The Taoiseach has said the issue of public sector pay and pensions is something that will be considered in December's Budget.
Brian Cowen was commenting on a new report by the Economic and Social Research Institute, which shows that State employees were earning up to 25% more than private sector workers in 2006.
The authors of the report comparing public and private sector pay say their findings show there was no justification for increases in 2007 benchmarking.
More increases would further undermine Ireland's current drive to regain competitiveness, the report says.
Authors Elish Kelly, Seamus McGuinness and Philip O'Connell stress that this latest research does not capture the effect of the last year's downturn, or the State pension levy.
However, they say the results raise serious questions regarding the justification for any further boost in pay for State employees.
The ESRI found that in 2003, public sector workers earned on average 9.7% more than their private sector counterparts. By 2006 that gap had risen to 21.6%.
The pay gap widens to almost 25% when the value of public sector pensions is factored in.
Ireland's largest public service union, IMPACT, has rejected the report, saying it depended entirely on statistical averages that did not compare real jobs in the public or private sector.
The authors also note that their estimate of the benefit of a public sector pension is conservative.
The ESRI report does not take account of the value of guaranteed job security when employed by the State.
It finds that the gap is particularly acute among junior staff - with some of those in lower level State grades earning up to 31% more.
Senior State employees earn on average 8% more than private sector senior workers.
Male State employees earn on average 23% more than men in the private sector.
Female State employees earn 21% more than women in equivalent private sector positions.
The authors point to a warning from the International Monetary Fund that generous increases in public wages contributed to a drop in competitiveness in recent years by pushing up wages in other sectors of the economy.
This morning Mr Cowen said the Government was committed to a carbon tax measure in the next Budget.
He said Minister for Finance Brian Lenihan would begin to frame his Budget in the context of that.
Mr Cowen said bridging the gap between Government expenditure and what is coming in through taxation remained the challenge of the Budget.
