The union that represents outside workers at the City of St. John's says contract talks broke off last week because of a dispute over pensions.
Ed White, a national CUPE representative, said the city wants workers to accept a defined contribution pension plan for new hires.
On the other side, CUPE wants to maintain a defined benefits plan, which ensures that workers can rely on a specific amount of money.
White said the city's proposal is "similar to an RRSP structure," and would mean too much uncertainty for its members when they retire.
"We feel it doesn't provide adequate security for people in retirement. The risk shifts entirely from the city to the individual employees," said White, adding that city negotiators have not been budging.
"The breaking point is that the city's proposal for [defined contribution] for new people is their only proposal," he said.
The city has offered employees a raise of 18 per cent over four years, but White said the union would prefer less money in wages in order to keep a defined benefit pension plan.
On Tuesday, Premier Tom Marshall announced a breakthrough deal with the leaders of five unions that will maintain a defined benefit plan, although workers will have to pay higher premiums and work longer before retirement.
White welcomed the announcement, and said it could influence labour relations at city hall in St. John's.
"There's enough good news from this story to pressure council into changing their position at the table," he said in an interview.
The city and the union are currently in a "cooling off" period, with neither a strike vote nor a lockout allowed until at least Sept. 18.
White said the city has not responded to a CUPE proposal that the union says would save money in other budget areas, so long as a defined benefit plan is maintained.