Negotiations broke off this week after the Alberta Union of Provincial Employees rejected a four-year deal that would have offered more one-time lump sum cash.
AUPE President Guy Smith said Thursday those hikes need to be made permanent, especially in a province where rising oil prices are expected to deliver an extra $2.2 billion this year alone.
"(We) need those increases on the (pay) grid," said Smith in an interview.
"The province is doing well financially, and our members need to see some decent increases which are fair and reasonable.
"A lump sum disappears very quickly. It doesn't translate into long-term wage increases."
Smith said his side has also made offers in the current round of bargaining that have been rejected by the government.
Deputy Premier Dave Hancock, who is spearheading the issue for the province, said the offer was the fairest compromise to ensure the workers get the extra money they deserve while not tying the hands of the government if oil and natural gas revenues fall precipitously.
"(The offer) does provide fair compensation but also meets the objective that we set out of maintaining the public sector salary grid," said Hancock.
He said government studies show Alberta's public sector workers earn comparable or higher wages compared with other provinces.
"It's OK to be a little bit ahead, but we don't want to be a lot ahead," said Hancock.
The AUPE and the province have been talking on and off for a year to reach a new contract.
Premier Alison Redford has made it clear she needs the union to sign a similar wage restraint deal inked by doctors and teachers.
Those deals have included wage freezes.
Redford has said while the economy is doing well, restraint is needed to keep costs in line while the province builds roads, schools, and hospitals to meet the needs of a growing population.
Talks with the union have been lurching off and on for more than a year, but stalled last July.
AUPE then invoked its legislated right for binding arbitration.
Redford's government responded in December by passing the Public Service Salary Restraint Act.
The law ruled that if the two sides could not reach agreement, a deal would be imposed that included wage freezes in the first two years followed by one per cent hikes in each of the following two years.
The law also revoked the right of the union to go to binding arbitration in this round of bargaining.
The AUPE challenged the law in court, saying it unjustly undercut its charter right to fair bargaining given that its members also cannot legally strike.
Two weeks ago, a Court of Queen's Bench judge agreed with the union and took the unusual step of suspending the law pending a full hearing on whether it violates the charter.
The government is appealing that decision, and arguments are expected to be heard in April.
Along with the wage freezes and one per cent hikes, the contract in the Public Service Salary Restraint Act would also have given workers a lump sum payment of $875 in the first year.
The revised deal rejected by the AUPE this week would have increased the lump sum payment to $1,550 in each of the first two years, retroactive to 2013, with another $775 lump sum in the third year.
The wage freezes would have remained in the first two years, followed by the one per cent hike in the third year, but a new two per cent hike in the fourth.
The two sides did make headway by agreeing on other issues such as vacation leave, overtime, and harassment language.
The next steps are unclear.
Hancock said he hopes the AUPE reconsiders the last offer, while Smith said they're open to striking a deal on a different offer.
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