Revitalizing Japan / Anachronistic 'special post office' system should be reviewed

This is the second in a series on the issues surrounding the three
postal services and their reform prospects. The head of a national association of postmasters is vehemently
opposed to the proposed privatization of the three postal services
of mail delivery, savings and life insurance. "What on earth is
wrong with keeping (the existing postal system) as it is?" Kiyoshi
Takeuchi, 68, said. Takeuchi noted that in Germany, where the postal services have been
privatized, the number of post offices has been halved, predicting
that "unprofitable post offices in regional areas (of Japan) will
simply be abolished." The national association of government-commissioned postal agents,
commonly known as Zentoku, is a monolithic organization of
postmasters who manage about 19,000 "special post offices"
throughout the country. It has overcome pressures for privatization
on many occasions. Takeuchi is postmaster of Matsudo-Nemoto Post Office in Matsudo,
Chiba Prefecture. The entire first floor of his residence has been converted into a
post office that employs five workers. Takeuchi is the third
postmaster of the post office since it was inaugurated in 1944. Despite growing calls for the privatization of the three postal
services as part of the structural reform plan of Prime Minister
Junichiro Koizumi, Takeuchi remains bullish. "I don't like the current trend, in which those against
privatization are labeled as forces of resistance," he said. "As the
saying goes, 'Know what you truly want, and heaven will grant your
request.' The public should be the ones to make the final decision." The special post offices account for about 75 percent of the
nation's 25,000 post offices. Prominent individuals in local
communities are usually named as postmasters at these post offices.
The postmasters provide the land and facilities required for post
offices, which they lease to the government. The system dates back to the early Meiji era (1868-1912), when the
government–which wanted to establish a postal system similar to
that of Britain and France–appointed prominent or wealthy figures
from local communities who supplied land and facilities. Through
this system, the government was able to establish a nationwide
network of post offices at a relatively low cost. After the end of World War II, the government banned postmasters of
the special post offices from holding other jobs. Since then,
postmasters have become employees of the central government. However, about 20 percent of the 1,200 postmasters who assume the
position each year are selected through an arbitrary screening
process comprising a written test or interview. They do not have to
take the regular civil service examination. Moreover, openings are not usually announced, and in most cases, the
positions are handed down to relatives or close associates. All this, as well as the fact that the special post offices are
under the jurisdiction of the central government, constitutes a
compelling case for those claiming that postmasters of the special
post offices represent vested interests. In addition to their regular salary, the postmasters are paid rent
for the post office facilities. The annual total of such rent
exceeds 80 billion yen nationwide. Each postmaster receives an
average of 4 million yen in rent each year. On top of that, more than 90 billion yen in lump-sum allowances is
distributed to postmasters each year, the use of which is left to
the discretion of each postmaster. This spring, a citizens ombudsman group based in Sendai looked into
the accounting practices of several local special post offices by
taking advantage of the national information-disclosure system. The
group focused its efforts on investigating the uses of the lump-sum
allowances. According to the findings, in addition to being used to defray
normal operating costs, lump-sum allowances had been allocated to
special post offices as: — A special allowance for so-called executive special post offices,
which supervise the operations of ordinary special post offices. — Wining and dining expenses for postmasters and office employees
in the name of "meetings to review operations." Asked about the uses of the lump-sum allowances, an official of the
Postal Services Agency–the arm of the Public Management Ministry in
charge of mail delivery, savings and life insurance–explained that
the taxpayer-funded parties were an "operating expense aimed at
raising the morale (of postmasters and post office employees),"
acknowledging that the practice is widespread. The Sendai group also discovered that in September last year, the
then Posts and Telecommunications Ministry issued a notice to
special post offices across the country telling them that the
mandatory period for keeping accounting records of lump-sum
allowance payments should be shortened from the long-established
three years to one year. An official of the group pointed out that
an ulterior motive may be behind the ministry move. "I couldn't help but suspect that (the Posts and Telecommunications
