GREATER flexibility in the public service must be part of any new national pay agreement, the Taoiseach, Mr Bruton, has warned.

Earlier, the IBEC president Mr Tony Barry had said that employers would pull out of national pay talks if the price of a new national agreement is too high. But speaking to journalists after addressing the Irish Management Institute conference in Limerick yesterday, Mr Bruton said that the Government is in favour of a fourth national pay agreement.

Mr Bruton told delegates that people must accept the need for change and flexibility and that the biggest need for this flexibility is in the state sector. The Strategic Management Initiative the programme designed to improve the management of the public service is aimed at improving the quality of government.

"We must have less demarcation," he said bluntly, highlighting the Government's desire to see more freedom of movement within the Civil Service, which is one of the goals of the SMI.

Mr Bruton said that while any new national agreement would undoubtedly involve costs, the experience of the three agreements in the past 10 years is that the benefits have outweighed the losses. "It's a question for each party involved to assess the costs against the benefits," he stated.

In a wide ranging keynote speech, Mr Bruton emphasised the need for industrial relations stability.

"We have enjoyed unprecedented industrial relations stability since 1987 but we should not take the benefits of social partnership for granted," he said, pointing to the current social unrest in France as an example of what happens where social partnership has broken down.

"There can be a price too high, but we must be careful before saying the price is unacceptable, before assessing the costs of having no partnership. Social partnership doesn't come free, " he stated.

Mr Tony Barry, the IBEC president, warned that negotiating a new national pay agreement will not be easy and said trade union expectations are "on the high side."

Mr Barry warned that employers are not going to enter into an agreement "which would be the seeds of undoing all the good work done in the past three agreements." He said. "I am neither over optimistic nor over pessimistic about the prospects of a new agreement." He added. "It won't be easy to reach an agreement when talks get under way at the beginning of November."

"It wouldn't be the end of the world if we don't get a new agreement, most employers would come to reasonable local deals," Mr Barry said.

Referring to the public sector, he said that local deals are already being done in the public sector "which are bordering on the parameters of the current agreement".

Responding to a question from one delegate, the Taoiseach rejected the suggestion that there has been insufficient debate about European Monetary Union and Ireland joining the single currency.

"The time for debate was in 1991, we made that call at Maastricht," he said. At Maastricht, "Mr Haughey decided on no opt-out for Ireland, the people voted for it, QED".

Mr Bruton also addressed the theme of stability earlier yesterday, addressing 150 guests at a £100 ahead corporate fund raising lunch organised by the Limerick West constituency party of Fine Gael at Adare Manor.

Speaking within 500 yards of where Detective Garda Gerry McCabe was shot last June and another detective wounded, he said "that the law must at all times be upheld and there can be no halfway between terrorism and politics.

He added. "It is very important that there should be stability in the law. There have been occasions in the recent past when, for whatever reason, there has been a tendency to scapegoat some individuals or groups. We have insisted rightly that the law is there to protect everybody whether it be popular or not". The law, he said, must be upheld because there is no halfway house between terrorism and politics.

The Taoiseach told the Adare meeting that technology was drastically changing the world. Jobs that are secure today, he said, will not necessarily be there in ten years time. "We have got to invent new jobs all the time and we have got to be improving our standards of skill and education".