Talks between the Government and the social partners to draw up a successor to Partnership 2000 are likely to get under way in the autumn, the Taoiseach said.

Mr Ahern added that much discussion had taken place already on matters which would have an important bearing on the orientation and content of a new agreement, particularly the consultations on the National Development Plan and the ongoing work of the NESC in devising a strategic framework to underpin the new agreement.

"I am confident that a successor to Partnership 2000 will be agreed, principally because all the participants accept fully, I believe, the enormous contribution which social partnership has made to the turnaround in Ireland's economic fortunes over recent years."

The Fine Gael spokesman on public enterprise, Mr Ivan Yates, said it was now widely acknowledged that what was really driving pressure on pay was the cost of housing and the proportion of net income taken up by it.

"Given that in the next decade we will need four extra houses for every 10 which exist on the east coast, will the Taoiseach and his Government give leadership in making a major housing initiative part of any successor to Partnership 2000 to ensure uncompetitive pay pressures because of accommodation problems do not lead to a loss of competitiveness in the Irish economy?"

Mr Ahern said the central issue was that the State should remain competitive. A successful economy driven by the co-operation of social partners had contributed to the housing issue.

"We have built 15,000 to 18,000 houses every year for a number of years and this year we will build over 50,000 houses, between social and private housing. We must continue doing that."

He added that land use, serviced land and other initiatives contributed to that.

In some cases, the cost of housing was part of the reason for pay pressure, while other reasons included skills shortages as some employers in some sectors found it difficult to employ suitable people.

"All of these elements create pressures. We will be seeking pay restraint and moderation and no excessive demands so the economy will continue to develop.

"This is why the economy is performing so well and why nearly 1.7 million people are working.

"There will be changes in the new programme but they must reflect the development of the Irish economy in the next three or four years."

Mr Yates said that, as public service union leaders had stated, an average couple comprising a garda and a nurse could not afford a mortgage to buy a house in the Dublin area.

"This will drive pay pressures through the roof."