The Government's ability to increase pay next year for hundreds of thousands of State employees has "even tightened in the past month", Taoiseach Brian Cowen warned this afternoon.
Mr Cowen has left Galway at the end of the two-day Fianna Fail Parliamentary Party meeting in the city to return to the pay talks in Government Buildings.
However, Mr Cowen was downbeat about the prospects of a deal emerging: "There are still difficult issues. I am going there this afternoon to see if it is possible to find the basis of a deal. At this, genuinely, I couldn't be sure if we will have a successful outcome.
"This is not a done deal by any manner or means as things stand. It isn't an orchestrated process, or anything like that. There are genuine and serious issues on which there is not yet agreement. I don't know whether in fact we will be able to come up with a solution, but we will know later tonight one way, or the other."
Asked about the implications of wage rises for State employees on the Exchequer, the Taoiseach said: "Given where we are at the moment there is very little room to manoeuvre in terms of the public finance position. We are trying to find a deal that is doable. The question of phasing, or pauses and the numbers involved have yet to be decided and yet to be agreed.
"I think I have made it clear both directly to the parties and when we resumed that the room for manoeuvre for the Government has in fact even tightened further over the last month," he said.
The two-day meeting of the parliamentary party has heard strong warnings from both the Taoiseach and the Minister for Finance, Brian Lenihan about the state of the economy.
Next month's budget is going to include "painful measures", said Mr Cowen, but he was confident that the public would appreciate its Government taking necessary actions quickly.
