FINANCE Minister Dr Peter Phillips says public sector unions will have to limit their expectations as they prepare to negotiate a new wage and fringe benefits package for the 2012-2014 contract period, sending the Administration's clearest signal to government workers.

The finance minister would not say whether the Government would be insisting on a wage freeze, even though his warning comes as the Government prepares for further talks this week with officials of unions representing thousands of public sector workers who have been clamouring for adjustments to their salaries.

In a bid to demonstrate their appreciation for the Government's poor financial position, several of the unions decided earlier this year to forego an increase for the 2010-2012 period. However, they have been adamant that the situation will have to be different for the next contract period.

Speaking yesterday at the weekly post-Cabinet media briefing, Phillips commended the public sector unions on their decision to formally accept a zero per cent increase for 2010-2012 and emphasised that discussions aimed at arriving at a settlement for the current period were far advanced.

Those talks between Phillips and the union officials take place just days before the arrival of a team from the International Monetary Fund.