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* First trade union comes out against new agreement
* Finance minister warns alternative far harsher
By Padraic Halpin
DUBLIN, Feb 26 (Reuters) - Senior Irish civil servants and managers were urged by their trade union on Tuesday to reject a public sector pay deal in a warning shot to the government that it faces a challenge in implementing the new agreement.
The government agreed with the largest public-sector trade unions on Monday to extend a three-year-old pay deal that has been credited with avoiding the kind of industrial unrest seen in other euro zone countries hit by debt woes.
The deal must be approved by hundreds of thousands of union members and the Association of Higher Civil and Public Servants (AHCPS) became the first to recommend its members reject it.
"AHCPS members have already suffered pay reductions of between 15 and 17 percent before tax and increases are taken into account, in addition to extra working hours," AHCPS general secretary Dave Thomas said in a statement.
"In addition these proposals raise legitimate questions as to the actual value that the government currently places on the work carried out by civil and public servants."
The deal renews a guarantee of no compulsory redundancies in the public service, but will see workers earning more than 65,000 euros a year accept pay cuts of 5 to 10 percent, work longer hours and have premium Sunday payments reduced.
The update to the Croke Park agreement - named after the sports stadium in which the original deal was struck - aims to save 1 billion euros ($1.3 billion) over three years, a key part of government efforts to reduce its budget deficit under the country's 85-billion-euro EU-IMF bailout.
The AHCPS' membership of some 2,700 civil service and non-commercial semi-state sector workers represents less than one percent of the total public sector. Like other unions, it will ballot members on the agreement in due course.
Six unions that walked out of the talks, representing nurses, the police and lower-paid civil servants, account for close to another third of Ireland's near-300,000 public sector workers.
The president of SIPTU, Ireland's largest trade union, told Reuters on Monday that the agreement was the best that could be achieved through negotiation but that industrial action is not off the cards should members reject the proposals.
Ireland so far has avoided the kind of street protests and strikes that have held back fellow bailout recipient Greece and also hampered the likes of Portugal and Spain, chiefly thanks to the cooperation of trade unions.
A number of unions rejected the original Croke Park deal but the backing of SIPTU and IMPACT, Ireland's largest public sector union with some 65,000 members, meant an overall weighted vote by the trade unions' umbrella group passed.
The government in recent weeks had threatened that if there was no agreement on the 1 billion euros of cuts that it would introduce them unilaterally. Finance Minister Michael Noonan warned on Tuesday that the alternative was more unpalatable.
"We have to have the pay savings otherwise it's going to lead to unbearable expenditure cuts and cuts in services and I don't think anybody wants to go down that road," Noonan told national broadcaster RTE.
"I think the agreement is good, it's difficult obviously for people but I'd like to see some space now for trade union members to reflect and vote freely on it. We're not waving any kind of big stick, we know how difficult it is for families."