Months of wrangling between the Bermuda Public Services Union and Government ended yesterday after arbitrators awarded civil servants a five percent pay increase.

The binding decision has lifted the threat of a strike by BPSU members and could set a precedent for the Island's other ongoing labour disputes.

Thousands of angry workers marched on Parliament last month to protest at the Government's rejection of two arbitration decisions — one involving the BPSU and the other relating to Bermuda Police Association (BPA).

Yesterday Labour Minister David Burch told a press conference that Government — which originally offered the BPSU a four percent rise — accepted the five percent increase.

The BPSU — which represents about 3,000 civil servants — said it would issue a full response to the outcome today (Wednesday) after consultation with members. But union president Armell Thomas criticised Sen. Burch for making the decision public before members were told, claiming it was "disrespectful".

Sen. Burch and Premier Ewart Brown met yesterday with eight unions, including the BPSU and the BPA, in an attempt to improve relations after the historic June 27 demonstration.

Dr. Brown told The Royal Gazette afterwards that the two-hour meeting had been "wonderful". A statement released by his press secretary last night described it as a "mutually productive gathering".

The statement said all parties agreed to make the meetings a monthly event for labour relations to be discussed.

Government has faced severe criticism of its handling of labour matters in the past few weeks, with Dr. Brown accused of cowardice for failing to face the majority of protesters outside the House of Assembly.

Sen. Burch said yesterday suggestions that the Government was anti-union or unsupportive of the labour movement were "preposterous".

"This Government has achieved its historical support from the labour movement," he said. "This Government continues to respect the rights of workers and recognises that it is because of workers that Bermuda is the success it is today."

The BPSU and Government fell out while negotiating a three-year pay deal earlier this year, with the union rejecting the Government's four percent offer for the final year of the agreement and calling for a 5.1 percent increase to meet high living costs.

Union members threatened a strike which would shut down the Island before agreeing to go to voluntary arbitration.

The arbitrators ordered that BPSU members be refunded a one percent increase in their pension payments for the final year but Sen. Burch told the panel that was "outside of the law", sparking outrage from union members.

After another hearing on Monday afternoon, the panel amended its decision, replacing the refund with the additional one percent pay rise for the final year, but ultimately achieving the same end result.

The outcome does away with the need for a costly judicial review of the original arbitration award and means the BPSU has got very close to the 5.1 percent it asked for.

The decision could also affect how other current pay disputes between Government and the unions are settled.

Government is seeking a judicial review of the award given to the BPA by the Permanent Police Tribunal.