Canada Post has rejected its union's latest contract proposal, saying the offer would increase the Crown corporation's labour costs by $1.4 billion.
Spokesman Jon Hamilton said Tuesday that the costs would have to be passed on to customers through a 15 per cent hike in high postal rates or to taxpayers through a request for more government support.
Mr. Hamilton said Canada Post has put forward a counteroffer and hasn't initiated a 72-hour notice for a lockout. He added that Canada Post has experienced a double-digit drop in mail volumes and has $3-billion pension deficit.
The union representing urban postal workers was waiting for word from the Crown corporation, and has said its proposal covers all unresolved issues including wages and benefits, staffing levels and working conditions. It had threatened job action if a deal wasn't reached by this week but the lack of a 72-hour notice effectively means there wouldn't be a strike or lockout before Friday.
An earlier agreement covering some 50,000 employees expired on Jan. 31, and talks on a new deal began last fall.
Last week, Canada Post reached an agreement with the union to bring in volunteer postal workers in some provinces to deliver cheques to pensioners and those on social assistance should a labour disruption occur.
Federal Labour Minister Lisa Raitt urged both sides late last week to reach a deal to avert a potential disruption of the country's mail service.