KUALA LUMPUR, Juy 14 – The wages data released by the Statistics Department today is quite alarming.
A. Wage average declined by 9 per cent to RM2,993; and
B. Median wages drops 15 per cent to RM2,062.
This means half of Malaysian 9.8 million workforce earns monthly income of less than RM2,062.
Similarly, if the median income dips further than the average wages, it will give immense impact to the lower income bracket or a contagoius transfer of income from the poor to the rich. The fall of 9 per cent is in fact much higher than the declining GDP of 5.6 per cent which are affected by the closing down of businesses.
At the same time, 720,000 are still jobless and this points to zero income.
Maybe the government thought they have done many improvements, including packages worth RM300 billion and others. However, the reality indicates how the assistance is not sufficient, far from enough. Even 100 packages will not suffice if the rate of fiscal injection is more of less 6 per cent of the GDP.
They should look at immediate intervention, namely:
Reasonable financial assistance.
Sometimes what is needed is not something complicated or “sophisticated”. It has to be straight forward. All that we need is confidence and courage.
Give a financial injection into the household sector with adequate value. From the beginning of the pandemic I tried to emphasize this but there was no will on the government side because all were still in the framework of fear of debt, fear of changing the law (but already an emergency?), fear of ratings, inflation and so on. Imagine if adequate assistance was given from the beginning.
Not RM350 for single paid twice in 3 months (RM117 per month), not RM1,800 for a B40 household in 3 staggard payments for a period of 7 months (RM257 per month) and not an insufficient wage subsidy to help save workers. Not also an SME grant quantum which is not enough to save their businesses.
Instead, spend more and wisely. For example, RM1,000 per month for a period of 3 months for all B40 and M40.
There is no big risk of inflation due to ideas like this. I have no intention of discussing technical at this time, but in short, not with the injection of RM1,000, suddenly the aggregate demand will exceed the limit and bring inflation. Any temporary price increase now is due to a supply bottleneck and not because the people have too much money to spend. See how other countries are handling this issue. Why are they willing to shop?
The government must be willing to spend. Do not worry of ratings by international rating agencies or any other consideration that is not really important at this time. In the medium term, it is possible to create a more permanent policy such as the Bank Job Scheme or Job Guarantee, Fair Income Scheme where there is an automatic mechanism for the Government to top up the people’s income.
It is possible to start a study on a legislation limiting the salary ratio between top and bottom. That’s one of the ideas from #SambungYangTergendala. But I am also aware that the idea is not the solution now. It only solves the post-lockdown or post-Covid problem.
But for now, give people the money because they don’t have enough. They were asking for EPF withdrawals although its their retirement money. This happens because THEY NEED MONEY TO SURVIVE!
So there is nothing to be proud of the moratorium or i-Citra. The reason is the government is akin to sitting tight, did not want to spend more.
The people are having a hard time. Some are depressed, some even committed suicide. The numbers are skyrocketing. Now we are having the Delta variant. Companies and enterprises are closing. They are on the brink of collapse. There is no mass recruitment. There is no confidence for companies to invest. One or two positive headlines cannot sweep the actuals under the carpet. Facilitate loans, simplify it. Our economy is also in the doldrums.
However, the banks have sufficient capital but they will not easily issue loans as long as the economic confidence is low.
Think wisely. Spend for the people!