The federal government has served notice that it intends to introduce back-to-work legislation to end the contract dispute between Canada Post and its 48,000 urban postal workers.

Labour Minister Lisa Raitt made the statement in the House of Commons during question period Wednesday.

Raitt said the government served the required 48-hour notice in the House of Commons Wednesday night, which means the legislation that would strip workers of their collective bargaining rights could be introduced in two days.

"Our Government is concerned about the effect this strike is having on Canada's economic recovery and on Canadians," Raitt said in a statement Wednesday night. "Canadians gave us a strong mandate to complete our economic recovery, and this is why we will put legislation on notice to ensure resumption and continuation of postal services."

Since the House isn't sitting Friday, the earliest the legislation can be debated is Monday.

Opposition parties railed against the decision, saying the government was using a "sledge hammer" to solve the problem instead of letting the two sides work out an agreement on their own.

NDP Leader Jack Layton called the idea of back-to-work legislation "very discouraging."

"They're attacking pensions. They're attacking the ability of workers to negotiate a decent wage," he said. "I think they were prepared to shut this process down right from the get go. I don't think the government has been serious about urging the sides to come together towards a resolution."

Until Tuesday, the Conservative government had said it was not going to intervene because postal workers had been engaged in 12 days of rotating strikes that didn't really seem to significantly impact the public.

However, Raitt's office said Wednesday "the game has changed" after Canada Post locked out the workers late Tuesday, and that back-to-work legislation similar to what the government is introducing to end the Air Canada strike is now a consideration.

"Obviously, with Canada Post locking [CUPW workers] out it's time to go back and take a look at the effect on the Canadian public, on Canadian businesses and indeed on the national economy," Raitt told reporters on Parliament Hill Wednesday morning.

Raitt said times have changed since the last Canada Post strike.

"We've had 11 days of workers of Canada Post having rolling strikes and we really haven't had a lot of public outcry. It's different than '97, when we saw a lot of people concerned about a general mail strike. Now we have email, we have package services and that was the issue of a rolling strike. This is different — this is now a lockout," Raitt said.

Hundreds of union members demonstrated outside Raitt's constituency office in Milton, Ont., to protest against the threatened back-to-work legislation for both Air Canada and Canada Post workers.

Union says Canada Post holding mail 'hostage'

Meanwhile, at a news conference Wednesday, Canadian Postal Workers Union president Denis Lemelin blasted the Crown corporation's decision to suspend operations and halt mail service across the country, calling it "unacceptable," and accusing Canada Post of holding the mail "hostage."

"There is mail in all postal facilities. It's kind of prisoner in the postal installations throughout the country," he said. "When we unleashed this strike, we announced it 72 hours ahead of time ... Canada Post has a lockout and there's no prior warning whatsoever."

Lemelin said the union wants to meet with Canada Post CEO Deepak Chopra to focus on three key issues. First he wants a public commitment from him that social assistance cheques will continue to be mailed. Second, that Canada Post agrees to reinstate the current collective agreement. And third that Canada Post negotiators be given a new mandate to discuss issues such as the safety of workers, the impact of new technology,

"Until now their only mandate has been to say "No" to our proposals such as health and safety solutions, and make demands for major concessions on issues such as sick leave and lower wages for new workers," said Lemelin.

In a news release, Canada Post said Chopra has agreed to meet with Lemelin.

"Mr. Chopra expects that Mr. Lemelin will come to the meeting with a meaningful offer that addresses declining mail volumes, competitiveness, and a $3.2-billion solvency deficit in the pension plan," the release said.

Canada Post locked out its workers on Tuesday, after days of rotating strikes that didn't really seem to significantly impact the public. Labour Minister Lisa Raitt's office said Wednesday that the federal government is now considering back-to-work legislation. Jeff McIntosh/Associated Press

Canada Post announced the move to suspend operations in a statement late Tuesday, saying it had no choice when faced with an "accelerating" decline in volumes and revenue, combined with an "inability to deliver mail on a timely and safe basis."

"We believe that a lockout is the best way to bring a timely resolution to this impasse and force the union to seriously consider proposals that address the declining mail volumes and the $3.2-billion pension deficit," the Crown corporation said.

Canada Post said the rotating strikes have caused losses approaching $100 million as of Tuesday's strike in Toronto and Montreal — and that the figure was climbing daily.

The corporation also cited "several incidents" that led to concerns about moving the mail while keeping employees and customers safe.

"Canada Post and CUPW remain far apart on several fundamental issues and there has been no progress made at the negotiating table for weeks," the corporation said in its statement.

"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."

Virtually no mail delivery

Canada Post has ceased nearly all mail delivery nationwide, with the exception of monthly social assistance payments such as government pension cheques, veterans' cheques and child benefit cheques, said spokesman Jon Hamilton.

Those cheques would all be delivered on June 20 by letter carriers in uniform who had agreed in advance to be on the job throughout a work stoppage for this reason. Rural carriers are still on the job so those in rural areas can expect to receive mail for another couple of days.

Mail boxes are in the process of being sealed. If you should find one that is not yet sealed, don't drop mail into it as it will not be delivered as there is no way of picking it up, Hamilton said.

All corporate mail outlets are closed. Retails mail outlets will remain open, though will not accept mail or parcels for delivery. Electronic options, such as e-post, will still be available.

Stubborn issues unresolved

The two sides are still at odds on a host of issues, including new mail-processing technology the company wants to implement and wages for new hires.

On salaries, the union has said the parties are "fairly close" on wages for regular employees, but Canada Post is pushing for a significant cut in the hourly rate for new hires, to as low as $18 from about $23.

The union said Canada Post has been profitable for the last 16 years and is misrepresenting its financial position. It acknowledges first-class mail volume is down, but said that overall, it amounts to only a seven per cent dip since 2006.

The Crown corporation counters that measured on a per-address basis, mail volumes are down 17 per cent since 2006 and calls the union "out of touch" with the challenges facing the mail service.

CUPW also denounced the withdrawal of employee medical benefits, saying some of its members are facing huge bills for medications that would have been covered by their drug plan.

Canada Post suspended its workers' health and dental coverage when the union issued its strike notice in May.