The Tánaiste insisted postal workers had not fully exhausted the State's industrial relations machinery.
Ms Harney said that some 10,000 staff worked in the postal service. "In the past, agreements have been made but productivity has not been forthcoming," she added.
The Tánaiste was answering questions in the Dáil before the postal workers held a rally outside Leinster House.
She said that in the past couple of years, the postal service had lost €90 million. "Last year, the volume of mail dropped by approximately 7 per cent," she added. "We are moving to a situation in which by 2009 there will be full liberalisation in this area. The reality is that the company cannot pay if it is not able to do so. All social partnership agreements provide an out for companies that do not have the ability to pay, which is the position in regard to An Post."
Mr Joe Higgins (Socialist Party, Dublin West) said those involved had been left with no choice but to strike for basic justice and workers' rights.
"How does the Tánaiste justify standing over a situation where workers on very modest incomes have been denied any wage increases whatsoever under Sustaining Progress, the so-called partnership deal?" he asked.
Mr Higgins said there was a social element to An Post and nowhere more so than in regional towns, villages and remote country areas where the post office was part of the social fabric of life.
"Despite this, there is a proposal to privatise approximately 100 sub-post offices," he added. "The Government outrageously puts its hand in the pockets of ordinary post office workers and, even more scandalously, in the pockets of post office pensioners to subsidise and finance this service." He asked why the Government was prepared to allow this to happen.
"Why is An Post management, which has no credibility due to the way it has dealt with its workers and broken agreements, given carte blanche to walk all over the rights of post office workers, to break agreements with impunity and treat workers in a way that gives the lie to any concept of so-called partnership?"
Mr Higgins said that not a penny of investment had been made by the State in the postal side of services. "This can be contrasted with the following. A handful of rich parasites from the highest-paid echelons of business, the medical profession and the legal profession recently bought land in Stillorgan for €31 million," he added.
"Only four years later, they sold it for an obscene profit of €53 million. Their contribution to society is that working people will slave for 30 years to pay mortgages on the houses that will be built on the land to make a profit, which puts these bastions of the establishment, in my view, on the same level as heroin pushers whom we usually regard as anti-social scum."
Ms Harney said that the best investment in the dispute would be if both sides worked together to find a resolution through the industrial relations machinery of the State.
She added that some €12.7 million was invested in computerisation just over one year ago.
