Although it is likely to be strongly opposed by public sector unions, it is understood there is support in the cabinet for a new and reformed benchmarking process, as suggested by An Bord Snip Nua. This process would allow for public sector workers in Ireland to be benchmarked against those in similar civil service jobs in other countries.
The issue is likely to be touched on by the cabinet in its all-day meeting on Wednesday, with much of the day likely to be taken up by the Bord Snip report. Senior government sources said it was unlikely any final decision would be made on benchmarking on Wednesday, adding that it was more likely to happen after the summer break.
The government has made it clear that nothing in the Bord Snip Nua report is ruled out. Cabinet sources said the crisis in the public finances was such that public sector pay would have to be revisited.
"It's very live at the moment. It [benchmarking] is a good idea and I think we'll go for it," one senior source said.
A new benchmarking exercise, without preconditions ruling out pay cuts, would have the benefit of providing clarity in the ongoing debate about public sector pay.
A recent study by the Central Statistics Office found that average hourly earnings in the public sector were 48% higher than in the private sector. Public sector unions claim such findings fail to take account of the age, experience and education levels of public sector workers.
There have been two benchmarking processes in recent years. The first, famously described by union leaders as "an ATM" for public sector workers, gave an average increase of 9%.
The second process, published at the end of 2007, gave virtually no increases, confirming the view that public pay had significantly overtaken the wages on offer in the private sector and that pensions in the public sector were vastly more generous.
Neither review body was allowed to recommend pay cuts for any group shown to be earning considerably more than their private sector counterparts. This would not be the case in any new benchmarking process, which would also likely be allowed study comparisons with public sector workers in other countries.
Such international comparisons are a central feature of the current exercise being undertaken by the Review Body on Higher Remuneration in the Public Sector.
This body, which examines the pay of top civil servants, judges and politicians, is comparing pay with peer groups in six comparable countries. It is certain to recommend significant pay cuts.
Government sources believe the publication of this report is likely to add to the momentum for a similar exercise being conducted across the entire public sector. There was also surprise support from Labour leader Eamon Gilmore for a new benchmarking exercise last week.
Why no mention of pay cuts in the banks?A strike is mooted by 500 staff in B of I looking for a 5% pay increase.How is it the Government can contemplate cutting millions of welfare and health but anytime the banks whinge another few billion can be found?