How to Save Israel's Postal Service: Higher Prices, Fewer Deliveries, Longer Hours

As postal workers strike, Communications minister declares: Post office must be restructured.

Amir Teig
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Israel Post workers demonstrating, April 29, 2014.Credit: Daniel Bar-On
Amir Teig

Israel Post faces financial collapse unless it raises rates and begins providing new services, a government panel said Tuesday postal workers launched a strike to protest layoffs.

The structure of the post office needs a change and the company must adapt itself to the changing needs of the public, said Communications Minister Gilad Erdan, who together with Finance Minister Yair Lapid, would have to approve the proposals before they can go into effect.

The recommendations came as hundreds of postal workers gathered at Israel Post headquarters in Tel Aviv and demanded that its CEO, Haim Elmoznino, resign. The strike, which will extend at least until Wednesday, shut down post offices across the country and stopped all deliveries.

The government committee, headed by Ziv Reich, made two main recommendations concerning the future of the post office: Increasing regulated postal rates for many products, and at the same time expanding its range of services while adopting innovative technology to provide these services efficiently.

The committee, headed by Ziv Reich, recommended increasing revenues by raising the price of a regular stamp for a letter within Israel by 10 agorot (3 cents) to 2.10 shekels. The cost of sending letters weighing 50 to 200 grams should rise even more to 4.10 shekels from 3.10 today, the committee said among a long list of price hikes for almost every product and service the post office supplies.

The committee did include some improvements side by side with the rate hikes, such as extending the business hours of post office branches as well as shortening waiting times. The new hours would include afternoons and evenings, as well as Friday mornings in residential areas. Main post offices in cities would stay open even longer. It said the postal service should step up use of self-service and automatic machines.

Erdan said that to save Israel Post it must also undergo major restructuring to guarantee its financial stability. He did not mention the post office employees, who are fighting the recommendations.

The panel also recommended cutting back on home deliveries from five days a week to only two, because of the drop in demand for mail. Mail pickups would also be cut, though express services would continue at almost the same level as today.

Another important part of the recommendations is to expand competition in bulk mailings – mass mailings by large companies. One possibility is forcing the post office to open its distribution centers to other licensed bulk mail providers, such as the Meser company, for a fee. But the real prize for Israel Post would be the lifting of regulated prices for bulk mail, allowing it to compete freely in the business and make agreements with other parties in the bulk mail industry, such as printers.

The committee also recommended raising certain Postal Bank fees and charging for some services provided free today. The quantities of mail are shrinking but the use of Internet mailings and packages is growing and expanding, the committee noted.