Government will flow NIS 1.7 billion to the Israel Postal Company and 1,050 employees will be fired

The state will invest about NIS 1.7 billion to the Israel Postal Company as part of the convalescence agreement approved by the company's board of directors, on the assumption that the investment will be worthwhile in preparation for the full privatization of the post office. As part of the agreement, 1,050 employees will retire from the post office in the first phase, with the average provision cost per employee reaching NIS 1.1 million.
The total cost of rehabilitating the post office will reach NIS 2.3 billion. In addition to a payment of NIS 1.7 billion for the allocation of employees, the state will provide NIS 600-500 million to strengthen the company's capital structure, which may collapse due to insolvency. At the same time, the post office will transfer to the State Authority real estate with an estimated value of NIS 800-600 million.
The State Comptroller has previously criticized the Israel Post for its lack of clarity regarding real estate holdings and the value of the postal buildings.
This is the third mail recovery agreement in the last decade. In 2015, a convalescence agreement was signed in which the state flowed NIS 470 million to the post office to set aside about 1,200 employees. In 2020, 150 more employees retired from the post office, and the post office took out a loan of about NIS 400 million to finance this - a loan that will now be partially covered by state inflows.
The convalescence agreement in the mail comes after a severe deterioration in his condition. The post office recorded a loss of NIS 175 million in 2021, partly due to the corona plague but also due to the high operating and wage costs. The post office has a live business note regarding the fear of insolvency.
The convalescence agreement is formulated by the Ministry of Finance, the Ministry of Communications and the Government Companies Authority. As part of the agreement, the post office will operate more digital services, the regulation on it will be reduced and the number of branches across the country will be significantly reduced.
The state intends to fully privatize the mail. Unlike previous plans to sell only about 40% of it, now the intention is to transfer 100% of it to private hands. The convalescence agreement comes after the Knesset recently approved a series of laws that are supposed to reduce regulation of the post office and ease the structure of the company's expenses. In addition, the company will be able to expand the scope of its services and integrate more digital services.
There are currently 5,000 employees in the post office. As part of the arrangement, 1,050 employees will leave the post office in the first phase - the majority in the voluntary retirement route, and some in the dismissal route. The program will be relevant only to employees age 55 and older. The agreement is formulated on the basis of postal workers' agreements in understandings with the Histadrut.
At the same time, the Israel Post intends to close dozens of branches, reducing the days of distribution of the mail to one day a week compared to the intermittent distribution now (not every day). The number of post offices will be reduced from 160 to about 80 branches. Hours of operation by mail will also be reduced. The post office will stop working on Fridays, and will not operate until 20:00 in the evening three times a week, but will close at 18:00.
The postal company now intends to invest in digital services and expand e-commerce activities. This agreement was formed after the management changed mail. Mishael Vaknin has taken over as chairman in recent months, and today David Laron has taken over as CEO of the post office.