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The government might strip Japan Post workers of their public-servant status and might end the guarantee on ordinary deposits in 2007, when postal service privatization is phased in, according to government sources.

As part of its reforms, the government plans to stop guaranteeing ordinary deposits held in the postal savings system, including those deposited prior to privatization, the sources told Kyodo News.

These ideas will be submitted to a meeting of the government’s Council on Economic and Fiscal Policy in early August. The meeting will involve intensive deliberations on the privatization of postal services.

Japan Post was launched in April 2003 as a government-backed entity tasked with taking over the government-run mail delivery, postal savings and “kampo” postal insurance operations. Prime Minister Junichiro Koizumi has made privatizing Japan Post one of his key policy goals.

Regarding the status of Japan Post staff, including those working at post offices, one plan is to have them become private-sector workers once Japan Post starts being privatized, the sources said.

The plan is aimed at increasing efficiency in privatized operations by doing away with often-wasteful bureaucratic working practices and introducing flexible wage-setting systems, the sources said.

Japan Post’s operations are expected to be reorganized into several entities, all of which would be 100 percent government-backed special corporations when the privatization process begins.

The government will present recommendations on how the operations will be managed at the August council meeting. The basic operations in question are mail delivery, postal savings and insurance services, plus post-office network management.

One idea is to establish a holding company to oversee post-office network management and mail delivery, under which firms responsible for postal savings and life insurance services will be placed.

Another idea floated by some quarters of the government is to establish an independent entity in charge of post-office network management as a holding company that will oversee the three other businesses.

The government plans to continue owning the privatized entity in charge of mail delivery to a certain extent, even after the transitional period ranging from five to 10 years, the sources said.

This is because the government wants to maintain uniform nationwide services in line with an international treaty, with the minimum governmental stake being set either at more than one-third or at more than half of the total, they said.

The government will offload all of its stakes in the other privatized firms during the transitional period toward full privatization, they said.

As for government guarantees for postal insurance money and fixed-amount deposits, the government will probably discontinue them, as suggested by the council in April, if the contracts are concluded after the 2007 start of the privatization process, they said.

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