KUALA LUMPUR: The Malaysian Trades Union Congress (MTUC) has hailed the government's bold decision to revise the national poverty line index (PLI)
Congress secretary-general J. Solomon said the move to substantially revise the PLI from a monthly household income of RM980 to RM2,208 means the country's poverty rate is now at a more realistic level of 5.6 per cent.
"We are happy that there were enough voices of reason within Putrajaya to make these important adjustments, as the 0.4 per cent poverty rate that stood previously was based on an archaic methodology of calculation which failed to capture the gravity of the problem," he said in a statement today.
Solomon added that he welcomes the government's acknowledgement that the RM980 poverty line was grossly low, and made a revision based on optimum food requirements and healthy eating, as well as 146 non-food items included in B20 households' spending patterns, as listed in the 2019 household expenditure survey.
He said the Congress believes the government would agree that the new PLI of RM2,208 can be further improved, considering the benchmark is for a family of four to live actively and healthily.
"This is to cater for the high cost of living in urban areas where 75 per cent of Malaysians are employed, with many of them in low-paying jobs and saddled with high household debts due to the spiraling cost of living," Solomon said.
He added that Bank Negara Malaysia has estimated that up to 27 per cent of households in Kuala Lumpur are earning below the living wage – the level of income needed for a household to afford a minimum acceptable standard of living.
The RM2,208 benchmark for poverty is considerably less than the RM2,700 monthly income MTUC has been urging the government to set as the minimum living wage, especially in urban areas," he said.
"Nevertheless, establishing a new index for the PLI at more than double the monthly income set previously, bodes well for the government's pledge to tackle poverty with more realistic data.
"This is very important as poverty has increasingly impacted Malaysia's 15 million workforce over the years, and more so now due to the economic fallout as a result of the Covid-19 pandemic," he said.
Solomon said the revision of the PLI also showed that the government had taken seriously the findings of Philip Alston, the former United Nations special rapporteur on extreme poverty and human rights, whose report debunked the government's earlier claims that poverty had been virtually eradicated in Malaysia.
"It must be noted that based on the new methodology of calculations, the government has now acknowledged that the national poverty rate in 2016 should have been close to 8 per cent and not 0.4 per cent.
"It also means that at least for the past four years, Putrajaya failed to address the needs of millions of people who were living below the poverty line, but were not recognised as poor because of the antiquated way data was collated," he added.
Solomon said although the poverty rate dropped from 7.6 per cent in 2016 to 5.6 per cent last year based on the new PLI, poverty is likely to worsen considerably in the coming months as hundreds of thousands of workers have been laid off, or forced to take deep pay cuts.
"As such, MTUC hopes the establishment of a new PLI will bring forth effective public policies which would create jobs and enable workers to have better wages, more disposable income as well as an increase to their EPF savings for retirement," he said.
Those mired in poverty are from the B40 and M40 groups of blue-collar workers whose salaries have largely stagnated and are unable to sustain the high cost of living, forcing them to incur high household debts. This is a key factor that has accelerated poverty in urban Malaysia, he said.
"MTUC calls on the relevant ministries and public agencies to give top priority to Datuk Seri Mustapa Mohamad's (Minister in the Prime Minister's Department for Economic Affairs) call that they pay heed to the 2019 PLI in reviewing and formulating policies related to poverty eradication and social assistance.
"We agree with the minister that only by using accurate statistics can the government formulate the right strategies and policies, especially in drawing up the 12th Malaysia Plan, which will be tabled in Parliament early next year," he added.
Solomon said with the new PLI set at RM2,208, the government must now acknowledge that the minimum wage of RM1,100-RM1,200, especially for urban areas, is not realistic nor in tandem with the cost of living.
"As the poverty index is now set at more than RM2,000, surely the minimum wage must also be adjusted accordingly," he added.
Considering that the poverty line should include having the resources to lead a healthy, active and dignified life and being able to participate meaningfully in society, Solomon said MTUC strongly urges the government to revisit the low minimum wage and bring it on par to the living wage proposed by Bank Negara Malaysia.
He said government figures also show that income inequality is widening in the country.
"This inequality must be addressed promptly and not be left to 'market forces' or other lame excuses often offered by employers and politicians. The wealth disparity in Malaysia has grown wider, as the workers' share of the nation's prosperity has been reduced to almost nothing despite being the front liners in building this country," he said.
Solomon also said that MTUC congratulates Prime Minister Tan Sri Muhyiddin Yassin and Mustapa for their firm political will in taking the bold step to recalibrate the poverty index of the country to a much more realistic one that will help the government address the problem of poverty more effectively, both in urban and rural Malaysia.