Japan's Ruling LDP Pins Hopes on Postal Reform to Win Election

Reviewed by Hitoshi URABE

Article:
Japan's Ruling LDP Pins Hopes on Postal Reform to Win Election
Bloomberg
http://www.bloomberg.com/apps/news?pid=10000101&sid=avr6AT0FN.1Y&refer=japan

Comments:

Japan's postal services were provided by the government directly, as a part of "administrative action" of the Ministry of Posts and Telecommunications until recently. In April 2003, Japan Post was formed through specific legislative procedures as a state-controlled company to take over business operations from the Ministry, which were essentially, postal services, postal savings, and post life insurance. Japan Post's operations are strictly defined by law, and its officers and employees have the status and enjoy the benefits as national government employees. (In fact, the latter feature is a good example of the all the hassles and compromises made in separating the operations from the Ministry to the public corporation.)

The fundamental issue of the privatization of Japan Post derives from its sheer size. To visualize, take the largest bank in Japan, the largest life insurer in Japan, and the largest courier service company in Japan. Consolidate the three companies, multiply it by three, and the size somewhat resembles that of Japan Post as a single entity. Post Savings and Insurance maintains 330 trillion yen, a quarter of the whole of Japan's household financial asset. And the number of employees, at 260 thousand, amounts to more than a quarter of national government employees.

In fact, the gigantic issue of Japan Post privatization is in many aspects interwoven into Japan's society, which makes it an issue with a variety of contentions.

Among many facets of the issue, one often referred to is the network structure of post offices across the country.

According to the bylaw of Japan Post, there are three type of post offices, "ordinary" (futsuu) run directly by Japan Post, "simplified" (kan-i) run by contractors - somewhat akin to franchise, and "special" (tokutei). Among the total of 25 thousand post offices across Japan, one thousand is classified as "ordinary", 4.5 thousand being "simplified", and the rest, about 19 thousand, are tokutei post offices. The definition of tokutei post office is arguably unclear. Bylaw only stipulates that the "tokutei offices are those run by the 'chiefs' of tokutei post offices", while there are no definitions as to who or what the "chiefs" are.

Japan's postal (mail delivery) system was created in 1871, immediately after the Meiji Restoration in an effort to establish a modern nation. As there were no resources for the government to establish the postal network, celebrities and distinguished people in localities across the country were invited to participate in the creation of the network. It worked, and helped a great deal in making Japan a modern country in a short while of time. But the scheme was never thoroughly reviewed.

The tokutei postmasters are, also, national government employees. But contrary to the norm of public servants to be hired through open recruitments, the postmasters are - not that the rule says so, but - in fact assigned by heredity. They also enjoy relatively high payrolls - without the risk of unemployment - and other fringe benefits of being national government employees.

Moreover, the tokutei postmasters are, understandably, often very influential persons in the local communities they reside, politically or otherwise, who have huge vote-gathering powers. Traditionally, the Association of Tokutei Postmasters - currently a very strong adversary to Post Office privatization - has been one of the most prominent interest groups supporting the ruling Liberal Democratic Party.

Destroying such a political structure and the social tradition to support it, is clearly one of the implications of Prime Minister Koizumi when he refers to the "reform."