And if the two sides can't come to an agreement, the provinces and territories must be able to opt out with full compensation, they added.
While all the provinces agree that they don't like the Canada Job Grant, there's been little movement to present the Harper Conservatives with another option since it was first proposed in last spring's budget, Ontario Premier Kathleen Wynne acknowledged.
"It's true that there is not yet an alternative that has been put on the table," said Wynne, who hosted the Council of the Federation meeting. "But we agreed that that alternative needs to be developed."
The federal Conservatives want to divert about $300 million — or 60 per cent — of what they currently give the provinces and territories to the yet-to-be-implemented and untested Canada Job Grant.
It would provide a grant of $15,000 per worker, with the federal government, provinces and territories and employers each kicking in $5,000.
But the provinces and territories want more flexibility to direct the money where it's needed most, saying it could jeopardize existing provincially-run programs that help disadvantaged groups. They say they'd have to come up with more than $600 million to maintain their current programs as well as match the cost of the Canada Job Grant.
"It costs the employers more, it costs the provinces more and it serves less people," said Manitoba Premier Greg Selinger.
Others rebuked the federal Tories for pushing ahead with the plan without consulting them first.
"It would have been great had there been consultation up front on the design of that program," Wynne said.
Prince Edward Island Premier Robert Ghiz was less diplomatic.
"The part that is most disturbing is the federal government is actually taking a program that's working and they're saying, even though it works, we don't care," he said.
"It doesn't fit with us ideologically, so guess what? We're going to take that money away from you and we're going to introduce this Canada Job Grant. And no, we haven't done any research on it. We're just going to make it happen. Give us your money now."
The $15,000 grant is unsuitable for jobs training in small and remote communities in the North, where unemployment can be as high as 50 per cent, said Northwest Territories Premier Bob McLeod.
It will just take money away from existing programs to train aboriginal people, those who are most vulnerable, and put it towards training workers who already have jobs, he said.
"In the Northwest Territories, $15,000, you can't go anywhere to train anybody, because you'll use that to pay for your airplane tickets," he said.
Although the existing agreement that funds the provincially run programs expires in March, Employment Minister Jason Kenney only met his provincial and territorial counterparts face-to-face to talk about the plan last week.
Kenney said he's willing to listen to their concerns and be flexible on some aspects of the plan, such as the contribution ratios, to accommodate small businesses which otherwise wouldn't be able to participate in the program.
The premiers also discussed enhancing the Canada Pension Plan, but there was no consensus on what direction to take.
The provinces are divided on the issue, with some advocating a hike in contributions, while others oppose it out of concern that it will kill jobs.
Newfoundland and Labrador and Prince Edward Island also want CPP improvements, with P.E.I. proposing to hike maximum CPP contributions to $4,681.20 a year from $2,356.20 starting in 2016, and boosting maximum annual benefits to $23,400 from $12,150.
But Nova Scotia, Alberta and the federal government are worried a hike in premiums, which are split evenly between workers and employers, would be the same as increasing taxes on businesses and could kill jobs.
The premiers say they're directing their finance ministers to keep working on options for CPP and Quebec Pension Plan enhancements and raise it at their Dec. 16 meeting with federal Finance Minister Jim Flaherty.
No decision can be made until that work is done, said Alberta Premier Alison Redford. The economy changes every year and all options must be weighed before the provinces can reach a consensus.
It's not for us an either-or proposition, and it's not time for us to make a decision," she said.
"We don't always have to come to a decision in two days' notice or three days' notice. It's important for us, all of us, as premiers and the prime minister to sit down and take a look at what our options are."
Flaherty has said an expanded CPP fund is a good idea, but it should only be considered when there's more strength in the economy and global economic risks lessen. The Opposition New Democrats say it's an urgent issue that needs to be worked out so Canadians have the retirement security they need.
Wynne acknowledged that the premiers couldn't agree on the timing or urgency of CPP enhancements as Canada's population ages. But it's important to come up with options first, she said.