Wednesday, December 1, 2010

Bridging the income gap...

I would like to second NUBE's (National Union of Bank Employees) sec-gen J Solomon for his statement that the government, Malaysia's big corporations and the private sector should look seriously into the income gap in the country, which is a deterrent to achieving the objectives of 1Malaysia.

Indeed, he said the narrowing of income gap (here) is an imperative towards the sustainability of economic development which has to tie in to social development of the people of any country.

Widening income inequality can be a major obstacle to the unity and solidarity that '1Malaysia' envisions. Since Merdeka in 1957, the top 20 per cent of income earners in Malaysia have benefited much more from economic growth than the bottom 40 per cent.

It is significant that the report of the National Economic Advisory Council (NEAC) on the New Economic Model (NEM) admits that, 'The bottom 40 per cent of households have experienced the slowest growth of average income, earning less than RM 1,500 per month in 2008.'

The wage trend in Malaysia recorded only an annual 2.6 per cent growth during the past 10 years, compared to the escalating cost of living during the same period. It explains why almost 34 per cent of about 1.3 million workers earn less than RM700 a month, below the poverty line of RM720 per month – a point emphasised by the Minister of Human Resources, Dr S Subramaniam, recently, as written by Dr Chandra Muzaffar (here).

Many economists and sociologists today feel that the term 'minimum wage' itself, which is the product of an earlier era, should be replaced with the term ' living income' and linked to the dignity of the human being.

A living income, according to him is a minimum level of income by which all human beings can provide for themselves and their dependents the five basic material human needs – food, housing, clothing, health care and education. These needs are vital for protecting human dignity.

The United Nations (UN)’s recent report on the Economic and Social Survey of Asia and the Pacific, urged governments to increase their social spending and invest more in their own societies to ensure a more equitable development of their economies.

There are economic benefits by doing so: By lifting more of their own people out of poverty and improving the income status of their citizens, the larger the consumer class and developed markets that countries could create for the future.

And the humane side of the argument is summed up well by UN Resident Coordinator for Malaysia, Kamal Malhotra, who says: “Economic development is not solely about numbers, trade, finance and wealth creation, but it is also about the welfare of the people.”

Economists say a country’s prosperity should benefit its people on the overall, not just the selected few, otherwise development will not bring much meaning.

In the case of Malaysia, its quest to become an advanced and high-income economy by the year 2020 has to be accompanied by efforts to enhance the social mobility of its people. As it stands, the gap between the rich and poor in the country remains wide, even though the overall poverty rates have been reduced significantly over the years.

It is estimated that around 4 per cent of all Malaysians, and more than 7 per cent of rural Malaysians, are currently still living below the poverty line. The bottom 40 per cent of households, on average, earn less than RM1,500 per month.

“Having 40 per cent of the country’s households in the low-income category is definitely a stumbling block to becoming a high-income, industrialised nation,” says Tan Sri Ramon Navaratnam, chairman of ASLI Centre of Public Policy Studies and former Treasury deputy secretary-general (here).

In encapsulating the principles of the NEM, Datuk Seri Idris Jala used to say: “Let us all be rich (earning high income), everyone together (inclusiveness), not just for one day or two, but for generations to come (sustainability).”

But, can we?


15 comments:

money changer said...

During the 1980s, economists and other observers began to notice striking changes in the income gap between rich and poor. At first, there was considerable dispute over the numbers and how to interpret them. For a time, it seemed possible that the increase in inequality was transitory, a product of the deep recession of the early 1980s, and would be reversed during the subsequent economic recovery.

Eventually, however, the weight of the evidence made the trend unambiguous. It also became clear that economic expansion-even during the current boom decade-was not reducing inequality.

One intuitive measure of inequality is to compare "high-income" and "low-income" families. Suppose we define a high income level as income at the 90th percentile: that is, the income level higher than that of 90 percent of all families but lower than that of the top 10 percent. Similarly, we can define a low income level as the income at the 10th percentile.

