Decentralization's Impact: Unseen Struggles of Local Government Workers in Asia

This article explores the findings of an ILO study on the working conditions of subnational government (SNG) workers in South and Southeast Asia, highlighting the challenges of fiscal autonomy, labor rights, gender equity, and social security. The study reveals the uneven impact of decentralization on SNG employment, calling for stronger policies to protect workers and promote inclusivity.

Decentralization has been a driving force in reshaping public administration across South and Southeast Asia, but how has it impacted the workers on the front lines of local governance? A recent study by the International Labour Organization (ILO) delves into the working conditions of subnational government (SNG) employees in Bangladesh, Nepal, Malaysia, Indonesia, and the Philippines, uncovering a complex landscape shaped by varying degrees of autonomy, fiscal capacity, and labor rights.

The Impact of Fiscal Autonomy on SNGs

One of the central themes explored in the report is the varying levels of fiscal autonomy among SNGs across the five countries studied. Fiscal independence, or the ability of local governments to generate and control their revenue, directly influences the effectiveness of decentralized governance. In Indonesia, for example, while higher-tier SNGs like provinces enjoy more financial resources, lower-tier SNGs heavily depend on intergovernmental grants. This dependency often restricts their ability to implement policies that cater to local needs, creating a gap between the expectations of decentralization and the realities on the ground.

In contrast, the Philippines sees its local governments deriving most of their fiscal reserves from central government transfers, which, while ensuring a steady flow of funds, may limit the independence of SNGs in making fiscal decisions. Malaysia, the only federal state among the countries studied, has a different challenge. Here, SNGs have limited tax autonomy, with most tax rates determined by the central government, potentially curbing the financial self-sufficiency that is crucial for effective local governance.

Labor Rights Under Scrutiny

The legal protections afforded to SNG workers vary significantly across the countries, with mixed results in terms of safeguarding labor rights. Malaysia’s recent amendments to the Employment Act of 1955 have expanded worker protections, signaling a move towards greater labor security. However, in Indonesia, the Omnibus Law of 2020, which was introduced to boost investment, has faced criticism for restricting workers' benefits. This divergence in labor regulations highlights the uneven approach to workers’ rights within the region, with some countries making strides towards better protections, while others fall behind.

The report also draws attention to the growing trend of informatization and privatization within SNGs, particularly in Malaysia and Bangladesh. The involvement of private contractors in public service delivery has led to the erosion of labor rights, with workers facing reduced job security and diminished benefits. This shift towards privatization has raised concerns about the long-term impact on the quality of public services and the working conditions of those who deliver them.

Gender Equity and Social Security Challenges

Efforts to address gender equity and social security in SNGs have been inconsistent across the region. In Indonesia, Bangladesh, and Nepal, social protection for SNG employees is limited, often excluding temporary or contract workers who make up a significant portion of the workforce. This lack of coverage leaves many workers vulnerable, particularly in countries where informal employment is prevalent.

Gender equity remains an elusive goal in many SNGs, despite the presence of legislative measures and dedicated bodies for gender mainstreaming. Women are underrepresented in senior positions and are often relegated to lower-paying, less secure jobs. This disparity underscores the need for stronger policies and enforcement mechanisms to ensure that public sector employment becomes more inclusive and equitable.

The Road Ahead for SNG Workers

The findings of this study paint a complex picture of the challenges faced by SNG workers in South and Southeast Asia. While decentralization has the potential to enhance the efficiency and accountability of local governance, its impact on workers has been uneven. Fiscal constraints, inconsistent labor protections, and persistent gender inequities are just some of the issues that need to be addressed to ensure that SNG employment is both fair and inclusive.

As countries continue to pursue decentralization, there is a pressing need for policies that not only empower local governments but also protect the rights and well-being of the workers who make these governments function. The ILO’s study serves as a critical reminder that the success of decentralization should be measured not just by the autonomy of SNGs, but also by the quality of employment they offer.