However, in return for increased wages — which Government could delay by a number of months — the report is expected to recommend workers contribute more towards their pensions, a move that would spark fury among workers.
Unions representing the country’s 300,000 public sector workers have already reacted angrily to any notion of changing pension arrangements and are calling for a full restoration of pay ahead of talks to establish a successor to the Lansdowne Road Agreement.
However, Minister for Public Expenditure and Reform Paschal Donohoe, who will bring the report to Cabinet this morning, has already warned that Government may have to delay pay increases by up to 12 months as he cannot put the national finances in jeopardy.
He has also pointed to last week’s exchequer returns which came in €344m below estimates. Mr Donohoe has already shed doubt over whether he will accept all of the recommendations of the Public Sector Pay Commission including a 6% pay hike over three years.
“There is a very high level of expectation from members of our public services in relation to our wages that was articulated clearly over the last number of weeks,” Mr Donohoe said in recent days.
“But what I’m articulating clearly is I have to deliver an agreement that’s not only fair to those who work in our public services but has to be fair to anyone who depends on our public services too.
“I will be the minister who will be taking to Government what our proposals are in relation to the parameters for public service pay.”
An expected recommendation to introduce higher pension contributions will be strongly opposed by those representing workers.
The austerity era pension levy already brings in up to €750m for the exchequer, but it is understood the report will recommend this be kept and converted into a permanent contribution on top of the existing pension contributions.
Public sector unions are vehemently opposed to asking workers to contribute more towards their pensions or to changing payments to link pensions to the rate of inflation.
Speaking on behalf of public sector unions, Bernard Harbour of Impact has made it clear that public servants make “a very significant” contribution towards their pension and there is “no case” for an increase.
Mr Donohoe will begin talks to hammer out a new public pay deal in the next two weeks.
The parties will be under pressure to have a deal in place before the June bank holiday to allow time to ballot teachers before their summer break.