"I am disappointed the BCGEU rejected a fair offer that would have provided a wage increase during worsening economic times," he said in a written release.
The B.C. Government Employees Union said Friday that two days of mediation failed make any headway. The union representing about 65,000 members said it has exhausted all its options.
"We are experiencing unpredictable economic circumstances around the world. Despite this uncertainty, we have been committed to finding savings that can fund a modest wage increase for employees," Falcon said.
"These negotiations have been undertaken in the context of the government's co-operative gains mandate. The co-operative gains mandate gives all public sector employees the ability to negotiate modest wage increases, provided the savings can be found within existing government budgets ... and that the savings can be achieved without sacrificing or compromising services to British Columbians."
The government and union have been talking since January, but negotiations are deadlocked over several issues, including wages.
Union members voted 82 per cent in favour of job action last month to back contract demands.