Wage inflation is now such that Partnership 2000, as a wage agreement, is dead in the water, the Irish Small and Medium Enterprises Association (ISME) has said.

It said that in general wage increases are averaging five per cent, twice that agreed in Partnership 2000 while high-tech graduate staff are negotiating increases of between 15 and 25 per cent.

"The question must be asked as to why the social partners persist with the illusion of Partnership 2000, its attendant costs and other peripheral agreements," ISME said.