The union representing federal government employees in Yellowknife says its members could take a financial hit when a new bridge over the Mackenzie River is complete.

Construction began last month on the $160-million Deh Cho Bridge in Fort Providence, N.W.T. It is scheduled to be completed in about three years.

Once opened, the bridge will provide a year-round link between the territory's North Slave region and road systems in southern Canada. The territorial government has said that link would lower the high cost of living in the region.

The Public Service Alliance of Canada says when the bridge opens, federal government employees in Yellowknife could see their annual northern isolated post allowances cut by an estimated $900 a year for workers without dependents, and $1,600 for workers with dependents.

"That's going to have an impact on their decision as to whether they prefer to work in the N.W.T. or just move on," Jean-François DesLauriers, the union's vice-president in the North, told CBC News in an interview.

"It's certainly not going to make them big fans of the Mackenzie River bridge."

The federal government pays the isolated post allowance, on top of employees' base salaries, to compensate them for the higher costs of living and travel in some northern communities.

In 2005, about 700 federal workers in the Yukon learned they would lose an average of $5,000 from their annual pay when the government eliminated isolated living allowances there.

Officials with the federal Treasury Board cited the opening of competing big-box stores in Whitehorse as the reason benefits were cut. The pay reduction was phased in over two years.

In Yellowknife, where the federal government is the city's second-largest employer, some workers said they don't believe the promised cost savings of the Deh Cho Bridge would make up for their lost allowances.

"I don't think it would have very much of an impact on the housing market and the fuel, because that's the biggest expense that we have up here in the Northwest Territories and in Yellowknife," said Delphine Elleze, a federal employee and single mother.

"Yeah, a few dollars off, you know, for groceries; I mean, it's not going to have a significant difference at all."