Koizumi’s next target: the bureaucracy

Approval of postal bills gives him free hand to shrink government

by Reiji Yoshida

With the Diet’s enactment of the postal privatization bills earlier this month, Prime Minister Junichiro Koizumi now has a new punching bag he can use to maintain his political momentum: the bloated bureaucracy.

In recent weeks, he has launched a number of new initiatives to bring about small government, most notably a plan to slash payrolls at both the central and local governments.

On Oct. 6, Koizumi and Seishiro Eto, head of the Liberal Democratic Party’s administrative reform office, agreed to reduce the number of central and local government officials by 20 percent over a 10-year period.

But the following day, Toranosuke Katayama, a party heavyweight in the House of Councilors and a former internal affairs minister, said the target was “definitely impossible” to achieve.

“You should propose figures you can achieve first,” he said at a news conference.

Many observers and bureaucrats say the figures bandied about so far are unrealistic without directly sacking government workers — an unlikely political choice — or transferring personnel to state-backed corporations, which would not really count as effective change.

Friday, the LDP’s administrative reform office said the 20 percent reduction would add up to roughly 700,000 jobs culled from a workforce of 403,000 central government employees — excluding the Diet and the Self-Defense Forces — and about 3 million local government officials.

In recent years, only around 3,000 — or less than 1 percent — of the some 332,000 administrative employees in the central government have retired annually.

The government is prohibited from arbitrarily dismissing public workers because they are denied the right to strike or conclude labor agreements, given the public nature of their jobs.

Laws must be revised and labor-management negotiations held if a net reduction in public servants is to be achieved, but even so it remains unclear whether such efforts would really result in large personnel cuts.

Jun Iio, director of the Policy Research Center of the National Graduate Institute for Policy Studies, expressed concern that the proposal of numerical targets, rather than the proposal of work reduction targets for the public sector, seems to have become a political goal.

Iio said many past initiatives for reducing the civil servant payroll turned out to be insignificant because workers were merely moved from government positions to jobs in new state-linked organizations.

Indeed, some of the numerical targets proposed by those close to Koizumi may be misleading.

For example, the four private-sector members of the Council on Economic and Fiscal Policy, one of the prime minister’s top panels, are floating targets that are even bolder than the LDP’s.

On Friday, the members proposed that the total personnel costs of the central government’s 948,000 workers, including postal workers, be halved in terms of its proportion to gross domestic product over 10 years.

The four estimate that one-third of the proposed cuts can be made by 2007, but this would be largely achieved through privatization of the postal services, where 262,000 people work.

However, although postal workers are technically “national public servants,” their services are financially independent of the national budget. Their income, after all, comes from the lucrative mail, postal savings and postal insurance services.

Thus, targeting the postal workers would not reduce the snowballing deficit — the crucial goal of administrative reform and streamlining — because no taxpayer money is used to pay their salaries in the first place, critics point out.

Heizo Takenaka, postal reform minister and a key panel member, told reporters Friday that reducing the fiscal deficit is not the only reason civil servants need to be reduced.

“We’re (discussing the issue) not only from the viewpoint of fiscal reconsolidation,” he said. “We’re doing this to realize a smaller, more efficient government, which will invigorate the economy and help establish a more free and independent society.”

But filling the nation’s strained fiscal coffers remains a pivotal issue.

The government is suffering from snowballing deficits and debts. For the current fiscal year, the government expects to receive about 41.7 trillion yen in tax revenues but plans to spend 82.1 trillion, yen 36.6 trillion yen of which will be covered by new government bond issues. Total personnel costs will account for 10 percent, or roughly 8.4 trillion, yen of this year’s expenditures.

Takenaka and Koizumi may have been emboldened by their success in the Sept. 11 general election, where they presented postal privatization as a symbol of “small government” even though postal services are not linked to the state budget and the meaning of small government remains vague in the public eye. Nevertheless, Koizumi’s LDP painted postal privatization as a cure for the ailing government’s ills.

The result of the single-issue campaign is history — the LDP-New Komeito ruling coalition now occupies more than two-thirds of the powerful House of Representatives, which will allow Koizumi to continue his crusade against the public sector.

“Now I understand very well how much the people hate government workers,” remarked one staffer at the LDP’s election campaign office soon after the election.