This put more pressure on President Robert Mugabe to deliver on election promises made last year of higher wages.
Unions want a monthly minimum wage of 543 US dollars - equivalent to the poverty line - for Zimbabwe's 235,000 state employees, the bulk of whom are teachers.
Under government proposals seen by Reuters on Thursday, the lowest-paid worker would earn 375 dollars a month, a 27 per cent increase from 296 US dollars now, while the highest-paid would get a rise of 20 per cent to 623 US dollars.
"The government made an offer during our negotiations on Wednesday, which we do not accept," said Sifiso Ndlovu, chief executive of the Zimbabwe Teachers Association. "We have asked the government to go back and refine their proposal."
A 27 per cent pay rise would be the biggest increase for state employees since Zimbabwe adopted the US dollar as its official currency five years ago.
The proposed rises are not included in the 2014 national budget presented in December. The government has not said where it will get the extra money as three-quarters of this year's 4.1 billion US dollars budget is already earmarked for salaries.
Minister of labour July Moyo declined to comment.
Negotiations are expected to continue on Friday.
Mugabe, Africa's oldest leader at 89 and in power since the former Rhodesia's independence from Britain in 1980, was re-elected in a July vote rejected by rivals as fraudulent but largely endorsed by African observers as free and credible.
Mugabe has promised to rebuild the economy, which is struggling to right itself after a decade-long crisis up to 2009.