A reduction in the minimum wage will be part of the government's four-year plan to be signed off by the cabinet today.
The Sunday Tribune has also learned that the 150-page plan will include:
* The introduction of a local services charge for every household as early as 2011 pending the rollout of a property tax system.
* A targeting of stratospheric legal fees and the amounts charged by other professions.
* Cuts in public-sector pensions to reflect last year's public-sector pay reductions.
* A major widening of the tax net to drastically cut the 50% of workers who currently pay no income tax and, at the top level, close off remaining tax shelters. An extra €4.5bn a year will be raised in taxes by the end of the plan.
* Spending cuts in excess of €11bn.
* The phased introduction of a new social charge to replace PRSI and the income levies.
The four-year plan will not contain any stimulus measures because there is no money to fund it and there is a belief that such packages do not work in very open economies like Ireland's. However, there will be specific measures aimed at improving Ireland's competitiveness with a view to driving export-led growth.
Senior government figures have confirmed that the current minimum wage rate of €8.65 – which is the second highest in the EU – will be reduced over the course of the plan as part of measures to improve labour-market flexibility. However, it will be done in tandem with reforms in social welfare to ensure the cut does not act as a disincentive to work.
A number of other wage 'add-ons', that exist particularly in the hotel and catering sections, will be scrapped, one source said.
And, as part of this drive to improve competitiveness, professional fees, particularly those charged by lawyers, are certain to be targeted, with sharp reductions in fees paid by the state for their services.
There will be no actual property tax in the early stages of the plan but there will be a commitment to introducing a 'site valuation tax' – once the preparatory work of assessing each site in the state is complete – and water charges, when meters are in every home. Pending the two developments, a local services charge on every household will be introduced in December's budget.
There are unconfirmed reports that this new local services charge might bring in as little as €500m over the course of the four-year plan – which would imply a charge of less than €150 a year per household. This might be a way of seeking to gain public acceptance of the new tax, paving the way for the smooth introduction of a site valuation tax in future years.
The plan will also outline the annual cuts in the public-sector pay bill and the budgets of the three biggest departments: Social Protection; Education and Health.
Commenting on the plan, one senior source said: "This is classic, stern economic stuff. All of the bling [that existed in the Celtic Tiger] is gone out of it."