Talks between the Goverment and unions on cutting €2 billion in exchequer spending this year will "inexorably focus" on public sector staff paying for their pensions, the general secretary of the Irish Congress of Trade Unions David Begg said today.

As talks between the Government and the social partners reach a crucial phase, Mr Begg said there were not too many instruments available to generate the savings.

He said that the trade union movement had ruled out pay cuts for principled and practical reasons, that scaling back on allowances could hit some sectors disproportionately and curbing increments could be a nightmare as some people at the top of the scale would not be affected.

Talks this morning dealt largely with pensions in the private sector and the establishment of a State pension protection fund. This has become a hugely important issue in the wake of the Waterford Crystal closure.

Mr Begg said there was no way the trade unions could come out of the current talks with nothing on pensions when the National Pension Reserve Fund had been used to recapitalise the banks. 

He said while these were seperate issues he did not think the unions would be able to "credibly explain" this.