The Government and public service unions have reached agreement on a draft pay agreement which will cost €880m over the next three years or €1.1bn over four years.

The cost in 2018 will be €180m.

By the end of the agreement, 90% of public servants - those earning below €70,000 - will be out of the financial emergency FEMPI legislation.

More than 300,000 Government employees stand to gain from pay restoration and changes to pension contribution arrangements.

The Government backed down on its demand for more outsourcing of public services, but unions failed to secure special arrangements for lower paid new recruits.

The deal delivers pay restoration for public servants in two ways.

Firstly, from a series of phased pay increases starting on 1 January 2018; secondly, from a three tier approach to funding pensions based on the level of benefits enjoyed by the individual.

250,000 people recruited before 2013 will see pay improvements ranging from 6.2% to 7.4% over the next three years.

For 50,000 hired after 2013 with inferior pensions, the gains will be between 7 and 10%.

However, 23,000 workers, including gardaí who can retire early on full pensions, will benefit least.

Unions succeeded in blocking a Government demand for more outsourcing, but failed to secure any winding back of the requirement to work 15 million additional unpaid hours per year - though staff will be able to revert to their original shorter week subject to a pay cut.

Each union must now consider the proposals, prior to putting them out to ballot.

Fine Gael leader Leo Varadkar welcomed the new public service pay deal and was confident it would go to Cabinet next week.

He said it restores public service pay in a way that is affordable and makes the cost of public sector pensions more sustainable.