SIPTU General President Jack O'Connor has warned of the threat of widespread industrial action if further pay cuts are implemented in the public sector.

The union has lodged a claim for a 3.5% pay rise on behalf of its members in the health services.

It has also advised its branches to prepare for a campaign of industrial action to resist pay cuts and job losses.

Mr O'Connor said he would be willing to re-enter partnership negotiations with the Government.

Speaking on RTÉ's This Week, Mr O'Connor also defended SIPTU's call for a pay rise.

Chief Executive of Irish Small and Medium Enterprises (ISME), Mark Fielding, said representatives of small and medium businesses should be involved in negotiations on any new partnership deal.

He described SIPTU's pay claim as 'economic sabotage'.

Meanwhile, Government Chief Whip Pat Carey has said that everything including public service pay will have to be looked at by Government to find €4bn in spending cuts.

Mr Carey told RTÉ's The Week in Politics that it would be preferable if this could be worked out by agreement.

He said the Minister for Finance will receive a report within the next week to ten days that is likely to recommend a significant lowering of salaries at the higher levels of the public service.

This should lead to a proportionate reduction in salaries at similar levels across the broader public service including universities, Mr Carey said.

Speaking on the same programme, former ICTU president Senator Joe O'Toole said it was his view that there should not be strike action.

He said an agreement could be reached between unions, employers and the Government along the lines of what happened in 1987.

However, he said it would require honesty and integrity from the Government side and people at the lower levels would have to be protected.