Malaysia: Younger workers feeling ‘left behind’, World Bank says
KUALA LUMPUR: Slowing income growth among lower-income households and younger workers has contributed to perceptions of being “left behind”, according to the World Bank’s Malaysia Economic Monitor.
The 21st edition of the report, which was launched here on Monday, pointed out although median incomes continue to outpace inflation, income growth rates for low-income Malaysians slowed between 2014 and 2016.
Moreover, wage growth for younger and less-educated workers has been sluggish, persistently trailing the earnings of older and better-educated workers, according to the report.
“Median employment income for younger workers aged between 20 and 29 grew at an annual rate of 2.4%, compared to 3.9% for those 40 to 49 years-old over the same period. The increase in the monthly absolute earnings gap between these two age groups has been more pronounced, more than doubling from RM529 in 2004 to RM1,197 in 2016 (all amounts adjusted for inflation). This signifies a growing wage divide and wage stagnation for the youths, ” it said.
The report highlighted varying purchasing power in different parts of the country, poor financial planning, household indebtedness, and unaffordable housing as other key factors affecting living costs.
Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail said the cost of living is a concern which extends beyond prices.
“Those on lower wages spend their income to pay for essentials – rent, transportation, food – and in the end, they find not much is left for the month. The challenge for policymakers is that different solutions are needed to cater to different groups with different needs, ” he said.
Saifuddin said the National Action Council on Cost of Living was established so that efforts by different ministries and government agencies can be formulated, consolidated and discussed under one roof.
He described the World Bank report as timely to inform efforts to better serve the people.
World Bank country director for Brunei, Malaysia, Philippines and Thailand Mara Warwick said there was an urgent need to scale up investments in people to encourage sustainable, inclusive economic growth.
“Malaysia can make policy decisions to combat inequality and improve the lives and opportunities of the poorest.
The report draws on strong evidence to identify high-impact policies with a proven record of building shared prosperity and improving people’s access to services and long-term development opportunities, ” Warwick added.
Alleviating cost of living pressures demands a mix of short-term measures and long-term policies, according to the report.
Short-term measures should strengthen social safety nets, while over the long run, greater coordination across agencies and implementation of structural reforms to foster greater market competition and accelerate productivity would help lift real incomes for all.