Malaysia: World Bank’s report shows lower-income households, slow income growth for youth

The 21^st edition of the World Bank’s ‘Malaysia Economic Monitor’ has been launched in Kuala Lumpur on December 9. According to it, slowing income growth among lower-income households and younger workers has contributed to perceptions of being ‘left behind’.

The income growth rates for low-income Malaysians slowed between 2014 and 2016 despite the median incomes continue to outpace inflation. The report suggests that the wage growth for younger and less-educated workers has been sluggish, persistently trailing the earnings of older and better-educated workers.

Median employment income for younger workers aged between 20 and 29 grew at an annual rate of 2.4 percent, compared to 3.9 percent for those 40 to 49 years old over the same period. The increase in the monthly absolute earnings gap between these two age groups has been more pronounced, more than doubling from RM529 in 2004 to RM1,197 in 2016 (all amounts adjusted for inflation). This signifies a growing wage divide and wage stagnation for the youths.

“The cost of living is a concern which extends beyond prices. Those on lower wages spend their income to pay for essentials – rent, transportation, food – and in the end, they find not much is left for the month. The challenge for policymakers is that different solutions are needed to cater to different groups with different needs,” Malaysia’s Minister of Domestic Trade and Consumer Affairs, YB Datuk Seri Saifuddin Nasution Ismail opined.

“The National Action Council on Cost of Living was established so that efforts by different ministries and government agencies can be formulated, consolidated and discussed under one roof. This timely report by the World Bank also serves to inform efforts to better serve the people,” Saifuddin Nasution added.

“More than ever, we need to scale up investments in people to encourage sustainable, inclusive economic growth. Malaysia can make policy decisions to combat inequality and improve the lives and opportunities of the poorest,” Mara Warwick, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.

“The report draws on strong evidence to identify high-impact policies with a proven record of building shared prosperity and improving people’s access to services and long-term development opportunities,” Warwick added.