The Canadian Auto Workers union (CAW) has proposed a low-start graduated wages structure for new employees at the US's three big carmakers in the hopes of averting a strike next week, secretary-treasurer Peter Kennedy said on Thursday.
Mr Kennedy also warned, however, that workers would strike at General Motors, Chrysler and Ford if negotiations fail by a Monday deadline.
Company bosses claim that Canada is now the most expensive place in the world to make cars and have threatened to move production south if the union doesn't accept cost-cutting measures.
Mr Kennedy described the talks as the most difficult he's seen in more than 20 years.
Canada has lost currency and health-care cost advantages it once had over the US and US car workers have accepted cuts that have undermined Canadian conditions.
The union is awaiting a response to its latest proposal, which includes starting new employees at a lower wage that would increase over time, he said.
Union president Ken Lewenza said CAW opposes a permanent two-tier system such as the one accepted by the United Auto Workers union for US plants.
Having two people working side by side earning different salaries would create "dissension and turmoil," Mr Kennedy warned.
The union also agreed to change provisions for new employees that would eliminate full pensions for employees with 30 years of service, something the companies are seeking for existing employees as well.
In exchange, the union is seeking firm investment commitments for Ontario's car sector.