* Canada Post says rotating strike too costly
* Mail system struggles with Internet competition
VANCOUVER, June 15 Canada's national postal system locked out its employees on Wednesday, saying more than a week of rotating strikes by its unionized workers had cost it too much money.
Canada Post and the workers are engaged in a contract dispute complicated by questions over how the postal system can survive in a era when letter writers use email and bills are delivered and paid over the Internet.
The Canadian Union of Postal Workers launched a series of 24-hour strikes 12 days ago which rotate daily between different communities. Canada Post says the job action had already cost it C$100 million.
"The accelerating decline in volumes and revenue combined with the inability to deliver mail on a timely and safe basis has left the company with no choice but to make this decision," the company said in a statement.
Canada Post, which is owned by the government but operates independently as a for-profit company, had already cut mail deliveries in urban areas to three days a week in response the the labor action.
The union did not immediately respond to Canada Post's lockout, but union officials have previously accused the company of attempting to provoke the federal government into intervening in the dispute.
Labor Minister Lisa Raitt told reporters on Tuesday the government was not prepared to get involved in the contract dispute because it had not shut down the national system.
Canada Post has offered raises to existing employees, but has said its survival depends on allowing it to impose a lower wage scale on workers hired in the future.
The union says the company is profitable, but refuses to listen to its proposals to deal with increasing competition by providing nontraditional services such as banking at post offices.
Canada Post has also said it needs changes in its pension plan because it suffers a C$3.2 billion pension deficit, but the union says that figure is exaggerated. (Reporting Allan Dowd, Editing by Todd Eastham)