KUALA LUMPUR, 1 June 2020 – Almost 2.2 million Malaysian households are more than RM1,000 short of reaching a living wage which happens on a monthly basis. This equates to a share of 31 per cent of all Malaysian households.
Post MCO the figure will certainly rise said a report analysing household income and living wages in the country by Research for Social Advancement (REFSA).
The analysis highlights the plight faced by low-income Malaysians, whose struggles had only been worsened by the COVID-19 pandemic and the resulting economic crisis.
The report adds that almost two-thirds of these households face a living wage shortfall live in urban areas, indicating the presence of a large population of underserved urban poor.
“This report offers further evidence that despite decades of median wage increases and reductions in both the Gini coefficient and official measures of poverty, a significant proportion of Malaysian households still struggle to make ends meet,” said Darshan Joshi, the author of the study as well as the lead researcher at REFSA.
The report also highlights that despite obvious – and vast – differences in the cost of living across the country, Malaysia’s flagship welfare policy, Bantuan Sara Hidup (BSH), was geographically-uniform. This means that low-income families living in inexpensive areas receive the same amount of aid as those living in more expensive areas.
The rural-urban divide also contributed to the great disparities in the monthly income required for households to lead a “minimum acceptable standard of living” across Malaysia.
“BSH provides, at most, RM1,000 per year to households with a monthly income of RM2,000. This does nothing for the millions of households (mostly urban poor) who need at least this amount on a monthly basis,” said Darshan.
In Malaysia there has long been a discrepancy between what official statistics suggest about the state of household income, and the reality. The former paints a picture of swift upward mobility: median wages quadrupled between 1995 and 2016 and in that time our Gini coefficient, the most commonly used measurement of inequality, has decreased by almost 10 per cent. Poverty, too, has been largely eliminated.
Darshan said as such some form of targeted basic income will be needed to address this issue in the short-run.
“In the longer-term, labour market reforms are urgently required. Rethinking heavy reliance on a low cost model (e.g. relying on foreign workers, examining the scope of jobs they have) increased union membership, and concerted efforts to move up value chains across sectors will all have the desired effects of raising wages. But while we put into motion plans to reform the labour market, the government should step in and play a bigger role ensuring a decent living for more struggling Malaysians. A large proportion of us need it,” he said.
Among the other key takeaways from the report are:
• Living wages vary greatly across the country, from as low as RM3,964 in rural Perak to RM7,156 in urban areas of Sabah;
• On average, 43 per cent of urban households and 59 per cent of rural households earn less than their respective living wage. This amounts to roughly 2.4 million households with incomes insufficient for them to enjoy a ‘decent’ standard of living;
• In absolute terms, twice as many urban households as rural ones suffer from the monthly RM1,000 income shortage, proving the idea that Malaysia’s urban poor are vastly underserved.
• More than 610,000 households are short of their living wage by at least RM3,000 per month, and in Sabah over 80,000 households are short by more than RM5,000 per month; and,
• Some form of targeted basic income will be needed to address this issue in the short-run. In the long-term, labour market reforms are necessary in order to increase general wage levels in Malaysia. As this study highlights, wages in Malaysia are simply too low at present.
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