Malaysian households are better off: KRI

KUALA LUMPUR: The Malaysian household income has improved between 2012 and 2014 by an average of RM1,141 monthly, as revealed in Khazanah Research Institute’s (KRI) fourth publication, The State of Households II.
KRI noted that the growth in household incomes was not driven by expansion in salaries and wages, as nominal salaries and wages grew at a much slower pace of 3.3% in compounded annual growth rate (CAGR) terms between 2012 and 2014, reflecting a relatively low labour productivity growth.
Data from the Department of Statistics (DOS) showed that main sources of income for heads of households in 2014 were paid employment (65%), self-employment (16%), property and investment (11.4%) and current transfers received (7.6%).
Based on the Household Income and Basic Amenities Survey (HIS), households in 2014 have a higher median at RM4,585 and average income at RM6,141 compared with RM3,626 and RM5,000 respectively in 2012.
“Cash transfers such as BR1M have improved incomes, especially among the less well-off; it has been households in the lowest 40% of households in terms of income distribution (B40) who have experienced the fastest income growth between the two years,” KRI chairman Tan Sri Nor Mohamed Yakcop said in his speech at the launch of the publication yesterday.
As of August 2014, the government distributed some RM3.6 billion in BR1M payments to 4.6 million households and 2.3 million individuals. Before 2014, BR1M payments were not calculated as part of household income.
In 2012, income from current transfers received and property and investment were lower at 6.5% and 9.7% respectively.
KRI said the gap between rural and urban households and households of different ethnic groups is closing and the Gini coefficient, which is a measure of inequality, has improved to 0.401 from 0.431.
The poverty rate has also shrunk from 1.7% to 0.6% while hardcore poverty has decreased from 0.2% to 0.06% between 2012 and 2014.
However, some income and wealth disparities remain among the states, with 84.8% of Kelantan and 81.1% of Perak households earnings less than RM6,000 per month compared with 64.4% of Kuala Lumpur and 69.2% of Putrajaya households, earning more. In 2015, median and average monthly wages were RM1,600 and RM2,312 respectively.
“Disparities in wealth – when measured by EPF and ASB savings, as we have done in the report – are more pronounced than that of income; a reflection of the fact that those with higher incomes can save more. Furthermore, there is a concern that there are many who will not have saved enough for a 20-year retirement and are taking on too much debt,” said Nor Mohamed.
KRI managing director Datuk Charon Mokhzani said the biggest concern is youth unemployment, which at 3.5% in 2015 was higher than the national unemployment rate of 3.1%. In addition, 33.8% of the unemployed have a tertiary education.