He said the Government's “steadfast position” is not to initiate the increases asked for, maintaining it cannot afford what is demanded.

Both he and Permanent Secretary, Public Service Ministry, Dr Nanda Kishore Gopaul defended their positions taken after the talks between the two sides resumed Tuesday. On that day they met at the Labour Ministry, still far from reaching an agreement.

At previous meetings, GPSU tried to justify its claim for a hike of public servants’ pay, from $20,045 to $32,832 per month, 64 per cent more than in 2001.

GPSU said the rise is necessary to improve the workers’ living standard, motivate them and end "the spiralling under-performance” and exodus of the trained and skilled.

It also argued that, if the demand is not met, the relationship between GPSU and the People’s Progressive Party/ Civic (PPP/C) Administration “will continue to be strained”.

At Tuesday’s meeting, Gopaul said improving pay in the Public Service has always been given priority by the Government and, since it took office in 1992, it moved constantly to raise it "in the real sense" while, at the same time, inflation was drastically reduced.

He said the last four years revealed that, while inflation increased 25 per cent, in corresponding terms, the higher pay offered Public Service workers amounted to 93.22 per cent.

Gopaul cited the country's economic standing, including the gains over the years, but stated that, despite all of that, the destabilising crime situation, as well as political protests in the past year, led to a decline in revenue collection.

According to him, there have been significant shortfalls in a number of important areas and consumption taxes fell by $648M.

He also said employment costs exceeded the target by $101M, the purchase of goods and services by $296.9M and there were transfers and subventions $404M in excess of what was targeted.

Gopaul said the transfer to Linden Mining Enterprise (LINMINE) was $195.9M more than estimated.

He declared that the Government is “in dire financial straits”, having borne a fiscal deficit of half a billion dollars more than budgeted and the second half of this year promises to be equally challenging.

Gopaul said business activity continues to be depressed, as a result of the current criminal activities and the response by the Private Sector is having “a telling effect” on the economy.

He said, consequently, more emphasis will have to be placed on curbing crime and that would see a significant outlay of unanticipated expenditure.

Gopaul said, in addition, the domestic economy will reflect “other large shocks” in the second half of this year, to include the impact of difficulties facing the bauxite industry, occasioned by unplanned expenditure in this regard, with increase severance and training grants to employees of Berbice Mining Enterprise (BERMINE) and LINMINE, in its preparation for privatisation.

"It is against this backdrop that the Government has to resort to managing the economy with the greatest degree of prudence. Any skyrocketed increase in wages, as is now being sought by the union, will create a climate of economic chaos which is likely to lead to serious economic instability and trigger high inflation which will, ultimately, do more harm to the pay packets of the workers," he asserted.

Gopaul said Government is desirous of improving real wages and not allow a decline by encouraging inflationary trends, by proposing a three per cent increase, which, from all indications, “is what the economy can afford".

"In seeking to increase wages for workers, be they in the private or public sector, while it is always good to reach a level that can be considered a decent living wage, it is not always prudent to effect these increases for several factors.

“The first has to do with the ability to pay. The second has to do with the curbing inflation. The third has to do with comparative analyses of wage increases and the fourth is to do with opportunity cost," he stated.

Gopaul said, in dealing with those issues, people have to recognise the Government's abiding interest in improving social services throughout the country and not discriminate in any one area.

He said consideration has to be given to health, education, water, sea defence and, especially, regional and community development, as well as wages and salaries.

In all of these areas, over the last ten years, the record will show that there has been a systematic increase, Gopaul said.

Yarde, however, said he foresees arbitration because both parties are rigid and Government “continues to take an unrealistic position when it comes to paying people”.

"...the Government does not consider costs when it comes to purchasing 'Prados', buying a house or going on overseas trips.

“All these things they are doing and they never sit and determine scientifically what it takes for a person to properly maintain a family," he said.

Yarde accused the Government of “dealing differently” with certain persons within the Public Service and said a significant difference is reflected in the salaries of some persons with the same qualifications.

He said conditions within are “so poor” that the Public Service is hardly attracting people of quality.

Yarde said many people are quitting and it is part of the Government's policy to frustrate some out of the employment as they are perceived to be “not politically correct”.

He said progress in the bargaining is not very encouraging and should be quickened as workers are in desperate need of relief.