Minister for Transport Leo Varadkar has said public sector pay increments should be deferred, particularly at a time when services for the public are being cut.

Mr Varadkar acknowledged that increments were protected under the Croke Park Agreement, but said deferring them for a year would save up to €200m.

He noted that under the agreement, core pay would not be touched, but also said there would be no pay increases, so increments were "a kind of a grey area in that sense".

However, he said it was very hard to justify giving anyone any kind of pay increase in the year ahead, at a time when services were being cut.

The minister said a decision on increments would be the kind of judgement call the Government would have to make.

Irish Nurses and Midwives Organisation General Secretary Liam Doran said suggestions that increments should be deferred would be a serious breach of the agreement.

Mr Doran also said any such move would be "grossly unfair".

Minister for Finance Michael Noonan has said there have been no discussions at Cabinet about the Budget.

In relation to comments from Mr Varadkar, Minister Noonan said every Minister is entitled to give their views but they are personal views.

Earlier, it emerged that Minister for Health James Reilly had raised the possibility of cutting overtime and premium payments in the health service in an attempt to reduce the overspend, which had already hit €200m at the end of April.

Dr Reilly has come under pressure from Minister for Public Expenditure & Reform Brendan Howlin to personally engage to address the overspend.

SIPTU Health Division Organiser Paul Bell accused Dr Reilly of seeking to distract attention from the failures of his department.

He said issues such as overtime and premium payments were a matter for the Public Expenditure Minister and the public service unions.

Mr Bell also said that many of his members were doing compulsory overtime in order to keep services going because of the fall in staff numbers under the recruitment moratorium.

He pledged to resist any move to defer increments for his members.

A spokesperson for Minister Howlin said the Department remains committed to meeting its budget deficit target of 8.6%.

The spokesperson said that as part of Budget 2012 and the Comprehensive Review of Expenditure, the Government is committed to securing savings of €145m from the pay bill in the health sector.

It is intended that this will be secured by reducing levels of employment, use of agency staff, cutting overtime and premium payments and other measures.

However, he said those reductions were to be implemented within the Croke Park framework and that the potential for reform, productivity increases, roster changes and cost reduction under the deal should be maximised and pursued as a matter of urgency.

A spokesperson for IMPACT said increments are not a grey area and any move to decrease, suspend or defer them would be a de facto pay cut, which would mainly affect lower paid workers.

The union said any change in increments disproportionately affects those on lower grades, while higher grades remain almost completely unaffected.