ISLE of Man Post Office said it is disappointed members of the Communications Workers Union (CWU) could be balloted over whether to take industrial action.
The union has confirmed it is considering a request from members at Isle of Man Post Office for a ballot in a dispute over pay.
The Island's 250 postal workers say they have had no rise for the past two years, despite the company performing well and increasing its contribution to the Manx Treasury from 45 per cent of profits to 50 per cent.
A union spokesman said its offer to go to binding arbitration has been rejected by Isle of Man Post Office and the union is now looking at a timetable for a ballot, unless the organisation comes back with a pay offer.
A spokesperson for Isle of Man Post Office, which is a statutory board of Tynwald, said: "Isle of Man Post Office is disappointed that the Communications Workers Union (CWU) is considering balloting its members over industrial action.
"Throughout the pay negotiations for 2010, Isle of Man Post Office has made proposals including consolidating money into the long-term basic pay for its employees from elsewhere within the overall pay budget whilst ensuring the constraint of the freeze on public sector pay budgets is met.
"These proposals have consistently been rejected by the CWU, who have maintained their demand for new money to be added to pay.
"The Island is currently in a difficult fiscal position and all parts of the economy are feeling the strain.
"Isle of Man Post Office is not immune from this and is acting in a responsible manner by supporting the Island in the re-balancing of its budgets, while protecting the future prosperity of the Post Office, jobs and postal services.
"Isle of Man Post Office recognises its overall successful performance in the current economic climate, despite the well publicised decline in mail volumes.
"The traditional postal services are under pressure from electronic substitution, the downturn in the economy and fierce competition making the need to grow our diversified services more important than ever.
"The success of this is down to everyone involved including postal workers. These efforts are undisputed and much appreciated, however this does not change the position the Island finds itself in.
"The CWU has requested the pay claim be referred to arbitration for resolution.
"Unlike other pay groups on the Island, the Isle of Man Post Office and the CWU do not have an agreement to automatically use arbitration.
"It's the Post Office's view that arbitration is a potential route to circumvent the government pay policy.
"The CWU negotiator is based in the UK and throughout these talks has failed to demonstrate an appreciation of the Island's situation or the relationship Isle of Man Post Office has with government.
"The CWU negotiator has referred in the press on numerous occasions to an agreement to share the success of the Post Office and believes this forms part of some agreement.
"Whilst Isle of Man Post Office shares these sentiments and is keen for everyone to share in its success, this does not provide a guarantee for a pay increase year on year.
"Isle of Man Post Office has already witnessed adverse public reaction to the press speculation about industrial action during these pay talks, which has upset many people working within the business.
"Isle of Man Post Office is sure the majority of staff understand the economic situation facing the Island and accept the position the business is currently facing.
"It is hoped this is reflected in the outcome of any ballot.
"Isle of Man Post Office remains open to further discussions with the CWU at any time."
The last ballot for industrial action by the CWU postal workers in the Island was in 1997.
Pay was last increased for all Isle of Man Post Office workers in April 2009, for the year ending March 31 2010, at 2.5 per cent.
Also see: First strike ballot in "living memory"
