Minister for Communications, Energy, and Natural Resources Pat Rabbitte said this morning the Government has ruled out compulsory redundancies in its bid to reduce the public sector paybill.

In a speech to the Dáil last night, Minister for Public Expenditure and Reform Brendan Howlin reiterated the Government's commitment to making savings of €300 million in the public service pay and pensions bill this year. He said if the State was a private sector employer, job losses would now be on the cards following the rejection of the move to cut the pay bill.

Meanwhile, the union representing national teachers has said there is no point in the Government bringing forward the same formula for talks with trade unions “ and expecting a different outcome”.

The Government yesterday asked the chief executive of the Labour Relations Commission Kieran Mulvey to contact the parties to determine whether there was a basis for a basis for a negotiated agreement. However the Cabinet insisted that €300 million in savings and €1 billion by 2015 would have to be generated from the public service pay and pensions bill.

Mr Mulvey is expected to hold talks with all public service unions and organisations -including the Garda representative bodies which walked out of the recent Croke Park talks.

In a statement, the INTO said trade union members had delivered a decisive verdict. It said three out of every four public sector workers had rejected the imposition of a third pay cut.

“There is no basis for a deal that will focus exclusively on cutting the pay of public servants,” it said. “During the talks on the LRC proposals the INTO argued that the deal on the promissory note gave a boost to the public finances which allowed government to make choices. It called on the Government to ensure that public services benefited from the deal here. Since then the Government has secured more favourable terms on repayment of troika loans and the basis for an ’austerity only’ policy has been discredited.”

Mr Rabbitte said this morning the Government was seeking to make savings as part of a wider reform of how public services are delivered. However, the Government was "not wedded" to making the savings one way as compared to another, he told RTÉ's Morning Ireland. "There are always ways in industrial relations where you can tweak things this way or tweak things that way or do things slightly differently."

He added that members of unions which have rejected the Croke Park deal could theoretically lose their job protection, but there was “no particular will on behalf of the Government” to impose redundancies. “Our purpose is not to try to solve this problem by getting rid of people who are badly needed in the public service,” he said.

Mr Howlin’s speech last night amounted to a rejection of the proposal from Jack O’Connor, the head of the country’s largest union, Siptu, that an alternative to pay cuts was possible. Mr O’Connor suggested that some of the proceeds from the recent promissory note deal and greater taxation of the wealthy would reduce the need for the planned savings in the public service pay bill.

However, Mr Howlin told the Dail that the Government was willing to talk to staff representatives who were prepared to reach “a realistic compromise” on how to make savings. He also warned that the reality of the budgetary timetable meant that time for any discussions was running out.

However the Cabinet insisted that €300 million in savings and €1 billion by 2015 would have to be generated from the public service pay and pensions bill.

In his speech last night, Mr Howlin warned that the public finances - or the employer of 300,000 staff across the public service - remained in a very serious situation position.

“I have heard some teachers unions representatives defend their move towards strike ballots by claiming they are not the ‘aggressors’ here. I find the language used strange. There are no ‘aggressors’ here - merely a Government seeking to make good the huge hole in the public finances caused by [Fianna Fáil]. This issue arises solely because of the place we collectively find ourselves in. The public finances - or in normal labour relations parlance, the employer - remains in a perilous position. Were this the private sector there would be a lot of jobs at stake.