Rising unhappiness and inequality in Malaysia
IN the recent Sustainable Development Social Network’s World Happiness Report (2014), Malaysia ranked 61st in the company of Croatia and Libya. In 2013, Malaysia ranked 56th. What is more alarming is we recorded a decrease of 0.36 in happiness. Even neighbouring Indonesia recorded changes in happiness ranking from 2005-2007 to 2012-2014. Indonesia recorded an increase of 0.38 in the happiness level from 2012-2014, followed by Thailand (0.61) and Singapore (0.51).
In spite of a robust economy and good gross domestic product (GDP) figures, and the fact that we are not far from achieving a developed-nation status, our ranking in the World Happiness Report has gone down.
Households in the country have remained constrained by poor salary increments amid rising cost of living and goods and services. Most people do not feel better off now than they did previously.
According to Dr Frederico Gil Sander, the World Bank Senior economist for Malaysia, Malaysia’s “exceptional” GDP growth in the last two quarters had been driven mainly by strong export recovery. However, the spill-over effects had not been as strongly felt by many because of the limited linkages of the country’s export-oriented industries with the domestic sectors.
The World Bank’s latest Economic Monitor report on Malaysia published last year finds that the contribution from domestic intermediaries to the value-added of Malaysia’s electrical and electronic exports is only seven per cent, compared with that of South Korea, for instance, at 31 per cent.
The report indicates that multinationals in Malaysia source less than 40 per cent of their inputs from domestic firms compared with 46 per cent in Vietnam. Therefore, there is one area in the economy (exports) that is doing well, but it is actually concentrated on a relatively few number of firms.
According to Sander, Malaysia’s relatively low level of wages at around 30 per cent of GDP could also explain the limited impact
felt by the masses despite the strong growth of the country’s economy.
Even though growth was accompanied by a dramatic reduction in poverty from 49.3 per cent in 1970 to one per cent last year, pockets of poverty exist and income inequality remains high relative to the developed country Malaysia aspires to emulate. The Gini coefficient of income inequality stood at 0.41 in Malaysia last year, compared with 0.31 and 0.33 in South Korea and Japan (both as of 2010), for example.
The total number of households as of last year stands at seven million. One household on average comprised 4.3 members (Malaysian Employers Federation). According to the Statistics Department’s wage survey, average monthly wages of about nine million workers surveyed in Malaysia in 2012 and 2013 were RM1,916 and RM2,052 respectively.
Perhaps the most crucial aspect about household income was purchasing power of income, said Universiti Malaya senior lecturer Dr Lee Hwok Aun. According to the 2012 Household Income and Basic Amenities Survey (HIS/BA 2012) the bottom 40 per cent of Malaysian households earned only about RM1,800 per month. Additionally, while the HIS/BA 2012 already noted that the average Malaysian household earned RM5,000 a month, 50 per cent of them actually earned less than RM3,626 monthly.
According to Sander, the low wage level is a challenge to many countries and the government is already addressing the issue.
The government should continue to carry out initiatives, such as implementing a minimum wage, providing 1Malaysia People’s Aid (BRIM), expanding the 1Malaysia People’s Shop (KRIM), conduct strict enforcement on prices of goods, building more farmer’s markets and providing more business opportunities, to increase the average monthly income.