increase next year.

And this year their wages will rise by about three percent, or $17.50 a week.

Yesterday's announcement was welcomed by bosses, some hailing the second year rise as the lowest in living memory.

Mr. Malcolm Dixon, executive director of the Bermuda Employers Council, applauded the deal.

"It sounds like a very reasonable settlement in these uncertain economic times. Both sides have acted responsibly,'' he said.

The agreement follows months of tough talks between Government and the Bermuda Industrial Union.

Government labour relations officers were summoned to pull both camps together.

The previous contract expired on December 31, 1992. And the outcome of the mediated talks was watched with interest on the labour scene.

Keeping the lid on the second year rise has gone down particularly well with employers. It amounts to a $11 per week increase.

The agreement will be signed in "due course'', the parties announced yesterday.

There are roughly 900 blue collar workers employed in a range of areas, including Agriculture, Works and Engineering, and Marine and Ports.

Mr. Dixon said the settlement was a success for arbitration, attacked by American labour relations expert Dr. Leo Troy.

"It shows the process of mediation is still alive and well,'' he said.

Mr. Dixon praised the realism shown by BIU and Government negotiators.

Asked whether 1.8 percent was the lowest ever deal, Mr. Dixon was unable to say.

Looking at settlements back to 1982, however, no deal was below two percent.

Government financial secretary Dr. Walwyn Hughes said the awards were "realistic and appropriate'', and reflected a compromise by both sides.

"It's nice to get a settlement round the table,'' he said.

Dr. Hughes said he could not remember a rise as low as 1.8 percent.

Yesterday Mr. John Barnes, director of Agriculture and Fisheries, was enthusiastic over the end to negotiations.

He said: "They have been dragging on nearly a year. I am very glad there has been a settlement.

"It does not do anything to encourage harmonious working relations for there to be no agreement.'' Mr. Barnes said the wage awards appeared to be in line with inflation, pegged below three percent.

But he cautioned: "I would like to see the whole package. It goes beyond wages. We are talking about the whole collective bargaining agreement.'' In his Budget statement Finance Minister the Hon. David Saul declared Government employees had enjoyed a real wages growth over recent years.

"The current economic climate, low rate of inflation, and the fact that there has been real growth in wages and salaries achieved by Government employees in past settlements, will guide Government in its wage and salary negotiations this year,'' he said.

BIU president Mr. Ottiwell Simmons declined to elaborate on yesterday's joint statement by his organisation and Government.

"We have signed the agreement,'' is all he would say.

Meanwhile, contract talks involving hundreds of hospital workers drag on.

The Hospitals Board's contract with the BIU expired on October 4 last year.

Yesterday the board's executive director Mr. Hume Martin said the talks were at the conciliation stage. This meant labour relations officers were trying to bring the sides closer together.

Among the hospital staff there are 346 within the BIU, and roughly 800 within the Bermuda Public Services Association. The contract for this group expires on September 30.