Public sector pay talks between the Government and unions are to intensify and move to a formal phase next week.
Following today's Cabinet meeting, Minister for Public Expenditure and Reform Michael McGrath said the Government now believes there is a basis to proceed and enter formal negotiations.
Exploratory talks between the two sides got under way last week at the Workplace Relations Commission (WRC).
"My aim in these negotiations is to secure a deal that is fair to both public service workers and also taxpayers generally," Mr McGrath said.
"It needs to be affordable to the State and recognise the fact there is now a considerable degree of uncertainty around the global economy.
"I think it is in the interest of all parties that a deal is done but these will be very difficult negotiations and success is not guaranteed," he added.
Mr McGrath said he expected the negotiations would be quite intense.
"I expect that it will happen over a relatively short period of time and I think we'll know where we'll stand in a week or two," he said.
Under the current public sector pay agreement, 'Building Momentum', public sector workers received a 1% pay increase last year, with a further 1% due in October.
In March, unions triggered a review clause contained within the agreement due to rising inflation.
Unions have not yet said what percentage pay increase they are seeking, but have said that their focus will be on the gap that has emerged between where inflation is now and where it was when the original public sector pay deal was agreed.
The President of the Irish Congress of Trade Unions Kevin Callinan said that today's inflation figures and the ECB's announcement on future interest rate increases all add to the current pressures and that they need to know what the government is prepared to do.
