Minister for Finance Brian Cowen has insisted the decentralisation plan would go ahead despite a Labour Court ruling that State agency Fás could not link staff promotions to the willingness to move location.
Responding to suggestions by Opposition parties and unions that the plan was no longer viable in the wake of the ruling, Mr Cowen maintained the programme was progressing well, as evidenced by the fact that nearly 40 per cent of civil service posts, due to be relocated, had already been filled.
"In the region of 2,000 of these posts will have moved to their new locations by the end of this year," he said.
In its judgement published on Monday, the Labour Court said that staff applying for promotions at Fás had the right to be judged on suitability and merit alone.
Siptu had taken the case on behalf of staff in Fás who were unhappy with the agency's plan to relocate from Dublin to its proposed new headquarters in Birr, Co Offaly.
The ruling, which will have major implications for all employees of the 23 semi-State agencies, is major setback for the Government's decentralisation plans.
In his first formal response to the ruling today, Mr Cowen said it was always recognised that there were particular issues for the State bodies in progressing decentralisation at the same pace as the Civil Service because of the size and nature of the individual organisations.
In relation to the court's recommendations, the Tánaiste said he had asked his department to engage with the unions representing staff in the State agencies to establish how progress can be made on this aspect of the court recommendation.
But he accepted the linking of promotions to relocation at State bodies is something that cannot be done at this time.
"In relation to the State bodies generally, it is now a matter for each body together with its parent department to manage their approach to implementation, taking account of the implications of the Labour Court recommendation," he added.
Siptu, which represents 1,600 semi-State agency employees, said the ruling reflected concerns raised by the Government's own decentralisation implementation group.
"No operational rationale has ever been produced to justify such a potentially disruptive plan and expensive proposal for the taxpayer," said Dublin regional secretary Patricia King.
Siptu representatives in the agencies are meeting next Thursday to consider the Labour Court's recommendations.
Former minister for finance Charlie McCreevy announced the plan to decentralise 10,000 civil servants to 33 locations across the State in 2003.
So far, opposition to the plan, mainly from civil servants based in Dublin, has meant that less than one-fifth of the total staff due to relocated will have moved by the end of the year.
