Brendan Howlin will begin talks with the unions on restoring pay next month.

The Minister for Public Expenditure and Reform said yesterday he will bring proposals to Government within two weeks.

Speaking on his way into Cabinet, Mr Howlin said: “What I have always said is that we won’t be able to undo the FEMPI legislation in one year or in fact in two years either.

“It will be a gradual increase to restore pay.”

Mr Howlin said the new pay agreement will not form part of the Spring statement next week.

He said next week will be a “snapshot of where we are”, the progress we have made and where the country is going.

The Minister said dialogue with the unions would begin afterwards.

The Minister also said the Government is committed to finding solutions to the mortgage crisis.

He said there has been "serious dialogue" at the Economic Management Council on the issue.

Labour TD Willie Penrose said Fine Gael needs to "get real" on cutting the bankruptcy from three years to one.

Asked if the coalition partners were awake to the problem, Mr Howlin said: “I think they are. We have had serious dialogue within the EMC addressing the issye of mortgage impairment.

“It is one of the residual big social challenges left as we recover the economy.

“We need to have solutions to that. I don’t think it will be a single solution. It will be a suite of measures that will be required

“Both parties are completely focused on finding solutions.”

Speaking on his way into the Cabinet meeting, Taoiseach Enda Kenny said he was committed to announcing the proposals in by the end of the month.