government Buildings tonight.
Senior Department of Finance officials told trade union leaders tonight that "the lion's share" of the spending cuts sought by the Government this year will have to come from the public sector pay bill.
The Department of Finance officials also said that the four per cent reduction in payroll costs announced last July and in the Budget last October was considered to be separate from this €2 billion saving on expenditure.
However the union leaders were not told precisely how much the Government wanted to save on the paybill for its 350,000 staff in the public sector this year or on the way it proposed achieving this.
Union leaders believe that the savings are more likely to be sought through additional pension contributions rather than through direct cuts in salaries. It is expected that such a "pension levy" would be graduated with those earning the most paying the highest levels.
Earlier today, Ictu general secretary David Begg said the talks would "inexorably focus" on public sector staff paying for their pensions.
As talks between the Government and the social partners reach a crucial phase, Mr Begg said there were not too many instruments available to generate the savings.
He said that the trade union movement had ruled out pay cuts for principled and practical reasons, that scaling back on allowances could hit some sectors disproportionately and curbing increments could be a nightmare as some people at the top of the scale would not be affected.
Talks this morning dealt largely with pensions in the private sector and the establishment of a State pension protection fund. This has become a hugely important issue in the wake of the Waterford Crystal closure.
Mr Begg said there was no way the trade unions could come out of the current talks with nothing on pensions when the National Pension Reserve Fund had been used to recapitalise the banks.
He said while these were seperate issues he did not think the unions would be able to "credibly explain" this.
