Rotating strike action by postal workers at selected cities has turned into a full lockout at all urban centres by Canada Post.
The corporation's decision halts urban mail delivery and could lead Parliament to consider back-to-work legislation as early as next week.
"A lockout is the best way to bring a timely resolution to this impasse and force the union to seriously consider the proposals that address the declining mail volumes and the $3.2-billion pension deficit," Canada Post said in a statement Tuesday.
"If we allow the uncertainty created by the rotating strikes to continue, our ability to remain financially self-sufficient and not become a burden on Canadian taxpayers will be in jeopardy."
No new talks are scheduled so far but the union has demanded a meeting with Canada Post's CEO.
Federal Labour Minister Lisa Raitt told CTV News her staff will reassess the impact to the economy and public interest before contemplating legislating the 48,000 urban postal workers back to work.
She indicated Parliament would deal with the Air Canada strike first.
Canada Post said the corporation has lost more than $100 million in revenue since the rotating strikes began June 3.
Canada Post had already cut service to three days a week in response to shrinking demand as uncertainty from the strike led customers to use competing services or switch to online alternatives.
The Canadian Union of Postal Workers said management was "irresponsible" to lock out the workers.
"There is now a considerable amount of mail in the system that will not be delivered," the union said in a statement.
"Canada Post is reneging on its responsibility to the public to deliver mail that has been paid for. We committed to deliver pension and social assistance cheques and we intend to fulfil that commitment."
The union had asked for wage hikes of 3.3 per cent in the first year and 2.75 per cent in each of the next three years.
Canada Post offered a four-year contract lifting pay 1.9 per cent in each of the first three years and 2.0 per cent in the fourth.
Issues at the table include changing technology, job procedures and concessions on wages and benefits for new hires.
Postal workers currently make at least $23 an hour, however Canada Post wanted the starting wage for new hires to begin at $19 an hour.
Canada Post says it must address labour costs as a result of a 17 per cent drop in letter-mail business since 2006 due to a rise in online bill payments and other electronic communications.