The United States Postal Service announced plans yesterday to contract out more than 12,000 new jobs in order to save between $10 and $12 an hour per worker.

Postal officials said the "preliminary" decision involved some letter-sorting functions and would save the semi-independent agency $4.3 billion over 10 years.

Postmaster General Anthony M. Frank said no career employee would lose his job as a result of contracting out, but the effort is expected to force a showdown with the powerful 360,000-member American Postal Workers Union.

The average postal worker costs the post office $29.85 per hour, including benefits, according to Lynn A. Kidd, director of the office of program services for the postal engineering and development center. The comparable figure for the new contract employees is expected to be $14.52, plus the overhead associated with contract administration.

American Postal Workers Union President Moe Biller demanded Frank's resignation over the proposal. "He has outlived his usefulness," said Biller, who claims jurisdiction over the new jobs. "This union has never opposed automation. . . You might as well oppose the sun setting. But Tony Frank is getting rid of the Postal Service piece by piece. He says he's going to save some money. God knows when."

Biller contended that the Postal Service was "putting in $1 billion {in automation} to move the mail slower."

Postal Service officials said at a briefing the decision was not "etched in stone" but would be discussed with unions under the existing labor contract, which expires Nov. 20.

"We're looking for a discussion, and I'm sure after that {Biller} will realize that it is in the best interest of his membership," Frank said. "The thing that will really cost jobs is if the Postal Service becomes so expensive people don't use it."

"It is going to be a hell of a fight," said Gene A. Del Polito, executive director of the Third Class Mail Association, who supports the change. "Tony Frank is throwing down the gauntlet." Del Polito predicted the postal unions will seek to have the decision overturned by Congress, but added, "I can't imagine how they can expect this guy {Frank} to talk cost containment and not look at the 83 percent of his costs that are labor-driven."

Peter A. Jacobson, assistant postmaster general for engineering and technical support, said contracting out jobs that will result from new technology called the Remote Bar Coding System is a crucial step in controlling costs.

The Remote Bar Coding System is designed to automate the processing of mail that cannot be read by postal computers -- for example, handwritten mail or addresses printed faintly.

Under this system, cameras would take pictures of the unreadable mail and flash the pictures on a screen, and the contract employees would type the addresses into computer terminals. Computers would tell each other what bar code to place on each letter.

The contract jobs are designed to disappear as computers become more adept at reading addresses. The new jobs will all be part-time, according to Jacobson.

Biller said his union filed a grievance over the proposal in June, claiming it violated six provisions of the union contract. Grievances that cannot be resolved go to arbitration.

"We do not have the necessary flexibility to work effectively," said Jacobson. "We have an obligation to our employees, but we have a greater obligation to our customers."