The Irish Small and Medium Enterprises Association (ISME) has launched a strong attack on the public sector, saying that current unrest there is the result of bad management. It says radical change can only be implemented by capping the public sector pay bill at its current level of £4.8 billion.

This would ensure that future pay increases would have to be funded from internally generated savings, according to ISME director Mr Frank Mulcahy.

He said productivity gains could be deployed to reward high achievers and promotion within the service would then be based on performance.

"Anachronistic practices such as privilege days and automatic entitlements to sick days (whether sick or not) should be abolished", he said.