More than 20,000 Fiji public servants have been given a pay increase for 2004 known as the Cost of Living Adjustment or COLA.
The government had refused to pay but the matter went to arbitration when the public servants threatened a nationwide strike.
The government's permanent arbitrator, William Callancini, has handed down a graduated increase ranging from F$14 a week to the lowest paid, F$10 a week for those on middle incomes and F$7 a week for those at the higher end of the pay bracket.
The labour minister, Kenneth Zinck, says the payments backdated to January 2004 will be made before Christmas.
The general secretary of the Fiji Public Service Association, Rajeshwar Singh, says they are very happy with the award.
Mr Singh says apart from this award, civil servants will receive another two per cent increase based a previous agreement between the unions and the public service commission.
The arbitrator ruled that the purpose of the Cost of Living Increase was to minimise the erosion of the living standards of workers brought about by inflation, and was not a reward based on productivity.
Mr Callancinni also ruled that the government's Performance Management System in its current form was not workable in the long term.