HUMAN RESOURCE CHALLENGES IN A DECENTRALIZING STATE:

SOME NOTES

By

Ma. Ernita T. Joaquin

HUMAN RESOURCE CHALLENGES IN A DECENTRALIZING STATE:

SOME NOTES

“We have seen lags in the administrative system due to the inability of long-established bureaucratic systems, procedures and practices to cope with the imperatives of a decentralized regime.”

– Senator Aquilino Pimentel

“Pursuing Our Collective Struggle for Local Autonomy”

I. Introduction

The need to build local-level capacities should have the people at the center. It is their performance that needs organizational and material support and their actions that accomplish results. Lip-service has been has been given to people as the most important resource but it is ironic that countries lagging behind in development still have not adequately established the means to harnesses their biggest resource. This challenge even becomes greater in the context of decentralization of government.

The Philippines where the student comes from is right now in the middle of a giant decentralization experiment, with plenty of advice needed in terms of capacity building. In 1992, the country embarked on a policy of decentralization through Republic Act 7160 or the Philippine Local Government Code. Passed by the government of Corazon Aquino, it devolved substantial responsibilities and personnel to local government units that heretofore were mere conduits of national government programs. But since 1992, a lot of “birthing pains” have been experienced as the government bureaucracy adjusts to the new arrangement. This research is an attempt to look, through an extensive review of literature, at the challenges presented by decentralization in terms of local human resource and capacity building in a less-developed country like the Philippines.

II. Research Questions and Methodology

The study would like to answer the following questions: What human resource issues are faced by Philippine local governments as the decentralization takes effect? Why? What personnel issues do local authorities and governments face now as perform new responsibilities? What does the literature say about these challenges and how to deal with them, that can benefit what is currently happening in local government in the Philippines?

The main method of research is document analysis or review of literature. The scope of review may be limited because it is difficult to find country materials on decentralization and materials on personnel management that deals with political devolution per se. This is a modest attempt that is more of introducing an important subject and other studies can pick up where this might leave gaps.

III. Research Context

The Philippines is one of several countries colonized by Western powers and granted independence in 1946. An archipelago of 71 million inhabitants, the Philippines is a unitary state with a presidential system of government. The territory is divided into several administrative regions, including the Autonomous Region of Muslim Mindanao in the south. Local government units—provinces, cities, municipalities, and barangays (villages)—are political subdivisions under executive supervision of the President and legislative control of Congress. The provinces coordinate the delivery of basic services while cities and municipalities bear the responsibility of direct service provision to villages. Local governments are empowered to create sources of revenue. LGUs in the Philippines are classified according to income level and most of them belong to lower-income categories. The lowest level of local government, the barangay, is supervised by either the municipality or the city. At the moment, there are an estimated 78 provinces, 90 cities, 1500 municipalities and thousands of villages.

Local government system was over-centralized prior to 1992. History notes that centralization of government was instituted as the colonizing powers co-opted local elites in forming the colonial government. Gonzales (2000) records how the United States retained the centralist arrangements left by Spain by carefully orchestrating the integration of the elite into the structures of power. These local elites would subsequently dominate Philippine politics and perpetuate the centralized governing structures. The LGUs’ political fates, organizational and administrative processes were therefore tied to national political regimes as power and resources were concentrated especially during the dictatorship of Ferdinand Marcos. Funds, procedures, and programs came nationally prepared and administered countrywide under supervision of national agencies with their field offices in the localities. Contributing to the centralization was the culture of patron-client relationship and personalism in government (Sajo et al., 1998).

The local government system follows civil service rules and regulations administered by the national Civil Service Commission. Merit system is the guiding principle in recruitment and promotion of civil servants. The mechanisms for grievance and discipline are lodged with the Civil Service Commission and the respective Office of the Local Chief Executive. Most locally appointed officers and employees are career personnel with security of tenure. But culture, politics, and technical inadequacy have continually tarnished the image of the civil service, both local and national.

The local chief executive is the governor for the province; the mayor for the city or the municipality, and the punong (chair) barangay for the villages. They are the appointing authorities except for the local Treasurer, who is appointed by the Secretary of Department of Finance. There are local legislatures for each LGU, the Sanggunian, whose members are popularly elected as the local chief executive and the vice local chief executive for a maximum of three terms of three years each.

IV. Philippine Decentralization Policy

The revolutionary government of Aquino adopted new measures to get the country back on its feet. In 1987 the people ratified the new Constitution, in which Article Ten, Section 3 called for the enactment of a law on local autonomy and decentralization:

"The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum."

