The Bermuda Public Services Union has called off its strike threat and opted instead to take its pay dispute with Government to voluntary arbitration.

Last month union president Armell Thomas warned his members would "close down the whole Island" if Government did not back down after the BPSU issued a 21-day strike notice which had been due to come into effect on Tuesday.

However, with Government likely to halt that by referring the dispute to the permanent arbitration tribunal whose members are selected entirely by Government, the union voted for voluntary arbitration — which allows it to nominate one of the three arbitrators.

Yesterday morning the union marched on Parliament and was met on the steps by Labour Minister David Burch.

BPSU general secretary Ed Ball said: "This is the first time in the BPSU's history that we have found ourselves in arbitration on a salary issue."

However, he said the issue of underfunded pensions had been inherited by the PLP and dated back to the 1980s and he applauded Mr. Burch for "his stellar support in this issue".

Mr. Ball added: "He's tried his damnedest to assist by working behind the scenes.

"We are sorry we have had to take this step but pensions are an issue which affects every worker in Bermuda."

Sen. Burch joked that he had been Labour Minister for 71 days but had had more marches in that time than all his predecessors combined.

He told the marchers: "People are saying: 'They are marching on you!' I say they have a right to.

"I will work hard to see if we can't get to some type of resolution that we can all agree with.

"You know I am not responsible for the purse strings so I will have to liaise with the Minister of Finance but it is my responsibility to try to get to a resolution that is satisfactory to everybody."

The BPSU is pushing for a 5.1 percent rise, but have been offered four percent for two years and 4.5 percent for a third year, which is slightly higher than inflation, running at 3.6 percent according to the latest figures from December.

However, one percent of that rise will be subtracted for pensions, giving a below inflation award.

Yesterday, Government put out a statement saying the only unresolved issue in the current negotiations is the salary award for the third year of the current three-year agreement.

The statement said: "Over the first two years of this agreement, the salary award was 4.5 percent and four percent respectively for a combined uplift of 8.7 percent.

"To complete the third year of the contract, Government has offered four percent, and should the offer be accepted, it will bring the total salary adjustment over the life of the three-year agreement to 13 percent."

Government said it was significant that the increase in inflation over the same or similar period (2005-2007) was 10.3 percent.

The statement went on: "In light of this favourable comparison against the Consumer Price Index, the Government considers that the offer of four percent is fair, reasonable and affordable.

Government said it did not share the BPSU's view of the impact that Superannuation Pension contributions will have on the true value of the proposed rise.

"Pension contributions represent asset transfers to pension funds which, in essence, are long-term benefit plans. Therefore, the one percent increase to the Superannuation Pension Fund is an enhanced contribution to a future savings plan; one that will benefit all civil servants in the short and long-term," said the statement.

In response Mr. Ball said: "They can quote whatever they wish about what happened in the past but it still doesn't address fully the issue at hand, that's why there's a need for arbitration where all things will be revealed."

He said Government kept talking about pensions but people had to survive in today's economy. "If you cannot live today, how the hell are you going to make it through to tomorrow?"

BPSU members have been angered by the vast amounts of money which have been spend on consultants.

This year nearly $80 million will be spent on outside help despite further increases in the civil service payroll which has grown by more than 100 jobs to 5,725.

Mr. Ball said: "How can you on one hand cry foul you have no money yet you can continually hire outside consultants and not utilise your own full time staff?"

Yesterday's march disrupted Government services at the beginning of the day and there were long queues at TCD where truckers were trying to get registered before the end of the month.