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TORONTO (Reuters) - Toronto city workers went on strike on Monday, halting garbage collection, day care and other services, but negotiations resumed and both sides said they were optimistic an agreement can be reached soon.
About 24,000 workers in Canada's biggest city walked off the job after failing to reach a deal on a new contact after six months of bargaining.
During the strike, 500,000 households will have no garbage service, all public litter bins will be sealed, and a fine of C$380 ($330) for illegal dumping will be enforced. Transit and police services are not affected.
The city was bracing for a major disruption similar to the one it faced in 2002 when garbage collectors and thousands of other city workers were on strike for two weeks.
"As long as the city appears interested in trying to reach an agreement, our people will be staying in negotiations and trying to keep this strike as short as it has to be," said Pat Daley, spokeswoman for the Canadian Union of Public Employees.
At the center of the contract dispute is an existing perk that allows workers to bank unused sick days and cash them in when they retire, a practice the city of Toronto wants to abolish because it says it will cost it hundreds of millions in payouts over the years. Workers are currently entitled to 18 sick days a year.
"We are still very optimistic we will see a settlement very soon," Joe Pennachetti, Toronto city manager, told reporters. "The city will resolve the issue as quickly as possible."
The strike comes just weeks after data showed Canada's unemployment rate rose to an 11-year high in May as the recession resulted in big layoffs in the factories of Ontario, Canada's manufacturing heartland.
The unemployment rate in Toronto was 9.3 percent in May.
Earlier this year, unionized workers at the Canadian operations of General Motors Corp and Chrysler, which are based in communities in the Greater Toronto Area, agreed to steep concessions in a deal that helped to secure government aid for the auto sector.
Along with the right to bank unused sick days, job security is the major issue for the Toronto workers.
The union said it was encouraged that negotiations continued through the first day of the strike on Monday.
"We need the city to move just like we have needed them to move for the last six months," said Daley. "We're talking and we're trying to make progress and that's all I can say."
Dominion Bond Rating Service said the city of Toronto is a sound 'AA' credit risk and it does not expect that to change even if the strike does drag on, calling the walkout a part of the normal operations of a city.
"This shows the city is exhibiting fiscal prudence and being responsible with spending," said Ryan Domsy, financial analyst at ratings agency DBRS.
Editing by Peter Galloway