EMPLOYERS have urged the Government to urgently slash its €17bn public sector wage bill by 5pc in a move that would result in up to 10,000 job losses.
The Irish Business Employers Confederation (IBEC) said the move was essential if the Government was to curb spending as it grappled with a massive €10bn budget deficit.
"The Government needs to do its part," said IBEC's Director General Turlough O'Sullivan. "I don't think it's sustainable to continue to have a public service that has expanded at a rate that this one has without some sort of a response to reality."
Speaking as the employers' group launched its pre-Budget submission yesterday, Mr O'Sullivan said the savings could be generated from natural attrition and direct redundancies, with jobs culled from administrative posts.
But the move sparked an angry reaction from public sector unions last night.
Mr O'Sullivan called for the headcount reduction "ASAP" and conceded that to cut 5pc from its wage bill, the Government would need to reduce the public service workforce by about 10,000.
The Government is expected to spend close to €19bn this year on public sector wages and pensions, with €16.9bn of that related to salaries.
IBEC admitted the Government was unlikely to see any financial benefit from the jobs losses for at least a year. But it warned that just as private companies reacted to difficult economic circumstances by letting staff go, so too should the Government.
The business group also called on the Government not to raise taxes in next week's Budget and called on Finance Minister Brian Lenihan to deliver a package that would deliver stability.
Mr O'Sullivan added that Mr Lenihan had accepted that enterprise remained the foundation of the country's success.
"He was very understanding and very sympathetic to that view," said Mr O'Sullivan. "To a great extent, we certainly saw eye to eye."
He added that a failure to tackle the public finances head-on could have "far-reaching implications" for Ireland's position within the European Monetary Union and would be "extremely damaging" to the country's reputation in the international investment community.
Meanwhile, the Economic and Social Research Institute (ESRI) and the Foundation for Fiscal Studies are expected to highlight concerns about tax increases at a conference in Dublin today.
Professor of International Financial Economics and Development at TCD, Patrick Honohan, said: "We have learnt that tax rate increases do damage confidence, but a lack of a credible medium-term fiscal strategy is worse."