Minister for Public Expenditure and Reform Michael McGrath has said there will be a difficult balance to strike in the upcoming public sector pay talks.

Speaking on RTÉ's Morning Ireland, Mr McGrath said his officials would meet the Irish Congress of Trade Unions next week to discuss public sector pay.

"It is important that whatever arrangements are agreed are fair to both public servants, who have worked very hard over the last number of years, but also to taxpayers generally," he said.

"We have an obligation to ensure that we manage the public finances in an affordable and sustainable way into the future so we need a balance and it is going to be a difficult one to strike.

"We just need to be careful not to have a situation where we have wages chasing inflation and we end up driving it higher and making the situation worse."

He said that pay alone cannot be used to address inflationary pressures and that the Government has other levers at its disposal.

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"There will be a budget in October and expect further changes to our income tax code, to social welfare and other initiatives by Government to reduce the cost of living," he said.

Yesterday, the Government confirmed that it is willing to go beyond the terms contained within the current public sector pay agreement, but that it must be done in a balanced way.

The comments came as Fórsa, the country's largest public sector union, held its national conference in Killarney where delegates passed a series of motions calling for pay increases to help ease the pressures of inflation.

Unions met Government officials for exploratory talks on public sector pay last week and the Workplace Relations Commission has been asked to facilitate further talks in the coming weeks.

Under the current public sector pay deal, 'Building Momentum', workers received a 1% pay increase last year, with a further 1% due in October, but unions triggered a review clause contained within the agreement because of soaring inflation.

Mr McGrath said he accepted it was a really difficult period for people, and that it was "unparalleled in recent history".

"There isn't anything that the Government can do to fully offset the impact of the war in Ukraine in terms of the cost that people are facing. Unfortunately there is a cost to all of us in this war … I just think we need to be honest with people in relation to that," he said.

"There are many demands on the public purse … the cost of borrowing for the country is rising as well … so it's important that we manage the public finances prudently and that we don’t do any damage in this period that will cause greater difficulty down the line. So it is about striking a balance."

Minister McGrath warned of a need to be careful not to have a situation where "we have wages chasing inflation", which he said could end up "driving it higher".

He said there will be "meaningful discussions" to discuss pay increases as he acknowledged the current level of inflation is having a "real impact" on public and private sector workers and the unemployed.

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Elsewhere, the General Secretary of the Irish Congress of Trade Unions said that the rising cost of living is causing considerable hardship to workers and their families.

Addressing the national conference of the Fórsa trade union, Patricia King described Ireland as a low-pay economy, one of the worst in Europe.

"Recent revelations concerning 'sky-rocketing' pay packages being awarded to the chief executives of some of Ireland's top companies, puts workers seeking pay rises to counteract the impact of 7% inflation into perspective," she said.

"It is simply untenable, unfair and inequitable to expect low and middle-income workers to carry the burden of current inflationary pressures without adequate and sufficient alleviation measures."

"That is why the ICTU Public Services Committee and the Affiliates of the Private Sector Committee are very actively pursuing pay claims through their normal collective bargaining processes."