The money may have to be found from individual departments
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The employment board in Jersey has raised its pay offer to States workers from 2.3% to 2.7%.
The States has been in deadlock with workers in several departments, including teachers, for months.
But the chief minister's office announced it would increase its previous rate of inflation offer, with a guarantee of no job cuts.
Nick Corbel, from the Transport and General Workers' Union, said he would recommend the rise to his members.
Chief Minister Frank Walker said it was important to get over the industrial unrest there has been on the island.
'Just cause'
"Pay negotiations which drag on for many months take a considerable amount of time and effort and deflect focus from getting on with other very important service deliveries for Jersey," he said.
Mr Corbel said the union felt it had a just cause.
He told BBC News: "Our members were not willing to be bullied or threatened. We wouldn't tolerate that."
It is likely the money will have to be found from each department's budget.