RTÉ is to cut back on the large number of contract staff on its books in its ongoing efforts to tackle the station's €68m deficit.

Management – led by director-general Cathal Goan – has told the unions that because of financial difficulties at the station it will not be in a position to renew the contracts of most of the estimated hundreds of staff who are employed on fixed-term contracts, usually for up to three years at a time.

However, sources within the state broadcaster have stressed there is no question of cutting back on permanent jobs. More than 2,300 people are employed at the station.

Earlier this year, RTÉ staff narrowly agreed to accept wage cuts of up to 12.5% on the understanding that wage cuts would replace job cuts.

But management told the unions at the time that it would have to look at the large number of contract staff still on its books.

The situation has not been helped by lack of interest so far in the broadcaster's incentivised career-break scheme. Under the scheme, staff will receive a €20,000 payment upfront to take a two-year break from the station – which was to have begun by November this year.

However, because the €20,000 payment would be made so late in the tax year, it would attract a tax charge of close to 50%. It is understood that changes have been agreed to the scheme which would spread payments over a longer period and so reduce the tax charge.

While RTÉ said it was not yet in a position to say how many staff would avail of the schemes, it was expected that the tax changes would boost the number of applicants over the next two weeks.

Meanwhile, the number of civil servants applying for the government's more generous career-break and early-retirement schemes are well below expectations. By last month, close to 1,100 people had applied for both schemes with under 500 civil servants approved to date – a figure well short of the 3,500 it had hoped would leave.

While numbers applying are expected to increase, they are not expected to reach those targets, leaving finance minister Brian Lenihan with a major payroll headache coming into the budget.