The push for a salary increase could create another political headache just weeks before the state election, although the state government says it is not involved in talks over a new agreement.

The negotiations come amid industrial action by preschool teachers who are pushing for pay parity with primary school teachers. The preschool teachers stopped work for 24 hours last week, resulting in the closure of dozens of early learning centres.

Australian Education Union TAFE vice-president Greg Barclay said TAFE teachers feared having to substantially increase teaching hours in return for a pay rise. "Our members are saying that's absolutely unsustainable," he said.

The union wants a 12 per cent wage increase over three years. It is also seeking greater recognition for teachers' preparation time for classes, visits made to students doing work placements, travel  and assessment time.

"We need an agreement that recognises that teachers are professionals and they're not just churning through student contact hours to generate income," he said.

The union will negotiate a new pay deal with each institute individually. Mr Barclay said negotiations began with the first TAFE about 10 months ago.

He said TAFE teachers received their most recent pay rise in 2012. But TAFEs have faced mounting financial pressure and also lost market share of students to private providers.

Although TAFE teachers' salaries are paid by their institutes, any agreement that includes a wage increase above 2.5 per cent must include productivity gains under government policy.

A spokeswoman for Higher Education and Skills Minister Nick Wakeling said the government played no "active role" in enterprise bargaining negotiations for TAFE teachers.

"Individual TAFE institutes are responsible for negotiating enterprise agreements with their respective teaching staff," she said.

Bruce Mackenzie, who recently retired as Holmesglen Institute's long-serving chief executive, said teachers had reached a stalemate over pay with financially squeezed institutes.

"Budgets are tight," he said. "They're carrying all these overheads."

Mr Mackenzie, who will lead a TAFE sector review if Labor wins the November state election, said competition from private providers also made it difficult for TAFEs to offer pay rises to teachers. "Wages are definitely lower in the private sector by a substantial amount."

A leaked assessment by the Victorian Auditor-General's Office, which emerged in April, showed Victoria's vocational training sector had slumped into the red. It found half of Victoria's TAFE institutes were in deficit.

Several TAFEs also reported substantial losses in their latest annual reports.

Fairfax Media contacted several TAFE institutes, but none responded before deadline.

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