Thursday's threatened strike by over 250,000 public servants has been deferred following a breakthrough at the talks on cutting the public sector pay bill.
IMPACT General Secretary Peter McLoone said the Government recognised the significant advances that the unions had made in developing an agenda to transform the public service over the next number of years.
He added the Government also recognised it was possible to design an alternative to the paycut the Minister for Finance had been advocating for next year.
Speaking on RTÉ's Six-One News, Bernard Harbor of IMPACT said the unions have agreed to take unpaid leave to help stabilise the budget deficit.
Union sources acknowledged that 'a few loose ends' remained to be tied up in relation to the modernisation agenda and additional savings to secure money needed by the Government in 2010.
A statement on the IMPACT website read: 'The Government has said that the savings based on unpaid leave fall short of what is required and that this shortfall will need to be addressed.
'This will form the basis of the discussions over the next few days, as well as the issue of public service transformation in the longer term.'
The talks between the Government and unions about the proposed savings will reconvene tomorrow.
General Secretary of the Irish Nurses Organisation Liam Doran welcomed the developments at today's talks.
He said: 'It represents an important step forward in the search for a fair and equitable way of addressing the problems created by the current economic crisis for the delivery of public services.'
The Executive Committee of the Teachers' Union of Ireland (TUI) said that sufficient progress had been made to warrant deferral of the scheduled strike action.
Bruton claims Govt 'bottled it'
Fine Gael has described the outline pay deal as the 'worst of all possible worlds', while Labour has cautioned that final agreement is clearly some way off.
Fine Gael's Richard Bruton insisted the Government had 'bottled it' on the issue of public sector reform.
The Fine Gael Finance spokesman said the outline deal meant a 5% cut in the pay packed of every public service worker irrespective of their income.
That was unfair he claimed, warning that the unpaid leave would mean that consumers would lose out through reduced services.
There had been no fundamental attempt to address the cost base of pay in the sector, he maintained.
Labour leader Eamon Gilmore said that while sufficient progress has been made to allow the strike to be deferred, there was clearly some way to go before final agreement can be reached.
IBEC's Director General Danny McCoy has welcomed the deferral of the strike but said he would be disappointed if the Government pursued its compulsory unpaid leave plan for State employees.
Mr McCoy said this was not a sustainable proposition in order to address the public sector pay bill, which he said was now too large for what this country can afford.
