KUALA LUMPUR (July 11): The Malaysian Trades Union Congress (MTUC) has lauded the government's “bold” decision to revise the national Poverty Line Index (PLI) and called for a revision of the minimum wage.

MTUC secretary-general J Solomon said the revision of 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%.

"We are happy that there were enough voices of reason within Putrajaya to make these important adjustments as the 0.4% 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.

“The revision of the PLI also shows that the government has taken seriously the findings of former United Nations (UN) special rapporteur on extreme poverty and human rights Philip Alston, whose report in August last year debunked Putrajaya’s earlier claims that poverty had been virtually eradicated in Malaysia,” he added.

Solomon said while the RM2,208 benchmark for poverty is considerably lower than the RM2,700 monthly income the MTUC has been urging the government to set as the new minimum living wage, the fact that the government has set a new 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.

“Although the poverty rate dropped from 7.6% in 2016 to 5.6% 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.

“Those mired in poverty are from the B40 and M40 (bottom 40% and middle 40%) groups of blue-collar workers whose salaries have largely stagnated and 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,” Solomon emphasised.

He noted that Bank Negara Malaysia (BNM) had estimated that up to 27% of households living 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.

Given the mismatch between the PLI and the minimum wage, the MTUC called for the government to revisit the low minimum wage and bring it on a par with the living wage proposed by BNM.

“With the new PLI set at RM2,208, the government must now acknowledge that the minimum wage of RM1,100 to RM1,200, especially for urban areas, is not realistic nor in tandem with the cost of living.”

“As the Poverty [Line] Index is now set at more than RM2,000, surely the minimum wage must also be adjusted accordingly,” Solomon said.

The Department of Statistics Malaysia’s (DOSM) methodology was recently updated to reflect the PLI change, the first time since it was reviewed in 2005.

This means the number of households now categorised as poor has increased from 24,700 in 2016 to 405,441 last year.