Big consolation to redundant workers

Saturday, October 23 2004 @ 06:28 AM JST

Contributed by: Y.Yamamoto

Prime Minister Junichiro Koizumi once said there will be no place for a sacred cow in his "reform" plans. But anybody with a certain amount of commonsense can figure out there are a lot of rich pastures that are going to be preserved, forever, for sacred cows.

More often than not, just privatizing a governmental body does not lead to a reform in this nation which has proven prone to failure to cut off those pork-barrel operators and their constituencies from their vested rights. We have learned by now a lot of bitter lessons from the 1985 privatization of the NTT. Nobody thinks we are any better off than we were before 1985 now dealing with NTT DoCoMo, NTT Communications, etc.

Take Daiei for example. We have already discussed the double-scandal that involved the ailing supermarket chain operator and its creditors, including bad debts-ridden UFJ, in "It's always taxpayers that foot the bill" (TFP, October 17). On October 18 the main banks of Daiei and the Industrial Revitalization Corporation of Japan, the quasi-governmental body for bailouts, announced a restructuring plan for the Fukuoka-based retail giant. According to the plan, 27,000 jobs out of 58,000 permanent and part-time positions will have to be slashed while keeping the number of its outlets unchanged at 260. Which means Daiei's customers have been paying an extra 47% when shopping at its outlets as far as the personnel and overhead costs are concerned.

This indicates that the private sector shares the same problem with the public sector. In other words, privatization is no panacea in this country. And splitting up a newly privatized organization will just exacerbate the situation.

Prior to discussing the privatization, in 2007, and subsequent splitup of the postal services, the Koizumi's government enacted a law for privatizing and splitting up the Japan Highway Public Corporation (JH) toward fiscal year 2005. While people still have difficulty understanding what good the JH reform will do them, the PM has now started to puzzle them over exactly where they are benefiting from his postal reform.

In fact some recent reports have it that the JH, on the eve of its privatization, is so rotten and corrupt that it's almost unreformable now. For one thing the highway managing body has awarded 49 out of 55 contracts for toll collection to "JH-affiliated" companies, where the total amount involved in the 55 contracts was JPY 22.2 billion, or roughly USD 200 million. A report says the prices offered by those JH-affiliated bidders averaged 98% of the prices "predetermined" on the part of the JH.

According to another report, the JH used to set the norm for the tollgate staffing level at three - a tollgate chief, a tollgate collector and a clerk. This 3-per-tollgate was already much more than enough. (In this connection, you may refer to the Oct. 16 TFP article titled "Niceness or mass-stupidity?"). But since the beginning of this fiscal year the JH has raised the norm to nine per tollgate from three. A ministry official reportedly admitted that 25% of this JPY 22.2 billion could have been saved by "improving efficiency". This indicates that we cannot expect any more than a 25% cost reduction, when the JH is privatized, as far as the tollgates are concerned. And remember that contracts for toll collection are the smallest part of the tons of taxpayers' money that keeps draining into the bottomless ditch through the pork-barrel operators at JH. Unfortunately, though, the deal was done when a good part of the lawmakers and the media approved the Koizumi's "reform" plans for the Japan Highway Public Corp.

Now Koizumi's priority has quickly been shifted to the postal reform. Once again the PM has failed to articulate the vision and all the specifics involved in the reform he is aiming at. He, along with the media, just keeps sending a taped message that says the four arms of the Japan Post will be able to improve their efficiency by the planned privatization and subsequent splitup. To date he hasn't specifically mentioned his ultimate goal in terms of cutback in jobs and improved efficiency. Neither has he given his answers to such questions as how exactly he is going to have the postal and other services remodeled and what sort of "enablers" he has in mind for the remodeling. These questions are not included in his FAQs because they are questions the media refrain from asking, in the first place. At this stage we can be reasonably sure that everything will remain essentially unchanged just by looking at the list of the names on his Advisory Board for the postal reform. Most of them have their own vested rights in the conventional ways the Japan Post is doing its business, as some newspapers have diffidently pointed out.

As of last March, the Japan Post had more than 270,000 employees. These people, too, have their own vested rights. Worse, there is no conflict of interest between postal personnel and the lawmakers of the ruling LDP and the main opposition, DPJ. That's why we see a lot of "protest to changes" this time even within the LDP headed by Koizumi. And the PM hasn't failed to soothe these people by saying he guarantees that any employee won't be out of work at the initial stage of the privatization. But recently some government officials and members of the advisory board have hinted that the guarantee for job security may expire "after a certain period of time" following the privatization. The four private postal entities would be allowed to determine their own staffing levels once the dust has settled, the sources added.

Obviously Koizumi doesn't understand the dynamics to be involved in a successful reform. The most important factor there is the momentum. And "after a certain period of time" the momentum will have gone.

Let's face the reality: the "feat"-hungry PM won't have achieved anything that deserves to be called a reform until we see him ax tens of thousands of government employees to make the postal entities much leaner, much more agile, and much more efficient organizations. If he is serious about his postal and other reform programs, Japan will see its overall unemployment rate more than double, in a matter of 2, 3 years, to a sound level of 10% or even higher. But fortunately or unfortunately, this likelihood is quite remote.

Feel at ease, Japanese workers. Same to Chinese laborers, for that matter.

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