Japan Post has announced a “master plan to reform postal offices” as the process of privatizing the mammoth state-run entity of 260,000 employees is set to begin in October 2007. The focus of the plan is the reform of the specially designated tokutei post offices, which account for three-fourths of the nation’s 24,700 post offices and have been criticized for clinging to vested interests.

On Oct. 1, 2007, the postal service will be split into four business units. Japan Post Corp., a new joint-stock company that has just been set up by Japan Post, will serve as their holding company. Savings and insurance operations are to be fully privatized by 2017, while the holding company will wholly own the mail delivery and post office service units.

The history of tokutei post offices goes back to 1871 when the Meiji government introduced a modern postal delivery service. In an effort to spread the postal system quickly throughout the nation, the government encouraged wealthy people in local communities to offer land and buildings for “third-class” post offices. In return, the landowners received rent payments from the government and were appointed as postmasters, classified as public servants. A 1941 law turned the operations into tokutei post offices, a majority of which are manned by five or less workers.

The position of tokutei post office chief has largely become hereditary, as children or other relatives take over operations. They have formed a national association that has customarily supported politicians from the ruling Liberal Democratic Party. Until the general elections last September, it wielded a powerful political influence.

The group vehemently opposed Prime Minister Junichiro Koizumi’s postal service privatization program, saying it would lead to the closure of post offices in remote, depopulated areas. But the overwhelming victory of Mr. Koizumi’s forces has greatly weakened the group’s political power.

The reform plan calls for scrapping the traditional practice of exempting tokutei post office chiefs from transfers to other communities, gradually lowering their retirement age from the 65 to 60 (the same retirement age as for other postal workers), and paving the way for ordinary postal workers and “outsiders” to serve as tokutei postmasters. Behind the move to abolish the no-transfer policy is a series of embezzlement cases involving tokutei postmasters. Every year, about 1,000 tokutei postmasters retire and are replaced with new ones.

The reform plan also calls for aligning the salary level of tokutei postmasters with that of ordinary postal officials and discontinuing the 15 billion yen a year in rent payments for 2,300 relatively large tokutei post offices. Instead, the plan calls for buying them up for 70 billion yen and diversifying their operations to include convenience-store and other business functions.

Another proposal is to integrate the two channels of command and direction within Japan Post — one for tokutei post offices and the other for ordinary post offices — into one. Every post office will be under the supervision of one of about 50 control centers throughout the country.

Japan Post does not intend to abolish tokutei post offices; rather, it hopes to rationalize their operations with regard to a more competitive business environment.

In announcing the reform plan, Japan Post President Masaharu Ikuta praised tokutei post offices for having served as the “daily life infrastructure” of local communities. Although he has said that the tokutei post office system has developed “system fatigue,” as exemplified by the “unnecessarily high costs” to run it, he expressed the hope that the advantages of such post offices will be put to further use.

A strong point of tokutei postmasters, for example, is that they have detailed knowledge of the local community their offices serve and a personal connection with residents. In addition to postal delivery and savings services, tokutei post offices often serve local people as distributors of pension benefits and as asset managers. For this reason, tokutei postmasters will not be transferred outside a given geographical area. Moreover, some retired tokutei postmasters could be rehired if the results of screening indicate that they could continue to render a valuable service to their community.

A weak point, however, is that the political activities of the tokutei postmasters have fostered a strong public impression that they are closely tied to specific politicians. In their discussions with Japan Post over the reform plan, tokutei postmasters must focus on how to heighten the business efficiency of their office operations while enhancing the quality of their services to local residents. This would help shed the negative perceptions of them held by some segments of the public.

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