Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar has ruled out significant pay rises for government employees in the next public service agreement.
But he described pay inequality for post-2012 recruits as an unfair "running sore", which had never been intended to last forever.
Addressing a webinar on low pay for the Think Tank for Action on Social Change (TASC), Mr Varadkar said there was a general appreciation from everyone that because of the high level of borrowing that the Government is incurring both this year and next year due to the pandemic, "... the capacity for significant public sector pay increases just isn't there".
However, Mr Varadkar said that did not mean that nothing should be done.
He said that he did not favour general across-the-board pay rises of 1% or 2% or whatever, as inevitably they did not make a huge difference in people's lives, resulted in the best-off getting most in cash terms, and did nothing to reduce inequality or to deal with low pay.
Instead he said the next public service pay agreement should focus on the lowest paid staff in the public service "...and there are lots of them."
He proposed that they could be helped through mechanisms such as "flat cash amount increases".
The Tánaiste also said any proposed deal should focus on the outstanding issue of the "running sore" of recent entrants who joined the public service from 2012 onwards (on pay scales that were 10% lower than their pre-2012 counterparts).
He said the post-2012 entrants were not necessarily all on bad pay by any means.
"Teachers, for example, are very well paid in Ireland, with very high starting salaries, and the same would apply to other areas too - but it's something that's unfair and was never intended to last forever", Mr Varadkar said.
"We have an agreement to close the gap by 2026 but perhaps that could be done a little bit quicker", he said.
The current Public Service Stability Agreement expires at the end of December.
Last week the largest public service union Forsa, which represents 80,000 of the state's 340,000 workforce, confirmed that negotiations on a successor deal were intensifying.
Public service unions have flagged that apart from pay, they will be seeking the abolition of measures imposed during the financial crisis, including the unpaid additional hours introduced under the 2013 Haddington Road Agreement.