percent for more than 900 blue-collar workers.

And workers could find themselves being priced out of their jobs.

The twin warning came yesterday from Finance Minister the Hon. Grant Gibbons.

He said Government had hoped the increases handed down by arbitrator Mr.

William Hobgood would be nearer 2-2.4 percent.

"Government wishes to emphasise that in the current economic conditions of very modest growth, wage and salary increase above the underlying rate of inflation will damage the Country's competitiveness and will ultimately price workers out of their jobs.

"Hence, it is crucial that as the remaining rounds of negotiations take place in both the public and private sectors, the end results are consistent with what the economy can afford.'' Meanwhile, details emerged yesterday of a separate award for 388 unionised workers at King Edward VII Memorial Hospital and St. Brendan's Hospital.

Mr. Hobgood approved weekly wage rises of $18, from October 5, 1994, and $18.50, from October 5, 1995.

"Hospital employment levels have remained stable over the last several agreements even though length of stays has declined,'' said Mr. Hobgood in his award.

"Accordingly, I cannot look to productivity increases for justifying a wage increase significantly beyond that of the Consumer Price Index or comparable increases in other labour agreements.'' The three-year award for the blue-collar workers followed a lengthy dispute over how to replace the agreement which expired in December 31, 1994.

At one stage, some of the workers deemed to perform essential services -- such as garbage collectors and tug boat operators -- threatened a strike.

Other workers include street cleaners, bus drivers, ferry and tug boat operators, and Public Works and Agriculture and Fisheries employees.

Some of the issues concerned wages, vacations and sickness benefits.

At the hearing, Government rested its case on the Island's fragile economy and the low inflation rate, while the Bermuda Industrial Union argued its members had to keep an adequate standard of living.

The new deal includes a 3.2 percent wage hike for the first year, retroactive to January 1, 1995.

A 3.4 percent raise has been awarded for the second year, while wages for the third year remain unresolved.

On most other issues Mr. Hobgood directed no change be made to the current agreement.

Dr. Gibbons said Government was now examining the agreement, seeing how savings could be made to offset costs.

"While the award may appear to be goods news for the Government-BIU bargaining unit in the short term, its long term implications are clearly not good for the economy.

"Government is constrained to accept the arbitrator's decision and is obliged to implement the award.

"However, the cost of the new agreement will place an additional burden on taxpayers if savings within Government's 1995/96 budget cannot be found.'' Dr. Gibbons said Government was committed to containing the cost of the public sector.

And it was reviewing cost-saving measures, such as overtime reductions, recruitment freezes and job losses by retirement or resignations to meet this aim.

Dr. Gibbons hoped the award would have been more in line with underlying inflation rate, which had ranged between 2 and 2.4 percent since January 1994.