“The middle class have been constrained because of wage suppression on the top. Wage gap has been increasing since 1980s.” – Tan Sri Datuk Dr. Kamal Salih (Launch of the Malaysia Human Development Report 2013) #MHDR

Durian Asean: A spotlight on socio-economic inequality
By Nor Arlene Tan

Published 25 November 2014

Recently, UNDP launched their first Malaysia Human Development Report 2013 (MHDR) & UNDP’s Global Human Development Report 2014 as part of its focus on addressing the socio-economic challenges among countries.

UNDP is pushing for a wider awareness on sustaining human progress by promoting an equitable and inclusive growth. Datuk Nicol David, as the UNDP Goodwill Ambassador, also shared her vote for a more inclusive Malaysia via a video message.

Although there were two Reports launched by UNDP, the theme of the event centred on MHDR, which was a joint-effort between UNDP and Malaysian economists. The MHDR 2013 aims to highlight the growing inequality in financial asset, labour market, social mobility and relative poverty among Malaysians, as well as addressing inclusive gowth through institutional and policy reforms.

Michelle Gyles-McDonnough, Resident Representative of UNDP Malaysia moderated the discussion sessions with the main authors of the MHDR. One of them, Tan Sri Datuk Dr. Kamal Salih, gave an overview presentation of the Malaysia Human Development Report 2013 in the context of the Global Human Development Report. For Malaysia to achieve its goal of Vision 2020 and become a high income nation, it is vital that the government analyse the policy implications of inclusiveness in the New Economic Model. Moreover, it is important to prioritise inclusive growth and social cohesion, and move forward with second generation policies.

In addition to that, he expressed his concerns that the middle class have been squeezed because of wage suppression on the top. Wage gap has been increasing since 1980s. Malaysia has one of the lowest share of wages to national income (lower than the Philippines and China), due to the decrease in bargaining power and unionisation among employees.

Another author of MHDR, Dr. Hwok Aun Lee from UM’s Developmental Studies Economic Department, highlighted the dire need to address relative poverty among bumiputras and minority groups, as well as between different states. Although the overall poverty rate has reduced since the implimentation of NEP, but relative poverty is on the rise, especially since 2009 under the administration of Prime Minister Dato Sri Najib Razak.

Besides that, the relative income gap post-2009 is widening among Malaysians. For example, earned income in Sarawak household is lower than in Sabah despite Sarawak having a higher state GDP.

Dr. Muhammed Abdul Khalid from Khazanah Research Institute, another main author of MHDR also articulated his concerns over unequal wealth distribution and financial asset in Malaysia. For example, almost 90% of Malaysians have zero savings and 53% of Malaysian households have no financial assets.

Other pertinent issues that were discussed during the Q & A were issues related to wage stagnation, influx of foreign labour, and gendar pay gap.

Nevertheless, Tan Sri Datuk Dr. Kamal Salih is optimistic that the government is moving toward the right direction in its economic policy, but he believes that there is a lack of focus on addressing the issue of migrant workers on a regional framework.

On the other hand, his team will be pushing for a Social Charter for ASEAN to address the movement of foreign labour. It will include rules and regulations on wage and employment structure across Southeast Asia.

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It is essential that Malaysia continues to prioritise inclusive growth and social cohesion, and moves forward with the second generation policies that are needed to support this.
-Frances Stewart