Malaysia’s Wealth Inequality

If you have more than RM155,000 savings in the Employees Provident Fund (EPF), you are among the top 10% of EPF’s 14.9 million members. In total, the top 10% have 59.1% of EPF’s total assets of RM936.2 billion.

The bottom 10% of EPF members have less than RM659 in savings. In total, their savings is barely 0.05% of EPF’s assets. The wealth of the top 0.3% of EPF members exceeds RM1.1 million each which is equivalent to the bottom 65.4% with savings of less RM37,500 each.

The above picture is how Malaysia is unable to address structural issues of wages. The minimum wage of RM1,200 per month is very low in urban areas and reflects salaries of graduates 30 years ago.

Source: https://www.nst.com.my

The cost of living has increased but starting salaries and minimum wage has stuck in a “low-cost” economy environment. To live in Kuala Lumpur, one needs a living wage of RM2,700 per month and for a family of four household income must be RM7,000 per month at the minimum.

To address these issues, a multi-pronged strategy has to be mapped-out:

• Raise retirement age to 65
• EPF will secure Government support to “top-up” account 1 of the bottom 10% impacted by Covid-withdrawals;
• Increase minimum wage to RM1,500 initially, with the view of RM2,000 in 3 years time; and 
• Establish a joint public-private commission on wages

There are many other measures needed but for an economy to “move-up” the value chain, the Government has to devise and implement steps that realises Industry 4WRD. Unfortunately MITI seems to be lost after a plan was devised! Otherwise our Gini coefficient will remain at 0.41 for the foreseeable future and we are no better than Haiti on this index.

Reference:

Income and wealth disparity, Pankaj C. Kumar, Starbiz, 19 December 2021