Japan Post Holdings Co. has received a proposal by a group company to cut 10,000 jobs, as the scandal-hit company seeks to offset deteriorating earnings in the financial business by slashing labor costs, a source close to the matter said Monday.
Japan Post Bank Co., a unit of the former state-owned postal and financial giant, is eyeing the dismissal of 10,000 post office workers, or 5 percent of the total workforce at Japan Post Co., another unit of the group, the source said.
The postal service unit garners a large part of its revenue through fees paid by the banking unit and another financial group company, Japan Post Insurance Co., via sales of their products through some 24,000 post offices nationwide.
According to the latest earnings of Japan Post Holdings released last month, the banking and insurance units are forecast to post a drop of 23 percent and 13 percent in revenue for the fiscal year to March respectively.
Their revenues are not expected to recover anytime soon as they have halted financial-product sales after a scandal came to light last year involving fraudulent sales of investment trust funds and insurance policies at post offices.
The Financial Services Agency late last year ordered the two units to suspend new sales of insurance products. While the ban was lifted, they have continued self-imposed restrictions on new sales.
Even before the ban was imposed, financial institutions have seen their profit margins squeezed by years of low interest rates under the Bank of Japan’s ultraeasy monetary policy.
The postal service unit is opposed to the proposed job cuts, saying it is not feasible. The idea has not been officially discussed at a board meeting of Japan Post Holdings, the source said.
The labor union of Japan Post Holdings said it has received no official proposal of job cuts.
Japan Post Holdings was privatized in 2007 with 57 percent owned by the government.
New Japan Post Holdings Co. President Hiroya Masuda pledged in January to regain the public’s trust, saying the firm is “facing the biggest crisis since the foundation (of the postal group).”
Masuda, former internal affairs and communications minister, vowed to make an all-out effort to resolve all problems stemming from the widespread sale of insurance products disadvantageous to customers.
He also pushed them to report “bad news swiftly,” after the previous management was criticized for taking too much time to deal with the insurance scandal.