L oc a l Gov er n me n t A dmi n is tr a ti on    |   127  

 
128   |    Loca l G ov er nme n t Ad mi n is tr a ti on 
 
8.0 INTRODUCTION
Local government’s personnel systems are the foundation upon which an organization’s
work is performed.. When discussing the decentralization of power, the capability of local
governments to handle the administrative duties that may be transferred to them is often an
important issue. It is therefore necessary to discuss in detail the characteristics of local
governments' personnel administrations and organizations.

Expectations from local governments are also very high these days. They are not only
required to attain certain "national minimum" levels in various areas of administrative activity
and service but also to cater to the particular and special needs of their communities. Under
such circumstances, much more importance attaches to the quality and capability of local
governments staff. .

Local governments depend more on their manpower in comparison with the national
government, which makes it more important for them to hire capable persons and to develop
the capabilities of these employees to the greatest degree possible. In order to do this, it is
necessary to provide adequate compensation and treatment, but the financial resources
available for personnel costs are limited. Hence a major issue faced by local governments is
how to draw out the capabilities of their employees under the restraints imposed by limited
fiscal resources.

Local government have various types of personnel systems.

1. Separated personnel system

2. Integrated personnel system

3. Fusion personnel system

8.1. CLOSED / SEPARATED SYSTEM

In this system, local councils behave more like a private organisation and have full
administrative autonomy. They have full autonomy over hiring and firing of their staff. They
can also determine the terms and conditions of service for their staff for example salary and
hours of work. There is no transfer of staff to other organisations except if they resign.

L oc a l Gov er n me n t A dmi n is tr a ti on    |   129  

 
 8.1.1 Advantages of the Separated personnel system
™ It enables local councils to practice full decentralization and act as a body
corporate.
™ It creates greater loyalty to the organization since the staff cannot be
transferred.
™ It can decide on salary and other terms of service for staff such as bonus,
annual leave, medical benefits. It can also help bigger councils to attract
better staff since they can pay them more.
™ Local councils can take into consideration local factors such as lower salary if
their staff are from smaller and rural areas. For eg. a small council such as
Jasin District Council can pay less to their staff since the standard of living in
Jasin is much lower when compared to a big city such as KL.

8.1.2 Disadvantages of Separated personnel system

™ The staff cannot transfer and it can lead to lower morale of staff.
™ Less promotion prospects for staff since there will be stiff competition for
promotions.
™ There might be lack of training for staff since the councils have to provide their
own training or send them to other institutions for training.
™ A high turnover of staff especially if prospects for promotion and transfers not
available.
™ There will be a staff shortage in smaller councils.
™ There will be a lack of professional staff such as engineers especially in
smaller councils that cannot afford to pay them lucratively.

8.2. FUSION PERSONNEL SYSTEM

This personnel system is practised in Malaysia. This personnel system has elements of both
the integrated and separated personnel systems. Hence local councils can still hire and fire
their own staff but for group A staff, firing of the staff needs approval of the state
government. Local council staff cannot transfer to other councils. Wages and terms of
conditions of service will be decided by the Federal Service Commission (JPA)

130   |    Loca l G ov er nme n t Ad mi n is tr a ti on 

 
8.2.1 Advantages of the Fusion personnel system
™ Federal government can help to fill vacancies especially if councils lack
professional staff.
™ Since terms and conditions of service are standardised, it will benefit smaller
councils which might be able to pay higher wages.
™ It can help to provide adequate training for staff.
™ At the same time, councils still maintain their administrative autonomy by
being able to hire their own staff.

8.2.2 Disadvantages of Fusion personnel system

™ It reduces full administrative autonomy of councils.
™ It does not benefit the bigger councils who have the financial resources to pay
higher wages for their staff.
™ Local councils will be under the control and influence of federal government
where the latter can dictate their policies to councils.
™ Lack of motivation for staff since they cannot be transferred.