During the early 1970s, a family at the 90th percentile had an income about six times that of a family at the 10th percentile. By the late 1980s, this ratio had risen to nearly 8-to-1, and it moved even a little higher during the early 1990s.

It didnt change much when we moved into 2010. the income gap remains wide. so, what is the objectives of introducing too many incentives when it only enriches the rich and making the poors poorer?

STH, lumut said...

bro,

so many incentives and yet we still see many people getting poorer.

why? the govt failed to reach out for them!

alfonso said...

mr jai,

Many of the lowest-paid workers are poorly educated. These workers have seen their real earnings fall dramatically over the past 25 years. A man without a high school diploma, for instance, now earns a wage that is worth about a third less than what he would have earned in 1983.

that is why we put heavy emphasis on education... dont you see it?

kerani cabok said...

jai,

di kalangan bank pun, struktur gajinya berbeza.

ada bank membayar rm1,200 kepada juruwang baru berkelulusan diploma manakala bank lain membawa rm1,800.

di sini pun sudah nampak ketidakseragaman gaji dan jurang pendapatan di antara bank.

siapa yang sepatutnya mengenakan kawalan atau memantaunya?

Anonymous said...

what the govt is doing only provides more rooms to the rich to get richer, some of them are foreigners.

those in the rural areas remain as they are... no change at all, and in fact some got poorer by the day.

din boroi said...

yes,

it is a moral issue. income gap is immoral. this will add to reasons for the poor to do things not permitted by the law.

pro-PKR said...

jangan cakap banyak la.

kerajaan yang ada sekarang memang tak pikir pun pasal ni. yang dia tahu negara mesti maju je!

soal siapa kaya, siapa miskin, siapa dapat beli jet dan siapa punya motosikal kena tarik, bukan urusan dia.

oleh itu, SOKONGLAH PKR!

neng said...

i dont have any income... so i dont know how big the gap is.

the only thing i know is, i live in a neighborhood of rich people who will spit on your face if you try to ask for a dime!

1malaysia!

nasi dan kicap said...

kadang2 dalam merancang pembangunan untuk negara, kita lupa dengan hakikat bahawa majoriti yang mendapat nikmatnya ialah orang asing dan golongan yang sudah pun hidup senang dan kaya-raya.

inilah kepincangan kerajaan sejak dahulu lagi...

lang tengah said...

just take a look at the urban-rural gap... its widening, bro! what has the govt do to redress it?

frust said...

tu la akibatnya bila kita selalu cakap besar.

nak bantu rakyat konon... memang la... rakyat yang kaya je.

kalau tak, takkan la rakyat yang cuba dibantu 30 tahun lalu masih hidup macam ni jugak?

cakap tak serupa bikin! tiap2 pilihanraya, rayu agar undi dia. dah menang, jenguk pun tak. asyik nak pikat pelabur asing tapi rakyat sendiri dah tak terpikat!

long john silver said...

i believe the govt is aware of it but nothing much can be done because our leaders are too busy bickering and pointing fingers at what the opposition leaders are doing...

Anonymous said...

Hanya UMNO & BN sahaja yang dapat membela & membantu orang melayu...BETUL KE ?

kontots said...

we are too busy in wooing foreign investors

we are too obsessed to achieving a develop status

we are too concern about who should rule the country

we are so much preoccupied with our big export

we are too busy defending our power

we are so greedy in competing with others

we are so proud to impress others with our development

... that we have forgotten our roots... the grassroots who still find it difficult to make ends meet!

rasputin said...

eh, bukan ke semua rakyat dah kaya. kan ke kita nak capai status negara maju dah ni. mana ada jurang pendapatan lagi? yang ada cuma jurang pendapat je!

kita dah nak maju, dah nak buat banyak lagi bangunan tinggi2, 100 tingkat, 200 tingkat, 500 tingkat sampai langit ke-7.

inilah wawasan kita. majukan negara. takpe la kalau rakyat miskin dan jurang pendapatan masih luas asalkan orang luar pandang kita tinggi!