THE TAOISEACH told the social partners yesterday that he would only sanction a national pay agreement that tied in with the Government's strategy to get the public finances under control.
Mr Cowen told union and employers' leaders during a meeting at Government Buildings that he would like to have "an appropriate deal for the circumstances" but not one at any cost.
It is understood he expressed the view that a deal to run over a shorter duration than normal could be arrived at to help the economy, and could be reviewed again in the light of circumstances.
Mr Cowen's bottom line was that he could not agree to a deal that would throw next year's budget strategy further off balance.
The leaders of the Irish Congress of Trade Unions (Ictu) and the employers' body Ibec agreed at the meeting convened by the Taoiseach to restart the social partnership talks next week. The long-running talks on a new national agreement were adjourned a month ago.
In a statement after yesterday's meeting, Mr Cowen said: "I think all sides are agreed on the need to avoid drift and uncertainty as to whether an agreement is possible."
During his meeting with the social partners Mr Cowen made it clear that if there was going to be a deal he would like to see it concluded by the end of next week.
The Taoiseach is understood to have told the social partners that while he was "not afraid not to have a deal", he did want to see an agreement as it was important for the country. He also raised the prospect of what would happen in industrial relations if a deal was not secured.
Mr Cowen expressed the view that a new deal on the right terms could provide a framework to get the economy back on track.
In a statement after the meeting Mr Cowen said he had underlined the changed context of the talks "in terms of the evolving economic situation and, in particular, the further developments in the exchequer finances since talks were concluded in early August".
The statement welcomed the fact that the parties had affirmed their commitment to engaging in further discussions. The Taoiseach assured the parties that he stood ready to assist the process in any way.
During the talks Mr Cowen does not appear to have given any specific indication of the Government's position on public sector pay or employment levels in the light of the deterioration in the exchequer finances since the talks broke down several weeks ago. At that point the Government was seeking an 11-month pay pause.
The Government also gave no hint yesterday of proposals it could bring to the table in other areas such as measures for the lower-paid, inflation, or reforms on collective bargaining rights which could be used to bridge the gap between the parties
Speaking after the talks yesterday, both union and employers' leaders warned that securing a deal over the coming week would be difficult.
At the talks in July the unions rejected proposals for a 5 per cent increase phased over 21 months, with a six-month pay pause for most workers. However, this would have run for 11 and 12 months for those in the public service and in construction.
The head of the Construction Industry Federation, Tom Parlon, said yesterday that its position had not changed on the need for a 12-month pay pause.
He also said he had implored the Taoiseach to press ahead with the National Development Plan for constructive infrastructure even if this meant borrowing levels above the EU stability pact.