Agreement has been reached in public sector pay talks, with public servants set to receive a €2,000 pay increase over two years.

Under today's agreement, known as the Lansdowne Road Agreement, payments will be lodged in three installments between January 2016 and September 2017.

The restoration of pay will involve a combination of adjustments to the public sector pension levy and a partial reversal of pay cuts imposed in 2010.

The protections of the Haddington Road Agreement are to be extended to September 2018. 

Minister for Public Expenditure and Reform welcomed the agreement saying he believes "it strikes the right balance between the legitimate aspirations of public servants for pay recovery and sustaining our improving public finances."

He said: "it reinforces the ongoing commitment of public servants to the wider reform agenda in the public service" and "begins the process of unwinding the financial emergency measures in a prudent and sustainable fashion thereby reducing the risk to the sustainability of the public finances."

Mr Howlin said the agreement was "made possible by the improvement in our economy delivered by this Government and the public service reform which has been delivered by public servants in recent years."

He also said  it is his intention to fulfill his commitment to "begin the orderly restoration of public sector pension reductions made in recent years."

The agreement must now go to union members to be ratified.

IMO 'disappointed' at outcome of talks

The Irish Medical Organisation has expressed disappointment and grave concern as to the outcome of the talks.

IMO Industrial Relations Director Steve Tweed said: "the agreement does nothing to address the very real problem of retaining and recruiting suitably qualified doctors to our public health services.

"Over the past number of years doctors have been working in an environment of illegal working hours, unsafe conditions and reduced resources to treat patients.

"The opportunity to recognise the efforts of our doctors in this agreement has been missed by Government and the consequences will be inevitable - more doctors choosing to work abroad in systems that value and respect them," he said.

The Civil Public and Services Union has welcomed the end of the talks, noting they are "a welcome first step towards full restoration of pay and conditions".

CPSU General Secretary Eoin Ronayne said the union would begin its consideration of the proposals at a special meeting next Thursday 4 June 2015

Speaking on RTÉ's Six One News, Mr Ronayne said the deal is a long way from achieving full restoration of pay and conditions.

He said that it is the beginning of a rolling back of a levy which was nothing more than a pay-cut.

He also said that the most difficult element of the deal for his members to take on board will be that the  additional hours have not been dealt with, adding his members will be disappointed over this. 

Mr Ronayne added they have set a train in process that will ensure that lower-paid workers will fair better out of this deal than in traditional type of pay-deals done in the past. 

Individual unions will ballot their members on the terms of the proposed agreement.

Reacting to the outcome of the public sector talks which concluded this afternoon, trade union Unite extended a cautious welcome to "partial pay restoration", but pointed out that the agreement fails to adequately compensate public sector workers for the losses suffered since the onset of the economic crisis.

Restrictions on outsourcing a real concern in new pay deal - Ibec

Ibec, the group that represents Irish business, expressed concern that the new deal on public sector pay puts in place overly-restrictive rules around out-sourcing, which could ultimately damage the ability of the public sector to meet the needs of citizens and businesses alike. 

Ibec Head of Policy and Chief Economist Fergal O'Brien said: "Ireland already has the fourth lowest level of public sector our-sourcing in the OECD. This agreement will further restrict the ability of Ireland to benefit from the quality and efficiency of services that outsourcing can provide."

Earlier Minister for Finance Michael Noonan said the Government has a certain amount of space to normalise the economy and it was a normal part of any economy that there are pay increases.

Mr Noonan said other things were happening as well and there was a commitment to tax reductions in the next Budget and the Government had the space to do that then.

He said other elements of expenditure increases would be in public services such as health, and education services as well as facilities for gardaí.

The minister said the Government had identified "space" of about €1.5bn and expenditure increases and tax reductions would have to fit within that.

He said the issue they had was to ensure that what they do accords with the new fiscal rules.