Government, Unions Agree to Overhaul Israel's Postal Services; Sanctions End

Accord calls for layoffs and fewer deliveries to cut costs, but offers longer hours at branches and other service improvements

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A post office, with collection boxes in front. Demand for postal services has plunged 40% in recent years.
A post office, with collection boxes in front. Demand for postal services has plunged 40% in recent years. Credit: Alon Ron

Postal services in Israel will undergo a major overhaul that will cut costs and align more closely with the demands of the market under an agreement reached between the government and labor unions on Tuesday.

In response, the Histadrut labor federation called an immediate end to months of labor slowdowns and other protests that gradually spread from Israel Post to other government branches such as the courts and state employment service.

“We need to adapt the postal service to the new era, to reinvent it,” Communications Minister Gilad Erdan said at a press conference in Jerusalem on Tuesday that included Histadrut Chairman Avi Nissenkorn as well as a host of treasury and union officials. “It has national importance but is in crisis, both financial and in term of the services it provides.”

Israel Post has been late in adapting to changes in the market, particularly as the use of ordinary mail has dropped, saddling it with losses of 100 million shekels ($27 million) or more annually in recent years. With this year’s red ink expected to reach 185 million shekels, Israel Post would have run out of cash in 18 months and be unable to pay salaries or interest to bondholders.

But the Histadrut fought the changes, particularly the proposed layoffs, and enlisted the support of other civil servants in the battle.

Under the agreement, some 1,200 of Israel Post’s approximately 7,000 employees will be let go over the next few years as part of measures aimed at streamlining operations at the government -run company. Those made redundant will receive enhanced severance terms that will cost the government about 1 billion shekels, although details about the exact terms were not immediately available.

“We succeeded in saving the company and from here on the only way is up,” said Shimon Farjun, who heads the postal employees workers’ committee. “At the same time we preserved collective labor agreements and employee conditions. The agreement makes it possible to fire bad workers and keep the good ones.”

In terms of service, the agreement calls for post offices to be open until 8 P.M. three days a week, enabling people to reach them after work hours. Mail deliveries will be limited to five days every two weeks and put off to later in the day, so that 90% of all mail will reach people while they are at home. Small packages will be treated as ordinary mail delivered to home mail boxes rather than picked up at the post office, shortening waiting times for others.

Israel Post will gradually offer more services, such as buying envelopes and stamps, and collecting packages, through vending machines and other automatic devices. Some postal rates will rise in line with the recommendations of a government committee report earlier this year.

“People will pay a little more for registered mail but will be able to get it at home, without wasting money on gasoline or time travelling,” Erdan said, noting that the current rates, which have not been adjusted for some time, were “fictitious” in terms of costs.

Israel Post already offers some services though filling station convenience stories. Under the agreement it will greatly expand its “shop in shop” service to include supermarkets and other retail outlets. This will take some time as the postal service will have to sign contracts with retailers.

Israel Post bondholders, whose concerns relate to the company’s ability to repay them in time, are likely to be satisfied with the terms of the agreement, although officially they had not responded as of late Tuesday. A representative of the bondholders sat in on the negotiations leading to the agreement.

Israel Post CEO Haim Elmoznino, who designed the reform, will step down after three years amid criticism by Erdan and others about his performance and ability to see the reforms through.

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