Senior representatives of the Government and the Social Partners are taking part in talks this evening on a National Recovery Plan.
The Government's Framework Document makes a number of radical proposals to cut public spending by up to €2 billion.
The Irish Congress of Trade Unions has said the document provides potential for an agreement.
But the General President of SIPTU, Jack O'Connor, said it would be difficult to meet the Government's Tuesday deadline for a conclusion of the talks.
The Government's framework document says that unemployment could rise to over 10%, with over 120,000 people losing their jobs between 2008 and 2010.
Outlining the challenges facing the economy, the document says that national income could fall by up to 10% over the same period. It forecasts a general Government deficit of between 11% and 12% of GDP each year up to 2013.
The parties agree to reduce exchequer borrowing over the next five years to get the general Government deficit to below 3% by 2013, through an appropriate combination of spending and tax adjustments.
The document reiterates a commitment to social partnership based on an equitable approach, where all sectors of society contribute in accordance with their ability to do so, while the vulnerable are insulated against the worst effects of recession.
It acknowledges the need to cut the public pay and pensions bill, but stresses the need to maximise sustainable employment, to increase efficiency and to maintain high priority public investments.
Changes in taxation will be brought in to broaden the tax base with a higher proportion fall on the better paid.
The Government is also asking the Commission on Taxation to identify appropriate ways of raising tax revenue by September.
In the short term, the Government is committed to maximising economic activity and employment by maintaining capital investment at a high level by what it describes as 'international and historical standards'.
Labour intensive projects will be prioritised where possible. Measures will also be introduced to assist enterprises, particularly those under pressure from currency issues.
There is also a commitment to improve competitiveness, increase competition, and reform price regulation in areas including energy.
Regarding the banking crisis, new codes of practice will be introduced in relation mortgage arrears and home repossessions, as well as a code of practice on business lending. Controls on senior executive pay in banking will also be introduced.
Moderating executive pay in other business sectors will also be on the agenda, with the document acknowledging that those who benefited most from the economic boom should contribute to the adjustment required.
The social partners undertake to address the serious and urgent difficulties facing private sector pension schemes, many of which are in danger of collapse.
For those who lose their jobs, there will be a so called 'flexicurity' approach to equip them to return to work as soon as possible, by maximising training and providing appropriate state supports.
The social partners will also work together to implement an agenda for enterprise and competitiveness based on the Government's Framework for Sustainable Economic Renewal.
The document warns that failure to implement radical decisions has the potential to erode national and international confidence in the Irish economy, with profound risks for all sectors of Irish society.
Dáil debate on the economy
Meanwhile, opening the Dáil debate on the economy today, Taoiseach Brian Cowen said the challenge was unprecedented and the level of borrowing required was not sustainable.
Mr Cowen said the global downturn posed the most severe crisis since the Great Depression. He also said that banks must find a new way of doing business and must work to higher standards.
Fine Gael leader Enda Kenny said Ireland's economy had been relegated from the premier league to the third division. He added that the 'Government indecision and incompetence was making things worse'.
Mr Kenny said a significant cut in the public sector pay bill was vital.
Labour leader Eamon Gilmore said there was nothing new in the Taoiseach's contribution. He said the crisis was not about statistics but about people.