In Section 25, the Constitution also provides that "The State shall ensure the autonomy of local governments." Aquino considered decentralization to be the key element of redemocratization (Bossert and Bowser, 2000) so that five years after the Local Government Code (RA 7160) was passed by Congress. This is a devolution policy, by definition a political decentralization involving transfer of substantial functions, resources and power from the central to the periphery. Administrative decentralization or deconcentration had been resorted to several times in the past as powers were transferred not to local government but to the local, field offices and extended arms of national agencies. In devolution, according to the Code's premier author, Aquilino Pimentel Jr. (2000:1), "only Constitutional and legal limits constrain the use of devolved powers, functions, and money." Decentralization is argued to improve governance and public service by increasing allocative and productive efficiency (World Bank, 2001 [a]). Local governments can determine local preferences better than the national government and can therefore tailor services to these preferences. Decentralization is also supposed to rationalize costs. By taking government closer to the consumers, accountability is enhanced, bureaucracy is minimized, and local costs are better taken into account. With devolution, "the nation's governing structure is being recast from top to bottom in a process as consequential on the political front as liberalization initiatives are on the economic front" (Hutchcroft, 1996: 14). It was seen as a triumph of civil society that backed Aquino and of local officials who were tired of securing permits from Manila to do as little thing as buying a garbage truck (Arroyo, 2001). The Code aimed to achieve those goals by its sweeping provisions that:

  • devolved the responsibility for basic a) health services, b) agriculture, c) social welfare, and d) environmental programs from national government agencies to provinces, cities, and municipalities, with corresponding power and resources, and to a limited extent, to barangays;
  • increased the share of LGUs from internal revenues and enlarged local revenue-making powers;
  • mandated wider private sector and people’s participation in local government decision-making and implementation, and instituted local special bodies such as health boards, school boards, development councils and pre-qualification, bids and awards committees, and,
  • gave new meaning to local democracy and autonomy by instituting measures to promote local accountability.

In the area of human resource management, local governments are given authority by the Code for organizational development and HRM in the following provisions:

“Section 3 (b) - There shall be established in every local government unit an accountable, efficient, and dynamic organizational structure and operating mechanism that will meet the priority needs and service requirements of its communities”;

“Section 18 - Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities”;

“Section 76 - Every local government unit shall design and implement its own organizational structure and staffing pattern taking into consideration its service requirements and financial capability, subject to minimum standards and guidelines prescribed by the Civil Service Commission.“

The Code also provides for a Local Personnel Selection Board in every locality that shall advise the local chief executive in personnel recruitment matters, in an attempt to limit the influence of politics in selection.

V. Problems Implementing the Devolution of Personnel

Several issues came about as the central government transferred the bulk of its employees in the areas of health, agriculture, social welfare and environment, among others, to LGUs. These were documented in the early goings of the policy that can serve as platform for exploration of the biggest human resource challenges facing local authorities. Studies note the initial problems as: a) the increase in size of the local bureaucracy and the low financial absorptive capacity of LGUs; b) the administrative snags in the transfer of their salary items during the transition year, including the misallocation of some positions in some department; c) mistrust between transferred national employees and local bureaucrats; d) questions of loyalty to the local chief executive and nonabsorption of some personnel who had personal issues with local politicians; e) career advancement and personnel development concerns; f) resignation of some in order to avoid having to work in local government, causing further demoralization to the transferees (ARD 1994; Legaspi, 1995; Tapales, et al., 1996; Sajo, et al., 1998).

Philippine LGU personnel complement greatly increased because of devolution. When the transfers were completed, the total number of devolved employees from national agencies totaled more than seventy thousand (see Table 1). The LGUs relied mainly on the Department of Budget and Management and the Civil Service Commission in sorting out which employees must be absorbed, by which local government unit, and to receive how much. Loyalty issues arose mainly because of the salary issue. Devolved employees who were pessimistic of their welfare at the local level were not eager to show loyalty to local politicians. On other hand, original employees of the LGU were wary of their new co-workers. These were sorted out by several dialogues in the early goings of the devolution, facilitated by representatives from both sides (Joaquin, 1995).

Reluctance to serve LGUs also stemmed from professional development concerns; devolved employees saw the lack of career opportunities with local government. Career development programs are absent for employees who wish to continue to hone their skills, have access to and find suitable positions in higher levels of government. Employees from the Department of Health (DOH) were not eager to leave their more promising careers in the national government.

