Unite the Union says it's rejected Bus Vannin's latest pay offer, made during talks aimed at ending the strike which is now in its fifth day.
Union leader Debbie Halsall says it was delivered over the phone, and weaker than the offering discussed last week.
She adds the latest proposal didn't address core issues about pension and working hours for drivers, and instead involved a one-off payment.
It comes after minister Tim Crookall said the government must ensure good taxpayer value for money in any deal with the transport organisation, speaking before the negotiations yesterday, Wednesday, February 24.
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