Talks on settling the pay dispute with the civil service union could start next week - if the matter doesn't get referred to binding arbitration first.

The Bermuda Public Services Union issued a 21-day strike notice on Wednesday in protest over a four percent pay offer.

Earlier this week BPSU president Armell Thomas warned his members would "close down the whole island" if Government doesn't back down.

But last night, insiders doubted it would get that far before Government used its powers to avert action and set up a mandatory deal brokered by a third party.

Although the four percent figure being offered is slighly higher than inflation, running at 3.6 percent according to the latest figures from December, one percent of that rise will be subtracted for pensions, giving a below inflation award.

The BPSU is pushing for a 5.1 percent rise but insiders hope some compromise can be reached before the dispute escalates.

Recent pay awards to the BPSU have normally exceeded inflation. They were awarded a 4.5 percent rise in 2004 with inflation then running at 3.6 percent.

The award for 2005-06 was 4.5 percent when inflation stood at 3.1 percent and the 2006-07 award was four percent-again above inflation. That deal ran out in October, 2007.

The BPSU has the backing of the Trade Union Congress, an umbrella organisation of Bermuda's major unions except the Bermuda Industrial Union, in its stance.

Asked why the normally placid BPSU was taking a more forceful stance, two week's ago it gatecrashed the Throne Speech with a silent protest, TUC president Anthony Wolffe said it was a "sign of the times".

He said members were finding it hard to make ends meet in a high-priced island.

"The stronger tactics comes with the fact that many people are struggling," he said.

Union activity has been on the rise recently with a threatened strike by the BIU averted when Government backed down from a threat to sack a boat operator who had crashed a ferry while over the legal alcohol limit.

And this week it emerged Government had consented to have three union representatives on the interim board discussing education changes after union pressure.

But it also emerged the Bermuda Union of Teachers choice had been rejected.Mr. Wolffe, who is still on the BUT executive, said rejecting a name was "more like dictating to the union." He said the TUC had called for an increase in representation on the board as well as an increase in transparency and communication."At the moment outside the interim board and the Minister himself no one really knows what's going on, that includes personnal in the ministry of education."Mr. Wolffe said he didn't know why unions had been shut out until recently but he said there was a dire necessity for them to be involved."Whatever the interim board comes up with it is the worker who is going to have to implement the way forward. "If we don't have buy-in from the worker it is going to be extremely difficult and could even stand to fail."The teachers are in the classroom on a daily basis. If there is any perspective on what's needed in education it is going to come from those there at the ground level."Asked about the wider union scene Mr. Wolffe said unions were now about to draft a joint letter with employers about the lack of Labour Advisory Council meetings with Government and urge them to reconvene them after none for months on end.