KUALA LUMPUR: Middle-income households — a majority of them which do not receive cash aids from the government — are experiencing slower growth in their earnings.
Meanwhile, the low-income group’s earnings, known as Bottom 40 (B40), have increased in the fastest over the past three years.
The income increment among the B40 was mainly driven by the government’s financial assistance, for instance the Bantuan Rakyat 1Malaysia, known as BR1M — particularly among the less well-off — according to the outcome of a survey done by Khazanah Research Institute.
Its managing director Datuk Charon Mokhzani noted that overall household income improved between 2012 and 2014 by an average of RM1,141 per month. Compared with 2012, average household income grew to RM6,141 in 2014 from RM4,585 in 2012.
However, he pointed out that nominal salaries and wages grew at a much slower pace of 3.3% in compound annual growth rate (CAGR) terms between 2012 and 2014 — a sign of relatively low labour productivity growth.
The average Malaysian salary is only RM1,600 per month, although those who live in urban areas or higher educated ones could earn more, the survey shows.
The institute’s research director Dr Muhammed Abdul Khalid commented that going forward, it would be even more challenging given that economic growth is moderating — the number of unemployed remains high and inflation has eaten into Malaysians’ wages.
“We are experiencing low economic growth, while the labour market is not as good as previously. The number of unemployed increased by 10% last year,” he told the press after the launch of the research report and the “Map of Malaysia” online portal yesterday.
“Last year, wages in urban areas only grew 3%, if minus inflation, wages growth is almost zero or negative,” Muhammed added.
The report also raised concerns about food prices escalating at a faster pace than overall inflation.
“This is something we need to look into as food prices affect everybody, and for most people, food is the thing they spend most money on,” said Charon.
Between 2011 and 2015, food price inflation was 3.6% on average, whereas overall inflation was 2.4% over the same period.
The richest households allocate 9.9% of their monthly expenditure or RM992 per month on food at home, while the poorest households, who earn less than RM2,000, spend RM403 or 30.4% of their monthly expenditure on food.
The report also highlighted low household savings, at 1.4% of adjusted disposable income.
Employees are obliged to contribute to the Employees Provident Fund (EPF), but not all Malaysians are members of EPF. Active EPF members consist of less than half of the total Malaysian workforce, the report said.
While savings are low, household debts remain high as households earning less than RM3,000 a month have a leverage ratio of seven times their annual income on average, while higher-income households have an average leverage ratio of around three times, according to the report.