The new civil service act: federalism or centralisation?

The work on the Federal Civil Service bill, passed by the National Assembly last Tuesday, has disappointed many advocates of a truly federal system. The reason can be summed up by recalling what the chairman of the Public Service Commission, Madhav Prasad Regmi, declared before the parliamentary committee on the bill. He proposed that “provincial secretaries and chief administrative officers of local governments must be federal employees”. This “word of advice” ran directly counter to the 2015 Constitution, yet the National Assembly just followed the same words to the letter.

The Federal Civil Service Act, expected to receive approval in the Lower House next week, may mark the end of a long legislative journey for some, but perhaps the beginning of continued tussles for others. Indeed, criticism has already rung out and for good reason, considering that the power to recruit, transfer, promote, and discipline staff at provincial and local level has not been devolved to the respective levels as pledged. How will “federalism” – with the seven provinces constituting the “federal states” – ever work, critics ask, and the constitution gives them every right.

The new act and the 2015 constitution: an obvious conflict

The new act stands in obvious conflict to the constitution adopted in 2015, if nothing else then to its spirit. According to the “federal constitution”, each province has the power to establish its own “public service commission”, albeit in conformity with basic laws to be framed at the federal level, and thus to set up and manage its own “provincial civil service”. The local bodies within the province are to recruit and organise its staff in line with the system and laws of the provincial government and without federal interference.

The new act, however, effectively places the provincial and local governments in the exact opposite situation. It entitles the federal governnent to continue to post and transfer the heads of the provincial and local administrations for another ten years. The official justification? Well, the sub-national governments and their administrations first have to build “capacity” and “skills” to manage own staff. This may be true. Yet, it is indeed not difficult to think of other motives to postpone the devolution of “staffing powers”.

The new act: other motives than to await local capacity and skills

While waiting for the “Federal Civil Service” bill to reach some level of conclusion, the provincial and local governments have not been sitting on their hands. Indeed, it took over two years after the elections in 2017 for the first draft bill to be proposed. Then, until late 2021, 61 meetings were held to discuss the bill. However, when it was tabled in parliament, the legislative process stalled and was only revived in early 2024, with little happening in the intervening period. Provincial and local bodies, on the other hand, took action.

The seven provinces each established their own “public service commissions” and “civil service acts” and some local bodies did, too. While legally to await federal law as a framework, they moved ahead and began to hire their own staff, often on contract basis. Exacerbating the need for action was the fact that the federal government continued its frequent transfers of notably secretaries at provincial level and CAOs at local level, leaving some posts vacant months on end. Hiring staff was sometimes a practical necessity.

For the last seven years, an average of one-third of chief administrative officer (CAO) positions in local governments have remained vacant, mainly due to frequent transfers by the federal government. Asia Foundation, April 24, 2024.

Gandaki Province was the most successful in setting up its own civil service. Since then, it has recommended up against 3,000 staffers for recrutiment and nearly 500 for promotions. Across all provinces, public service commissions have also recommended staffers for high-level positions equivalent to joint secretary at federal level. This level is enough to qualify as secretary of a province. Despite lack of capacity and skills, perhaps, provincial governments have thus made progress in making constitutional provisions materialise.

The new Federal Civil Service Act negates all these achievements. Thus clauses 116 and 118 of the bill makes clear that federal joint secretaries, not provincial secretaries, will occupy the upper-most positions at the provincial administrations for up to 10 years from now. Similarly, the federal government will appoint also all CAOs. These clauses not only contradict the constitution but also the Employee Adjustment Act (2019) which stipulates that once provincial law is in place, a province can name its own secretary.

In this light, a larger “governance issue” can be said to underlie the new act. It can be summed up in one word which is as relevant now as under the “unitary state” in the past, namely “centralisation”. Despite major strides in making local government play a bigger role in local development, service delivery, and law enforcement, as well as other areas of public concern, the federal level – once called the central or national level – continues to hold on tight to the “strings”.