Table 1. Employees Absorbed by LGUs from National Agencies

National Agency / Number of transferred employees
Department of Health (DOH) / 46,107
Department of Agriculture (DA) / 17,667
Department of Environment and Natural Resources (DENR) / 899
Department of Budget and Management (DBM) / 1,650
Philippine Gamefowl Commission (PGC) / 25
National Meat Inspection Commission (NMIC) / 9
Total / 70,498

Source: Mistal, 1986 in Tapales, et al., 1996.

Although eventually the transfer was completed by 1995, many lingering issues point to the necessity of a more comprehensive human resource management and development approach in local government. When previously local politicians had small organizations run traditionally, now they have more of two things: responsibilities and personnel. Adapting managerial structures and HRM policies and practices to these new responsibilities are urgent. The Code expressly calls on them to exercise more modern management and less political patronage. Article 164 (b) of Rules and Regulation Implementing the Local Government Code states that:

“The local chief executive shall be responsible for human resource management and development in his LGU and shall take all personnel actions in accordance with the constitutional provisions on civil service, pertinent laws, rules and regulations, including such policies, guidelines and standards as CSC may prescribe."

Any individual paid mainly or wholly out of public funds is subject to human resource management. The literature distinguishes between personnel management and human resource management. Personnel management has an image bound to rigid routines of employee hiring and firing. In contrast, HRM:

  • “emphasizes the integration of its mission and future direction of the planning and management of its work force,
  • fosters a collaborative relationship between the management and employees and encourages a employee involvement, and
  • addresses not only the development and motivation of individuals employees but also the development work units in the organization as a whole” (U.S. General Accounting Office, 1987, page 60, in Ban,1998:24).

The main themes should be planning, collaboration, and development of both people and processes. HRM in that sense is quite new to the vocabularies of LGUs. Nine years after the devolution was accomplished, local authorities are still beginning to appreciate various human resource challenges they are facing. Coupled with learning how to perform new tasks, local authorities grapple with long-term issues of equity and personnel capacity.

Equity and compensation issues. There is a lingering clamor by local employees, led by those who were transferred from central agencies, for salary equity, as the local bureaucracy generally pays lower than national bureaucracy. Compensation theory identifies three different types of equity: external equity, internal equity, and individual equity (Wallace and Fay, 1988). While external equity uses the market as gauge, internal equity deals with the value to the employer, in our case the government, of the work being by employees. The issue in the country is that, despite the Salary Standardization Law passed by Congress, local government pays lower than the national agencies. This problem even led to a bill successfully passed in 1995 at the behest of devolved Health employees for “re-centralization” of health services – including personnel. Health employees are among the most organized employee sector in the country. During the lobby, one could count almost all types of health workers (doctors, midwives, nurses, office staff) joining the petition. The DOH, despite public pronouncements of going ahead with devolution, was sending mixed signals (Perez, 1998), to the exasperation of local officials. Only the veto of President Fidel Ramos removed the hesitation to decentralize. To appease the discontented workers, Congress created a benefits package called the Magna Carta for Health Workers implemented gradually with “augmentation funds” from the national government. Nonetheless, at least three more bills are filed in the present Congress to reverse decentralization (Senate Bill 1172, House Bill 1008, and House Bill 1596), evidence that centralist tendencies remain. This also proves the idea that devolved employees have strong urges to maintain ties with parent agencies, and vice-versa (World Bank, 2001 [b]).

The salary expenditure ceilings of LGUs (Section 325, RA 7160) are also seen as too low to address equity issues; low-income towns may only allocate a maximum of 55 percent of their budgets for personal services; but studies done by the Center for Local and Regional Governance, where the student worked, found that in general, the average expenditures for salaries is 60 percent, with the poorer towns using up as much as 80 percent of their budget. This practice is supposed to be controlled by the national Departments of Finance and of Budget and Management, but control mechanisms are weak in the country.

Apart from the issue of ceilings, income is itself an issue. The Code enlarged the taxing powers of LGUs but there have only been a few bold ones observed to be exercising their new powers. Most LGUs depend on grants and transfers from internal revenue allotment (IRA) instead of raising locally-sources income. Observers called it a “substitutive effect” by the decentralization policy that raised local share from the IRA (Tapales, et al, 1996).

There are calls for overhauling the compensation system at the local level because of inequity within local government itself - the transferred employees carried with them their higher-paid position items. In the beginning it was suggested by some local officials that they would either "freeze" the pay raises of devolved personnel until such time as the local staff of equal salary grades achieve parity - a process that could lower morale as it would take time - or reduce the benefits of devolved employees but this raised a howl (ARD, 1993). One of the biggest proposals in Congress now is the integration of the civil service so that career paths are continuous across all levels of government – employees who face dead end in local government in terms of position and salary could opt for lateral entry into national agencies, which generally pays more.