Employers group Ibec has announced its intention to formally withdraw from the national pay agreement before the end of the year.
A statement issued this evening said the group's national council decided on the move today but insisted it "still supported" an agreed partnership approach to the current economic challenges, but said efforts "must focus on keeping companies in business and supporting jobs."
It threatened to take "unilateral action" if no agreement is reached with Ictu by mid-December on what it described as "an alternative pay agreement that is appropriate for the economic and commercial environment of 2010."
Ibec's director general Danny McCoy said: "Protracted efforts over the last year to reach an agreement on suspending the pay terms have proved unsuccessful. We now owe it to ourselves and to future generations to act decisively and face up to the challenges ahead."
He said the terms of the national pay agreement were agreed in "radically different" economic times describing them now as "utterly inappropriate".
"It would be reckless to attempt to apply those terms in the current circumstances, with so many employers fighting for their very survival," he said.
Warning against increased spending on social welfare, Mr McCoy said Ibec had proposed a set of measures "that would redirect public funds towards keeping people in jobs, rather than allowing a drift into spending equivalent funds on social welfare payments."
He said the country needed to restore confidence insisting that "only competitive businesses can sustain and create employment."
"The business community is willing and able to play its part in getting the country back onto a sustainable path. Pay expectations must however reflect the overriding need to restore competitiveness and protect existing employment", he concluded.
Earlier this month, the Irish Small and Medium Enterprises Association (Isme) called for social partnership to be ditched and for a National Representation Forum to be created instead.
