Taoiseach Brian Cowen meeting Hoàng Trung Hai, Deputy Prime Minister of Vietnam in Government Buildings on the 22nd of October 2009.

The Taoiseach Brian Cowen signalled again on Tuesday that the planned €4 billion fiscal adjustment in the December Budget will be implemented with or without agreement from the social partners. However, a fudge is still likely on reform in place of pay cuts.

Last weekend, Cowen gave hope to the public sector trade unions that pay cuts could be avoided by producing a fudge on reform, that from experience and the short time available until Budget 2010 is announced on Dec 9th, could only be aspirational.

On Tuesday, in talks with farm leaders as part of the social partnership process, the Taoiseach signalled that a third of the overall cuts would come from reductions in the public sector pay bill, a third from social welfare payments and the final third from cuts in services.

Talks begin today between the Department of Finance and public sector unions on Government proposals to reduce the public sector pay bill by €1.3 billion next year.

Public sector unions are also to meet today to consider the trade union Impact's proposal for a one-day national public sector strike on November 24th in protest against any further cuts in pay for the 300,000-plus public staff.

It is possible that some fudge will be agreed and last Sunday, Junior minister Conor Lenihan said the Government would look at reform, cuts and “some effort to mitigate the extent of the public sector pension bill”.

Blair Horan, general secretary of the Civil Public and Services Union, said on Tuesday that “a part of the solution must be a top rate of tax on high earners and a wealth tax on assets and not pay cuts for lower-paid public servants.”

The Taoiseach and the Minister for Social and Family Affairs Mary Hanafin also signalled on Tuesday in a meeting with voluntary groups, that there will be significant reductions in social welfare spending in the budget.

In early October, the Minister for Education, Batt O’Keeffe, told an economics conference in Kenmare, Co Kerry, that 38 per cent of current spending by the Government was on social welfare payments.

He said that this figure “must be reduced.”