Public service pay cuts should continue, despite improvements in the economy, according to a new Government report.

The study, commissioned by the Minister for Public Expenditure and Reform Paschal Donohoe, claims so-called ‘FEMPI’ legislation to limit salaries saves the State more than €2bn annually.

Liam Doran, general secretary of the INMO union which represents nurses and midwives, said that public pay must keep pace with financial recovery.

“If we’re the fastest-growing economy in Europe, you can’t have a Government which has a law which says: ‘If you don’t do it the way we want it done, we’ll legally impose pay cuts or incremental freezes on public service – our employees’,” he said.

“That isn’t going to stick, and that’s why the renewal of the FEMPI was unnecessary in our view.

“Public service unions aren’t stupid – we don’t expect it all to come back by Monday week, but we want it back quicker than the current agreement provides for.”