8.3 INTEGRATED PERSONNEL SYSTEM

All council staff are under one central body or commission that is the Local Government
Commission in the same way as we have the Public Service Commission (JPA) for federal
civil servants. The local Government Commission decides on terms, salary and conditions of
service for local council staff. It is also responsible for hiring, firing and discipline of staff. It
also supervises movement of staff from one council to another.

8.3.1 Advantages of the Integrated personnel system

Promotion is more mobile because staff can be promoted to other councils if there is
a vacancy for promotion. It can produce better conditions of service for staff such as
better salary, allowances and hence encourage more people to work for a council
whether it is a small or big council. It can help to provide centralised training for staff
such as INTAN provides training for all government servants It can help pool talent,
expertise and experience of the staff. Hence those councils that lack professional
and talented staff can be provided with better qualified staff or the necessary skills.
It can help solve the problem of high turnover of staff especially in smaller councils

L oc a l Gov er n me n t A dmi n is tr a ti on    |   131  

 
 8.3.2 Disadvantages of the Integrated personnel system
Staff might form their own trade unions and demand better pay and prospects from
the centralised body. The centralised body has to subsidize the smaller councils who
might not have the finances to pay higher salaries for staff. There might be a problem
of maintaining uniformity in standards among the councils especially in terms of
quality and efficiency of staff. Local conditions and factors will not be taken into
account especially in hiring of staff.

8.4 EVALUATION OF THE PERSONNEL SYSTEM IN

LOCAL GOVERNMENT
Malaysia practices the fusion personnel system in local government. This system provides
some level of administrative autonomy to local government since the local council can hire
and fire their own staff except for the heads of departments. However, this system also does
not allow the staff to transfer to other organizations. This will in turn create a strong sense of
loyalty of the staff towards their councils.

The advantage of this system is that it allows local government to practice administrative
decentralization to a certain extent. It also allows the councils to hire and fire their own staff
which enhances its administrative autonomy.

However, the disadvantage of this system is that the terms of condition of service such as
pay and compensation for staff is not decided by the council but by the central agency which
is in this case the Public Service Department (JPA).What this actually means is that the local
government staff are treated like all other government staff and are pensionable. This in turn
would not benefit the bigger councils such as City Hall KL which have to pay the same scale
of wages to their staff as the smaller councils. The bigger councils might also not be able to
attract more professional and experienced staff since the pay is not decided by the councils.
It would however benefit the smaller councils who would not have to pay higher wages for
their staff.

132   |    Loca l G ov er nme n t Ad mi n is tr a ti on 

 
However since there is some form of centralization in terms of condition of service, the staff
will benefit from federal government initiatives such as centralized training can be given for
all local government staff. A good example is INTAN which provides a multitude of training
courses especially for local government staff.

8.4.1 Methods to improve local government personnel

systems
There are a number of methods that can be used to improve the local government
personnel systems. Among them are as follows:

8.4.1.1. Well planned horizontal integration system

It is the same as having an integrated local government service or
commission as in Ireland and Sri Lanka. An integrated local government
service commission can help by:
1. having common standards of appointment
2. allowing promotions among councils
3. standardising terms and conditions of service
4. setting common standards of performance

8.4.1.2. The Vertical Integration system

This is where central government helps out local councils in areas such as
accounting, tax assessment by sending or seconding their federal staff to
councils. It can help solve shortage of professional staff in councils. It
Increases local competence. It promotes more uniform treatment of technical
services. Saves smaller councils money and manpower that they do not have
and it widens career opportunities for such staff

8.4.1.3. Compensation and incentives

The federal government should give more benefits and allowances and
privileges to local council staff than to higher government staff, for example,
local council staff can be given loan preferences, free public transport and
scholarships for their children. More training should be provided for council
staff in areas such as budgeting, accounting and IT.

L oc a l Gov er n me n t A dmi n is tr a ti on    |   133  

 
134   |    Loca l G ov er nme n t Ad mi n is tr a ti on