The Minister for Finance has warned that high wage increases could price Ireland out of the international market.

Mr McCreevy said it was important the next national pay agreement did not worsen the State's competitive position.

"The competitiveness challenge must be met and pay is one element that we can, and need to, control," said the Minister.

He was speaking at the Financial Services Ireland annual members' lunch.

"The reality is that we are no longer a low-wage economy. In pay terms, we have benefited from high increases in recent years. Over the five years to 2003, economy-wide employee earnings rose by 37 per cent in Ireland, compared to about 14 per cent in the euro area," he told guests.

"The impact on our international competitiveness of relatively higher pay increases in Ireland was cushioned to a large extent by the weakness of the euro. But we are now faced with a much stronger euro.

"Pay increases which are out of step with our trading partners will result in job losses," he warned.

In a hard-hitting message, he said lower inflation rates of recent times needed to be reflected in the next agreement.

"If we, as a country, are to take advantage of international recovery, then we must ensure that our competitive position is not harmed by any decisions we make in these pay talks. We must ensure that we do not price ourselves out of the market," he added.

Mr McCreevy refused to comment on media speculation that he may become Ireland's next EU Commissioner. Mr McCreevy told The Irish Times he had expressed no view on the appointment and never commented on such speculation.

Also speaking at the event was the chairman of Financial Services Ireland, Mr Willie Slattery, who agreed that Ireland needed to avoid "any further diminution in our competitive position".

Mr Slattery also expressed alarm at recent suggestions that the IFSC had been damaged by the collapse of Italian company Parmalat, which had a subsidiary in Dublin.

"The central cause of the Parmalat collapse was likely to have been, at best, gross failure of management," he said. "The justifiably good international reputation of the IFSC has not been affected by this overseas event - regardless of what some local commentators might think - and it would be a serious over-reaction were it to bring about an unwarranted change in the regulatory approach in Ireland."