The conflict between federalism and a centralised “system”

The adoption of the Federal Civil Service Act in the National Assembly gives occasion to talk about the bigger picture. Where is Nepal headed, one might ask: towards a truly federal system or a still centralised one? The term “system” is crucial here, and many local people indeed often use it. It can mean the “formal system”. But when talking about what ails the country, it is common to add a line about how things really work and shug: “Well, it’s the system”.

The new act is not all negative. Some would say that it’s better than no act at all, for various reasons. It has clarified the situation for some staffers with respect to their “career status” as civil servants. Lack of clear rules have left many in limbo with no certainty about transfers, promotion, and career paths. Indeed, it has also created a set of formal rules that can now be either followed or contested. Some might say that at least the process has “moved forward”.

The negative side casts a long shadow, however, as a truly federal system without some provincial and local autonomy in deciding “whom to hire”, not only as peons and assistants, but also as chief officers, is unthinkable. The act has once again made the conflict between federalism and a de facto centralised “system” clear. The “system” in Nepal is centralised on a “formal” as well as “informal” level. The act seems to do little to change this state of affairs at least for another ten years. However, could it still pull things along?

A closer look: could the act still help federalism move ahead?

The new act allows the federal government to continue interfering with provincial and local administration. This has a strong informal aspect. By posting and transferring joint secretaries and under-secretaries who, as “career staffers”, are members of the federal civil service, “higher-ups” in Kathmandu maintain a high degree of informal control. Positions are used as rewards and as means of controlling provincial and local decision-making, namely through deployed “loyal” and “obedient” subordinates who will do as told.

“There is no stability in the bureaucracy of provincial and local governments as the federal government has been frequently transferring their top officials.” Khim Lal Devkota, former National Assembly member.

It is possible that some deployed staff will develop “good relations” and even “loyalty” with sub-national elected representatives. Yet, as long as a road is open to seek promotion to the federal level, and as long as federal “higher-ups” decide on transfers and advancement, chances are that the average provincial secretary and CAO will consider maintaining “good relations” even more so at “higher levels”. Without access to the “informal system” within which many decisions are made, a “career staffer” may not reach higher up.

It would be naïve to imagine, unfortunately, that elected provincial and local representatives are not also part of an “informal system”. By and large, as members of political parties for the most part, they are indeed actors in a similarly centralised system with “higher-ups” in the capital issuing orders and instructions to sub-national “party bosses” and “party workers”. Few provincial and local politicians can hope for a “party ticket” to run in the next election without maintaining “good relations” of some sort with those “higher-ups”.

It is the federal level, ultimately Ministry of Finance, which has the hands on the budgetary resources, moreover, channelling through not only a “formal” but also an “informal system”, as is often reported. Controlling the flow of resources is of concern within the federal bureaucracy as well as the party headquarters. Not only secretaries, who often rotate between ministries and departments, but also party leaderships along with ministers and MPs, not least, seek to decide in practice how, where, and when budgets are spent.

In the context of an “informal system” in which “good relations” and “hidden networks” connect all these actors in all manner of thinkable as well as unthinkable ways, the question of “federalism” becomes one of who is to control the flow of resources as well as opportunities from federal to lower levels: the provincial and local elected representatives and senior staffers – or the federal ones? It can become one of breaking “patronage ties” and “loyalties”, too.

This is at least one way of looking at it, if taking the fact of “systemic corruption” in Nepal into account. Is a truly federal system possible in the context of an ”informal system”, ever more observed to exist, in which political and administrative “higher-ups” seek to maintain control over the flow of resources and opportunities? The National Assembly’s adoption of the Federal Civil Service Act does not make it easy to be an optimist. The federal government now has up to another ten years to keep a great deal of control in its hands.

Yet, could provincial and local bodies develop a stronger sense of and desire for local autonomy? Chances are that the more elected local representatives and locally based staffers have the opportunity to make laws and take action on needs and issues in their own areas, separate from those of the “higher-ups”, the more they may begin to develop their own “agendas”. However, for them to pursue those agendas in earnest, they also need to depend less on those “higher-ups” for access to resources and opportunities. Therein lies, perhaps, the connundrum, and it is indeed a hard one to overcome.