Private JP a Rudderless Ship

02/13/2011
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Japan’s Post Service Co., the Japan Post group’s mail delivery unit, is in serious trouble. They will be laying off temporary workers throughout Japan when their contracts expire in March, which might amount to several thousand.

This is the first time that the Japan Post Service, JP, will not renew the contracts of some of its 160,000 temps, according to Sankei News. JP has also asked regular workers to voluntarily take early retirement.

“The Japan Post said they will not be renewing contracts, but they have not said how many contracts they will not renew, or what the criteria will be for none renewal,” said mid-size business owner Tomonari Saito in Tokyo. “The result is that morale in the Post Office has plummeted, and at least to me, who relies on the mail for a lot of my business, this is visible even in the local post office.”

JP had a deficit of about 1 billion dollars in the first six months of 2010. The cause was blamed on the merger last July of JP’s Yu-Pack services with Nippon Express’ Pelican, which is similar to a UPS or FedEx delivery service. The merger has reportedly caused chaos and a large number of late deliveries.

Last year, Japan’s Post Office President Shinichi Nabekura blamed these issues on the lack of familiarity with the new operations. However, if the confusion continues, the losses will go on. It is believed the decision for the layoffs is a move to improve business performance.

As of yet, no one knows how laying off these part-time workers will affect mail deliveries. The part-time workers facing layoffs are mail sorters and internal mail transporters. There’s a good chance that laying these workers off will further complicate mail deliveries. Sixty percent of all mail currently sent in Japan consists of bills and government documents of one sort or another; a slow-down in the mail has the potential to create chaos in the receipt of private and tax payments.

A former government official, who asked to remain anonymous, told Majirox News, “There have been tremendous inefficiencies among the service branches, postal service, insurance service, and so on. The incompleteness of privatization has resulted in redundancies in their personnel management.”

Japan privatized the nation’s huge postal service in 2005. The postal service was essentially the world’s largest bank and, at one time, had 3 trillion dollars in deposits and 25,000 branches. Its banking and insurance sales were immensely profitable until privatization.

“If by firing their work force JP cannot match users’ expectations, then it will exacerbate its financial troubles and not tap into the reservoir of goodwill among its customers,” he said.

A decade ago, when the privatization of Japan’s Post Office was hotly debated, people could no longer rely on its services. Instead, they exchanged e-mails and short messages for private correspondence and used all kinds of postal services for bulky packages, including delivery services, (the equivalent of FedEx) to cover all corners of the country, even the most remote areas. “These can deliver mail as effectively as the National Post Office,” the former official says. “In short, there may be delays, but who cares?”

The holding company, which is the sole shareholder to the branch companies, has an extended board structure that includes an outside board of directors that has representatives from large industries, scholars, and other professionals.

“There is an assumption that the post office is a private entity. The truth is, it is still a national entity, so far as its governance structure is concerned,” he noted.

Unlike before privatization, JP cannot ask for taxpayers’ money in order to make both ends meet. Yet the holding company, which holds 100% ownership for each branch of service, like the postal service and insurance, is firmly in the hands of the government. In other words, according to the former official, there is only one shareholder—the government.

With only one owner, there is no one to take the responsibility for failure, no board meeting schedule, no company structure, and no one to answer to; not to mention, JP’s company structure is utterly unique in Japan. Even a corner grocery store can’t get away with a corporate structure like this.

“The privatization attempt is a half-way house at best and in which direction it should go has been utterly confusing and unclear since former Prime Minister Junichiro Koizumi left office in 2006,” the former official says.

Koizumi had made postal privatization the cornerstone of an effort to streamline the Japanese economy by downsizing the government.

Since the Democratic Party of Japan, DPJ, came in to take office by forming a coalition with those seriously opposed to further privatization, one sees even less clearly where reform should proceed, in which circumstances it is anticipated that a needed reshuffle of the board members will be extremely hard to implement for the DPJ government.

The former official noted, “So long as tax payers’ money is not used to bail it out, voters will focus on other pressing issues.”

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One Response to Private JP a Rudderless Ship

  1. kaori on 02/16/2011 at 9:14 am

    It will be interesting to see if JP can gain the countries trust again. In a bad economy JP is just feeding to the unemployment.

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