THE unprecedented Covid-19 pandemic which has caused many people to lose jobs or even unable to get employment resulting from business disruptions has led to an increase in financial anxiety among the rakyat.
Financial anxiety appeared as one of the emerging issues discussed between participants during EMIR Research focus group discussion for our upcoming quarterly poll. In the April-June period (2Q20), the state of financial anxiety can be seen as critical because the Gross Domestic Product (GDP) figure contracted 17.1 per cent on the back of disruptions across sectors and economic activities before the Recovery Movement Control Order (RMCO).
The question often raised by the rakyat when talking about measures introduced by the government was, "what happens next?" Let's go through some of the initiatives so far. Take the case of PTPTN loan repayment. Fortunately, the federal loan institution announced that the deferment of PTPTN loan repayment will be extended for all borrowers until the end of the year.
Besides that, the bank loan moratorium has also been extended for another three months but now it is targeted only towards the vulnerable groups namely those who lost their jobs this year and those who remain unemployed. Monthly instalments have also been reduced for Malaysians who had to take pay-cuts. Then, the reduction in Overnight Policy Rate by Bank Negara Malaysia at 1.75 per cent to stimulate economic growth which makes it cheaper to borrow for entrepreneurs and SMEs.
The short-term economic recovery plan (Penjana) announced in June also include stimulus measures to address financial anxiety such as the extension of Wage Subsidy Programme, Bantuan Prihatin Nasional payouts, hiring incentives, child care subsidy and funding facilities for the businesses. These together with the reopening of more economic sectors during the RMCO have gradually helped in tackling the unemployment problem.
In June, the number of employed persons improved by 0.7 per cent on a month-on-month basis to 14.99 million persons. Concurrently, the unemployment rate in June went down by 0.4 percentage points on month-on-month basis from 5.3 per cent in May to 4.9 per cent. Nonetheless, these measures are only for short term and again, what happens next?
Eventually, people would have to repay their loans despite the current low interest rate environment. Eventually, people will retire from their jobs and there is a need to have adequate savings as their emergency funds. Statistics show, 52 per cent of Malaysians experience difficulties to raise RM1,000 as emergency funds.
There are two things that should be the focus. Firstly, people need to attain jobs . That is why the hiring incentives alongside training incentives for the unemployed and youth known as PenjanaKerjaya comes in handy after its commencement on June 15. The objective is in line with what needs to be done – create jobs and increase employment opportunities and prospects. Whenever an initiative is executed, it is a must to perform constant monitoring to track on its effectiveness.
For instance, reports said, the Minister of Human Resources Datuk Seri M. Saravanan said over 11,000 have been hired through PenjanaKerjaya. In between June 15 and August 7, 8,170 employers have registered for the incentive with 3,177 of them hiring 11,368 workers.
However, from the total of 300,000 job seekers who are expected to benefit, the 11,368 only represent 3.8 per cent. So, hopefully more companies will take part and provide greater opportunities to more people.
What comes after earning incomes is for people to look a bit forward – retirement savings. Although now may not be the best time for everyone to start saving due to different financial commitments, Malaysians still need to be educated on basic financial knowledge to ensure financial sustainability in life.
Looking at statistics from Employees' Provident Fund (EPF) as of December 31, 2019 shows there were only 7.6
million active members out of 14.6 million members (52 per cent). This means that close to 50 per cent of the total members are not actively contributing for their retirement.
Other publicly available statistics also showed that only 24 per cent of Malaysians can afford living expenses for at least 3 months if they lose their main source of income, and close to half of Malaysians are not confident in having sufficient income stream for retirement. These worrying statistics prove that there needs to be a serious consideration to continuously educate Malaysians about financial management skills.
It can be in line with the National Strategy for Financial Literacy (2019-2023) launched last year. Financial anxiety is one crucial issue that constantly needs to be addressed to ensure sustained economic recovery.
The writer is Research Analyst at EMIR Research, a think tank focused on strategic policy recommendations based on rigorous research
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times