Fiji's finance ministry is warning that funding for social services and infrastructure will have to be cut if public servants are given a Cost of Living Adjustment awarded the by the government arbitrator.
Th Fiji Times quotes the ministry's acting chief executive, Paula Uluinaceva, as saying that another problem will be fulfilling some agreements with doctors and nurses will have to be delayed if the 32-million US dollar pay-out is made.
But the general secretary of the Fiji Public Service Association, Rajeshwar Singh, says the award has been made by a body set up by the government which had failed to pay COLA since 2003.
Mr Singh says the World Bank draft report on civil service reforms had recommended that the government's Performance Management System should be scrapped and COLA paid instead.
He says the Performance Management System would cost the government even more than COLA and mean payments of an extra 42-million US dollars.
The arguments come as the government and public service unions appear before the permanent arbitrator, William Callanchini, to seek clarification on his earlier ruling.
Mr Callanchini had handed down a graduated increase ranging from 14-Fiji dollars a week to the lowest paid, $10 dollars a week for those on middle incomes and 7-dollars a week for those at the higher end of the pay bracket, backdated to January 1st 2004.
But last Friday the government offered to pay 3% COLA as one off Christmas bonus rather than an increase in salary.