Ministry) instructed the special post offices to destroy the records
because (the ministry and the post offices) would be in trouble if
the records were revealed to the public," said Tsunesuke Kurayama,
secretary general of the group. It is surprising that such a vague and opaque allowance system
established 100 years ago has survived to this day. One could argue that privatizing the postal services would result in
such problems being addressed, leading to an improvement in the
efficiency of the services. Although the government's privatization efforts may bump heads with
the national association of postmasters of special post offices, the
government should focus on protecting the interests of the public. According to the fiscal 2000 account settlement of the three postal
services, released by the Public Management Ministry in July, the
mail delivery and postal savings divisions incurred losses for the
third year in a row.Losses in the mail delivery service increased
mainly from increased competition in fields such as parcel delivery. The Public Management Ministry explained that postal savings would
return to the black this fiscal year, with mail delivery becoming
profitable next fiscal year. "Even when we incurred losses, no taxpayers' money was spent
covering the losses," a ministry official said. However, the postal services' accumulated profit at the end of
fiscal 2000, which was spent covering losses, was 122.6 billion
yen–about half the corresponding amount three years ago. Postal savings reserves have also plunged, to 892.2 billion
yen–one-sixth of the amount three years ago. The ministry pays rent for special post offices and allots them an
operating budget–making for a total expenditure of 170 million yen
each year. Work to eliminate the high cost structure and implement other
measures to improve profitability through rationalization must be
started as soon as possible. But Katsunori Taira, senior director of Zentoku, disagrees. "I would
like to see the government look at the efficiency levels of special
post offices where only one worker operates all the services–mail,
savings and insurance," he said. More than half of the special post offices are small and staffed by
three or fewer workers operating all three services. Post office officials have long held the view that unprofitable post
offices are necessary to keep nationwide mail- and parcel-delivery
services at flat rates while offering financial services. They argue that running losses on some postal services–including
losses from maintaining special post offices–is not bad business
practice if the overall balance of the postal businesses is in the
black when the three services are looked at as a whole. But it is essential to analyze the balance of expenditures and
revenues, to determine which sections incur losses and why, and to
proceed with the rationalization of postal businesses to attain
greater profits. Though the Public Management Ministry unveiled for the first time
the balance sheets of 12 of the nation's regional postal bureaus
last month, it has not revealed the financial conditions of
individual post offices. Though the ministry has said that accounts of the three postal
businesses are separately managed, it is doubtful whether lax
management–symbolized by special post offices offering overlapping
services–can be completely weeded out. In addition, the heads of special post offices do not see how
important it is to reduce costs, and this has delayed post offices'
efforts to trim fat from their operations. The heads also see no further than the drive to reach revenue quotas
and targets. "They have to earn revenues to cover costs," an
official of the Postal Services Agency said. The result is that they do not pay enough attention to efforts to
reduce costs. The former Management and Coordination Agency, one of the
predecessors of the Public Management Ministry, recommended that the
former Posts and Telecommunications Ministry set up a greater number
of simplified post offices–which are located inside other entities
and entrust counter services to agricultural cooperatives and
individuals–instead of special post offices, in its auditing report
in 1999. The recommendation was made because the number of special post
offices that operated counter services but did not deliver mail
increased by 487 in the five years from 1992, while the number of
simplified post offices–which cost less to run–increased by only
eight in the same period. But the Public Management Ministry has refused to implement the
recommendation, saying that the operation of simplified post offices
is simply a stop-gap measure. If post office losses balloon, the burden will, in the final
analysis, be passed on to the taxpayer through higher postal fees
and the injection of taxpayer money to cover deficits. To prevent that, it is of supreme importance that vested interests
are purged without exception and that the management and structure
of postal businesses are thoroughly reviewed. Copyright 2001 The Daily Yomiuri
Copyright 2001 The Yomiuri Shimbun/Daily Yomiuri.
Source: World Reporter (Trade Mark) – Asia Intelligence Wire.