As finance minister Brian Cowen warned workers that they cannot expect too large a wage increase from the current national pay talks, the survey, carried out by European employers, revealed that in terms of purchasing power, only the Portuguese earn less than the Irish.

While Taoiseach Bertie Ahern enjoys the benefits of being the third highest paid leader in Europe on 252,000 a year . . . topped only by German leader Angela Merkel on 261,000 and Tony Blair on 268,500 . . . the pay survey by the Federation of European Employers (FEE) shows that when you factor in what your wages can buy you in Ireland today, Irish workers cost employers just 26,828 a year on average, compared to 19,488 for the Portuguese. Belgian workers head the 'rich list' on 41,793, followed by the Germans on 41,557 and our nearest neighbours and keenest competitors, the British, on 39,766.

The figures will cut little ice with Cowen and the employers, who have argued at the national pay talks that because inflation in Ireland is heading for 4%, or almost twice the EU average, workers will have to peg back their wage expectations even further if Ireland is not to lose more ground on our European competitors.

With tension mounting at Government Buildings in direct proportion to the surge in inflation, the unions said that Cowen's warnings on pay restraint were "preposterous".

Their bottom line is that any wage increase will have to at least match inflation and include a share of the country's wealth they have helped to create. Cowen and the employers take the opposite tack and warn that the only way we can catch up with our European neighbours is to keep wage increases at, if not below, inflation.

While Cowen is keen that Irish workers make up some lost ground with our European neighbours, the real threat to our booming economy comes from the eastern European states and the rapidly growing economies of India and China.

The FEE's pay survey shows that, overall, wages in eastern Europe are a third the average wages in the original 15 EU members states.

This is a massive pay gap within what is supposed to be the one 'country' and is an area of huge concern for 'old' Europe including Ireland.

In Ireland, the average industrial wage is 577 per week. But in Bulgaria it is just 37 a week while Romanians, on 66 a week, are not much better off.

Both these countries are due to join the EU next year when many people expect that the huge gulf in wages will attract workers to countries like Ireland, which pay over 15 times their average earnings.

But what concerns Cowen is that the attraction can also work the other way. Why wouldn't businesses in Ireland want to move over to another state within the expanded EU with such cheap labour costs, particularly if the skills available are as good if not better than what they can get in Ireland?

Workers in the 10 new accession states are not that much better off even though they have been in the EU now for two years. The average weekly wage in Latvia is 68 . . . almost a tenth of the Irish wage. In Lithuania it is 89 a week and 104 in Estonia.

Polish workers are on 147 a week but this is still just a quarter of what they can expect to get in Ireland. It is easy then to see why so many workers from these countries are arriving in Ireland. Even Ireland's minimum wage of almost 300 a week is over twice what Polish workers, including professional and skilled workers, can expect to get in their own country.

Outside Europe, the wage gap is even more acute. Workers in India, which has now established itself as the world leader in the IT industry, can expect no more than 22 a week, which would hardly pay an Irish worker's bus fare in and out of work for the week. Such low rates in India explain why so many IT and software companies are contracting out more and more work there, most frequently at the expense of Ireland.

China, where the economy is expanding at an alarming rate, pays its workers an average of 34 a week. Workers in Russia get 56 a week.

But while private-sector workers in Ireland are among the poorest in 'old' Europe, public servants more than hold their own worldwide. A teacher in Ireland is paid from a minimum of 28,814 to a maximum of 56,003. Halfway up the scale, an Irish tracher will receive around 45,000 compared to an average Australian salary of around 37,000 and a 36,346 average in the US.