The Minister for Public Expenditure and Reform has said that the Government strategy on public sector pay increases would have to be affordable to the State, and fair to everyone working in the public service, as well as to those who depend on them.

Paschal Donohoe was speaking amid reports that 300,000 Government employees may be in line for pay rises totalling 6% over three years when pay talks get under way next month.

According to a report in this morning's Irish Times, they could see 2% a year, with the possibility of further sectoral increases subject to productivity, when talks on a successor to the Lansdowne Road Agreement get under way next month.

Those talks will commence after the Public Service Pay Commission submits its analysis of how public service pay compares to the private sector, and to international comparators.

In a submission to the PSPC, the Government highlighted the need to reduce to cost of public service pensions, which are currently costing the taxpayer €3.3bn a year.

While staff recruited since 2013 are on a less generous "career average" scheme than their predecessors, savings from that new measure will not accrue for years, and the Government will be anxious to start reducing the pensions bill sooner.

There will be a number of key sticking points in the talks on the successor to the LRA.

First, the level of pay rises, and the phasing of their introduction.

Unions will argue that what they are receiving are not pay increases, but pay "restoration" of cuts imposed during austerity.

They will also be anxious to restore pay equality for newer recruits who came in on pay rates 10% lower than their longer-serving colleagues.

However, the Government will be anxious to moderate pay increases given uncertainty around external factors including Brexit and the Trump presidency.

Second, unions will seek to roll back productivity measures such as the 15 million additional unpaid hours to be worked each year.

They will also want restoration of their original paid sick leave entitlements, which were halved during the crisis.

However, Government sources have consistently stated that those reforms are here to stay.

Pensions will constitute another difficult area, with unions seeking the abolition of the pension related deduction imposed under austerity, while the Government is likely to argue that the increasing value of public pensions relative to the private sector must be factored into any overall pay deal.

Under the 2007 benchmarking pay deal, public pensions were calculated to add 12% to remuneration, but with private sector pensions deteriorating, that differential is now estimated to have reached up to 18%.

The biggest political difficulty for the Government will be to ensure that the final outcome takes account of trends in the private sector - as the growing gap between public and private sector pay is extremely controversial.

In addition, Government resources allocated to public service pay rises reduce the scope for general tax cuts boosting take-home pay for private sector workers, social welfare hikes or infrastructural investment.

Mr Donohoe said today that he will outline his position on public pay after the Public Service Pay Commission reports.

However, he said he wants to come up with a strategy that will be affordable to the State, and fair to everyone both those working in the public service and those who depend on them.

He said he would not comment on what that strategy might be until he has Cabinet approval for his negotiating mandate.