The State's largest union, Siptu, has today warned that any cuts in the public sector would be met with "stout resistance".
In an interview in today's Irish Times, Minister for Finance Brian Lenihan warned decisions on public sector cuts were imminent.
The Minister said the Government would have to make a decision on the State's payroll costs "within a matter of weeks" if it was to address the estimated €11 billion deficit Mr Lenihan expects this year between tax revenues and public expenditure.
"The Government must immediately make adjustments to expenditure in this year," said Mr Lenihan.
"Of course the bulk of deficit will have to be funded through borrowing this year but the State must embark on a credible path now.
"That involves in the first instance looking at our payroll costs for this year and making decisions on that and associated expenditure issues within a matter of weeks."
Mr Lenihan is to produce an emergency plan to cut €2 billion off this year’s spending as agreed in the October budget, while €4 billion will have to be cut off the projected spend for both 2010 and 2011.
Responding to Mr Lenihan’s comments, Siptu general president Jack O’Connor said: “The scale of the figures presented by the Department of Finance yesterday are truly horrendous, and they have enormous implications for our society and our economy.
“They are a consequence of the reckless agenda pursued by the PDs and the right wing of Fianna Fáil between 2002 and 2007. . . . It will require an unprecedented national effort, to which all sectors of society must contribute, to stabilise the economy over the next five to seven years.
“But the remarks attributed to the Minister suggest that he intends what we in Siptu feared all along, ie trying to solve the problem at the expense of working people and the less well off in society, Mr O’Connor said.
“We believe that the unilateral imposition of cuts in rates of pay will meet with stout resistance from trade union members generally. If the Government sets about it in that way we in Siptu , and I believe everyone else in the trade union movement as well, will do everything we possibly can to mobilise such resistance.”
“The only way to successfully tackle the issues confronting us with any prospect of success is on the basis of all sectors of society contributing, and with those best able to do so, contributing the most,” Mr O'Connor added.
Labour said the revised Stability Programme update “sneaked out” last night by the Minister for Finance was a “staggering document”.
“A mere nine days into 2009, and only 87 days after it was published, the Budget has been torn up and replaced with an “addendum”. The scale of the revisions in the new figures defy belief,” said Senator Alan Kelly, Labour Seanad spokesman on finance.
"The addendum shows that the Government doesn't have a single idea for how to deal with the crisis in the economy," he said.
Mr Lenihan also said he would not rule out "a fundamental reform of the tax system" in this year's budget because public revenue was "far too dependent on taxes which have an elastic rate of return". He said too many taxes such as capital gains and VAT relied too heavily on transactions and the value of declining assets.
"It is essential that we broaden our tax base as well as pruning our expenditure," he said.
This afternoon the Minster for Transport Noel Dempsey defended the Government’s handling of the economy.
The Minister said “we are living in extraordinary times,” and even the IMF had to revise figures it gave at the end of October for the economies of the world within a month.