EUROPE - Charlie McCreevy, the European Commissioner for Internal Markets, has called on European governments to tackle their burgeoning public sector pension liabilities.

European business is being hampered by having to shoulder such public sector burdens, McCreevy said in a speech in Dublin. He called for the public sector to be "rooted in reality, not in fantasy".

"Right across Europe it is now time for governments and politicians to address assiduously the trends that prevail in the public sector - in terms of rising headcount, inflexible pay policies, poor controls on capital investment, inadequate measurement of productivity, variable service quality, and rapidly increasing liabilities for pensions," the Commissioner said.

He was speaking at a dinner to celebrate the 40th anniversary of the Investment Bank of Ireland.

He added: "The competitiveness implications for Europe's businesses of having to shoulder the ever expanding burden of these things cannot for ever be ignored.

"There is ample scope to drive public sector costs down while driving public sector productivity, service quality, and public sector living standards up. And for delivering a win- win for public servants and taxpayers alike."

"I have huge admiration for the dedication, commitment and ability of the public servants I have worked with over many years.

"But I have less regard for the payment and reward systems under which they have to work. They are systems that leave the superior performance of the many unrecognised, and the under-performance of the few unpenalised.

"This is a lose-lose situation for business, for the taxpayer, for competitiveness and for the future."

The public sector needed to "deliver more on innovation and on procurement".

McCreevy added: "They must use technology more effectively to drive productivity up and bring costs down. And performance must be properly measured - because what doesn't get measured won't get managed."