Income and employment gaps persist among Malaysian households: Khazanah report

KUALA LUMPUR: Malaysian households are much better off now compared to the generations before them, but there are still gaps in income and employment that need to be overcome, according to the third installment of the State of Households report.

The report titled “Different Realities”, prepared by the Khazanah Research Institute (KRI), highlighted disparity between household incomes with regards to geographical location, their spending and inequality.

Based on Malaysian household income distribution in 2016, M40 households are defined as those with income between RM4,360 and RM9,619. However, the equivalent state-level thresholds vary significantly.

“A T20 household in Kelantan, Perlis or Pahang may be a B40 household in KL. Households in Melaka, Johor and Penang correspond more closely to national average.

“Differences in household incomes across states could also be explained by urbanization and education factors. Urban households earn more than rural households, and households with heads with higher education and skill levels have much higher household income,” the report said.

In addition, lower-income households spend disproportionately more of their income. Households earning below RM 2,000 consumed almost 95 per cent of their income.

After removing the effect of inflation, households earning below RM 5,000 are consuming less amount of food and less recreation and cultural services, the report added.

KRI said the gap between the rich and the poor could still grow even when relative inequality indicators are declining. The difference of mean income between T20 households and M40/B40 households almost doubled, compared to two decades ago.

“More people could be in poverty even when poverty rate is declining. More than one million households live in ‘relative poverty’ compared to two decades ago,” KRI said. Relative poverty refers to the number of households living under 60 per cent of median household income.

Participation of women in the labour force, meanwhile, has improved since 2010 and they stay longer in the workforce. One-third of the increase in women’s labour force between 2010 and 2016 is due to self-employment.

Nonetheless, the gap of labour force participation rate (LFPR) between men and women remains large compared to other countries.

KRI attributed this to housework, where 2.6 million women stayed out of the labour force compared to 70,000 men. A large proportion of women outside the labour force are mostly educated and of prime working age, it added.

The number of foreign workers, meanwhile, has increased with agriculture, construction and manufacturing the most foreign worker-intensive sectors.

The report said the biggest problem is the mismatch of supply and demand. There are more tertiary-educated native workers, but more semi-skilled jobs are available.

Source: New Straits Times

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