RICH GET RICHER, POOR GET POORER IN MALAYSIA: Income disparities still widening – Khazanah Research

PETALING JAYA – Although the Malaysian household income improved between 2012 and 2014, income disparities remain large and poverty in certain areas is still high.

According to Khazanah Institute Research’s (KRI) The State of Households II Report, Malaysia’s average household income in 2014 was RM6,141 per month and median household income was RM4,585 compared with RM5,000 and RM3,626 respectively in 2012.

However, 65% of Malaysian households earned less than RM6,000 per month and 42.1% earned less than RM4,000 per month, while 11.7% earned less than RM2,000 per month in 2014.

“Although average and median household incomes have improved across all states, there are significant differences in the income distribution of households across income classes between all states and federal territories,” said KRI.

In Kelantan, Sabah and Sarawak, the largest income class comprised households earning below RM2,000 per month compared with Kuala Lumpur and Putrajaya, where the largest income class is households earning more than RM15,000 per month.

In Kelantan, 84.8% of households earned less than RM6,000 per month while only 15.2% earned more than RM6,000 per month. In Perak, 81.1% earned less than RM6,000 per month while 18.9% earned more than RM6,000 per month.

In contrast, 69.2% of households in Putrajaya and 64.4% of households in Kuala Lumpur earned more than RM6,000 per month while 35.6% in Kuala Lumpur and 30.8% in Putrajaya made less than RM6,000 per month.

In terms of wages, median and average monthly wages were RM1,600 and RM2,312 respectively in 2015. Between 2012 and 2015, median monthly wages saw a compounded annual growth rate (CAGR) of only 3.3%. Wages grew the slowest in Kuala Lumpur at a CAGR of 4.1% and fastest in Perlis at 12.5%.

Malaysia’s overall poverty rate fell by more than half from 1.7% to 0.6% between 2012 and 2014, and hardcore poverty has almost disappeared, falling from 0.2% to 0.06% (about 400 households) during the same period.

“Despite this significant achievement, there are still some pockets of poverty. According to the 11th Malaysia Plan, the poverty rate for Orang Asli in Peninsular Malaysia remains high at 34%, and for bumiputras in Sabah and Sarawak, the rates were 20.2% and 7.3% respectively.

“In addition, although the poverty rate is 0.6% (total), 11.7% of households earn less than RM2,000 and are therefore vulnerable to shocks,” said KRI.

Lower income households are also less able to afford nutritious food due to rising prices. Between 2011 and 2015, food price inflation was 3.6% on average, whereas overall inflation was 2.4% over the same period.

“A nutritionally adequate diet is beyond the reach of many Malaysians, and unaffordable for households with incomes near the poverty line, particularly in urban areas and taking other living expenses into account,” it said. – Sundaily