Well-placed sources said the atmosphere at the partnership talks is "very fraught" and that the negotiations cannot get by a number of "sticking points" relating to employment standards. The sources are warning that the current difficulties are extremely serious and go beyond the usual 'choreography', where one or other side threatens to walk if they do not get their way.

While it is understood the government believes the problems involved are ultimately not insurmountable, there is concern that the talks remain stuck on employee protection and that the core issues of pay increases and the duration of the agreement have hardly been touched on.

There is also a view that some of the so-called 'red-line issues' for the unions would be very difficult to deliver because they run contrary to EU principles.

Jerry Shanahan of the AMICUS union, which represents over 60,000 members, yesterday warned that the talks were on the verge of collapse. "The reason is that this issue [employment protection] has come to a standstill. Unless there is a rethink to break the impasse, there is only one thing that can happen and that's a collapse of the talks, " he said, adding that some initiative had to come from the employer or government side.

A meeting of ICTU's special executive is scheduled for tomorrow, but Shanahan said there had been a lot of pessimism on the union side in recent days. He said the government and employers had failed to "deliver on commitments given to engage meaningfully in the provision of employment protection measures, in particular for immigrant workers".