Tuesday's resumption of public service pay talks will probably be a "make or break" day, according to sources on the Government side.
Both management and unions have acknowledged that there is only €200m in fiscal space for 2018, and not all of that can be allocated to pay rises for over 300,000 government employees.
Management sources said the Government side wants to secure an extension the Lansdowne Road Agreement but "not at any price" - and any potential deal must be affordable.
They voiced concern about the level of expectations among union members which "may not be compatible with fiscal realities".
The employer sources indicated that the sustainability of public service pensions, which currently cost €3.3bn per year, constitutes another concern.
They said that while the Government wants to protect benefits, which are generally viewed as superior to many in the private sector, the current Pension Related Deduction or pension levy introduced during the economic crisis would have to be part of the solution.
They also acknowledged that management proposals to limit restrictions on outsourcing public services to the private sector are also proving contentious.
They described the discussions to date as difficult but constructive, and voiced the hope that the gap between the two sides can be bridged with an outcome that is reasonable for all.
Meanwhile, public service workers have been advised not enter into any financial commitments based on an expectation about the outcome of the current negotiations.
The General Secretary of the Public Service Executive Union (PSEU) Tom Geraghty issued the warning in a downbeat update on the union's website entitled "Fitting a Quart into a Pint Pot".
Mr Geraghty, who is also one of the four central negotiators for public service unions at the talks, said all industrial relations agreement hinge on two questions: "How much?" and "How soon?".
He noted that the Government has fiscal space of just €200m for 2018, with not all of that allocated to additional pay.
He said that while that may sound like a lot, it was potentially very low when spread across 300,000 employees.
Mr Geraghty observed that even if union negotiators secured €150m for pay out of the total €200m fiscal space (which he stressed would be no mean achievement), spread over more than 300,000 people, the effect would be less than €500 per person, or roughly a 1% increase on average.
He also cautioned that 2019 and 2020 were not promising a "bonanza" on a scale that could alleviate all concerns for 2018 - and that there would be no equivalent of a "lottery win".
He referred to the spending constraints imposed by the Fiscal Compact Treaty, and noted that the resolution of pent-up problems from the "dark days of the recent past" would carry a cost.
The PSEU leader notes that the Minister for Public Expenditure and Reform Paschal Donohoe has already warned that he is not willing to bear the €620m cost of abolishing the €15m additional unpaid hours imposed during the crisis.
However, he said two worthwhile "prizes" were being pursued for public servants at the talks: getting out of the FEMPI financial emergency legislation through pay restoration, and doing a deal that would protect pension benefits from any potential attack.
