Mr Howlin is warning public sector workers they will have to "work longer, and more cleverly and in different, smart ways".
The minister plans to reduce the public sector pay bill by an extra €1bn by 2015 – on top of the €3.3bn reduction already targeted.
In return for maintaining pay levels, the Government wants wide-ranging changes to work practices in the public sector.
Among the items on the table in the talks with unions are practices borrowed from the private sector, including:
• Exchange of staff between the public and private sector.
• Performance measurement.
• Shared services.
• Changes to the working week.
• Reductions in overtime and premium pay.
Ministers believe the new agreement will provide the opportunity to bring in changes to the public sector that have not been possible to date.
The Coalition believes the desire of the unions to avoid a flat rate pay cut puts changes to work practices on the table that were previously regarded as inconceivable. "We don't just want people to work longer. It's about performance and delivery of services to the public," a senior government source said.
The Government also has to use the deal to continue to reduce the numbers in the public sector to 280,000.
Thus far, the numbers in the public sector have come down from 320,000 to 292,000.
Government sources say the bid to "shave off the other 10,000 has come a bit unstuck".
The Coalition is going to offer a new voluntary redundancy scheme that will seek to entice those who thought about going for early retirement or redundancy earlier this year – but then backed off after crunching the numbers.
Mr Howlin said last week the Government was examining how to achieve a more efficient and focused public service.
"Some things can be done better in the private sphere," he said.
"The public service is unique in providing quality services across education, healthcare and many other areas which I am determined not only to preserve, but to enhance," he said.
Mr Howlin also said he did not discriminate between public and private sector workers.
"Employees are workers and should be respected as such. Working in the private sector does not automatically mean working in a sweatshop or in appalling conditions.
"Some of the best workplace conditions are in the private sphere," he said.
Mr Howlin said public servants would be getting year-long placements in private companies as part of his public sector reform plans.