Public sector workers and Government have agreed to a two-year package which includes an overall 4.6 percent reduction in their take-home pay by taking a day off a month unpaid. That is expected to yield about $21 million in annual savings.But the overall savings to Government could be considerably more, estimated at a minimum of about $50 million, under the terms of the two year Memorandum of Understanding ratified by all the unions representing public sector workers.At a press conference yesterday afternoon, Premier Craig Cannonier praised the negotiation process which lasted just less than a month and was conducted in a spirit of conciliation.The five-point package also includes an incentive programme for early retirement, a wage freeze until 2015, and the setting up of a tripartite economic committee consisting of Government, the unions, the Chamber of Commerce and the Employers Council.And Government will be asking private sector organisations such as the banks, Belco and the insurance companies to “work with” public sector workers who might be feeling the pinch as a result of their loss of income.About 480 public servants — those aged between 60 and 64 — are eligible for the offer of early retirement. Six months’ pay is on offer for those who opt in, but they must accept by September 16, leave the service by the end of September and their positions will not be filled for two years. It is estimated that about $3.5 million to $5 million could be saved in the first year but another $7 million to $10 million in savings could be realised if just 50 people take up the early retirement offer.A clause addressing non-compliance seeks to ensure that the parties engage in dialogue before an aggrieved party takes action, and that collective bargaining agreements already in place are not altered by introducing conditions not covered in the MOU.Assistant Cabinet Secretary Judith Hall Bean said: “Because of the current economic climate and current debt that the Government has, it was thought advisable that we enter these negotiations in a different way than we had in the past.“By nature, the negotiation process is adversarial. We entered into this, not in an adversarial way at all. We entered it as colleagues trying to find a way to assist the Government out of its current deficit position.”The Bermuda Trade Union Congress (BTUC) represented the public service workers in the negotiations.In a joint statement the BTUC and Government said: “The Agreement was made with the understanding that the Government agreed it is not their intention to make redundancies or lay-offs from the signing date of the MOU to 31st March 2015. However, if it becomes necessary to do so, the Employer agreed to consult with the BTUC on any proposal to abolish any position/post within the Public Service which will result in redundancies.”Ms Hall-Bean pledged that Government would make every effort to find places for employees whose positions are made redundant.The joint statement also explained that “any overtime hours worked to cover the unpaid and un-worked day will be paid at straight time”.Premier Cannonier said: “This truly represents a reality check for Bermuda, an acceptance that everyone, all stakeholders have a say in the future of this country.“I think that in the past we have tended to believe that it is difficult to work with the unions. I want to say that this is not the case.”He added that he was “very excited” by what he described as a “historic opportunity” and its outcome.Asked how the MOU will interact with the SAGE Commission recommendations, Ms Hall-Bean said that was “the elephant in the room”. But she pledged that if some of their recommendations result in jobs lost, every effort will be made to find other positions for people affected.Premier Cannonier stressed that the SAGE Commission’s mandate is to make efficiency recommendations.“The Government is not just going to take the SAGE Commission’s word here. There has to be a consultation here. That’s what will happen,” he said. “We will consult everyone as to what we believe is pertinent coming from the SAGE Commission.”BTUC president Allan Wilkinson told The Royal Gazette that there was a “substantial gap” between the 15 percent wage cut the Government was seeking at the start of the talks and what was finally achieved.“It absolutely was a substantial gap. The Finance Minister was talking about a 15 percent cut in wages and salaries,” he said.“Our intention was to try to mitigate that on our membership.” And the union was trying to assist Government in meeting its cost-cutting target while minimising the impact on actual take-home pay.About half of Government’s $1 billion budget goes to wages and salaries.