The prospects of the government, unions and employers reaching agreement on a national recovery plan has now disappeared, sources close to the talks admitted this weekend.

"After 21 years, social partnership is over," said one trade unionist ahead of a crunch Ictu executive meeting on Tuesday to review the situation. The cabinet also meets on Tuesday to consider the partnership talks.

Unions and employers have together blamed the collapse on the government's overriding obsession with correcting the exchequer and banking crisis while failing to adequately address soaring unemployment.

"If the ESRI's prediction of 570,000 people signing on the live register by the end of the year is true then we are really looking at an appalling vista. Unless we do something now to stem these job losses we won't ever get them back," said Brendan McGinty of Ibec.

McGinty backed the union's suggestion that the government should borrow €1bn to help industry and sustain employment during the current recession.

"We have been told that there is no money available and in any case a €1bn stimulus package would probably be contrary to EU laws on state aid," said McGinty.

"This is nonsense. In Germany and France the government has taken decisions to help the car industry which avoided EU rules on state aid," he said. "The government has shown considerable courage in addressing the banking and exchequer funding crisis. It needs now to show the same political courage on the enterprise agenda."

Siptu president Jack O'Connor also said the government appears transfixed by the financial crisis to the detriment of the growing social problem of unemployment.

"The government told us it couldn't run with our €1bn stimulus proposal to help sustain employment because international opinion would see it as the government
borrowing more money," he said.

"But it hasn't accepted the relationship between the savings involved in keeping people in employment and state spending on social welfare.

"The unions also want the government to address the pension crisis in which thousands of workers stand to lose their retirement income.

"But again we were told that with accrued pension liabilities of €85bn, it was too risky for the government to pick up that tab even though it would never come to that.

"We have been going round in circles since February. It's down to the government to take the initiative now."