Blog
The Severity of Income Disparity in Malaysia
Rosanna Nizam
Rosanna is a 2nd Year Accounting and Finance student at University of Nottingham.
The COVID-19 pandemic has affected us all in some way. While some of us are devastated about not being able to go out to makan or lepak, others are not as fortunate. The global pandemic has left the less affluent and socially disadvantaged bearing the brunt of the pandemic, aggravating the disparities in living standards between the rich and the poor in Malaysia and positioning this matter into sharp focus.
Inequality between the rich and the poor is a pressing conundrum in most if not all countries worldwide. This predicament becomes even more compelling when we put it in the perspective of Malaysia – where the income gap doubled within two decades between the T20, M40, and B40 household income groups.
The recently announced 2-week extension of the Movement Control Order (MCO) – which has been ongoing since the 18th of March – translates to nearly a full month of unemployment for most. The current state of affairs has evidently worsened the inequality problem, with the B40 group being adversely affected with the unequal burden of unemployment, especially those who solely depend on hourly work. For instance, those who run small businesses or restaurants were forced to limit operations or shut down completely due to the MCO.
Clearly, this does not place the B40 income group in a favourable position as most of them live paycheck to paycheck, are struggling to maintain a decent lifestyle, and have been earning stagnant wages. These circumstances give rise to the vulnerability faced by this group, especially during any sort of economic shock as they possess fewer resources. This poses a substantial issue because unlike households from a higher income bracket, plenty of households in this category would struggle to purchase necessities and groceries for weeks in advance, which may lead to financial strains and debt.
Worryingly, research based on historical accounts of influenza has found that in a pandemic, such inequality can aggravate the transmission of infectious diseases whereas existing or underlying disparities in the quality of health suffered by the socially disadvantaged will lead to higher mortality rates for the entire populace.
This may be due to the fact that it is more likely for those who are situated lower on the social ladder to have underlying health conditions, which puts them at a much higher risk of having a fatal case of COVID-19 if they contract the virus. A study which found that there is a correlation between relatively low income and higher rates of chronic health conditions echoes this notion, and to further support this claim, 99% of COVID-19 patients who had fatal cases in Italy had at least one pre-existing condition (as of March 17, 2019).
It seems as though disparities in income itself may be multiplying deadliness of the virus and potentially, the spread of it as well. Undoubtedly, if there is even one individual who fails to detect or obtain treatment for the virus, that person would pose a risk to society at large. This situation is further exacerbated when those who are more susceptible to the virus live in close proximity, especially since there is a known tendency for Malaysian communities to be clustered by socioeconomic status.
On the 27th of March (Friday), Prime Minister Tan Sri Muhyiddin Yassin announced a Prihatin Rakyat Economic Stimulus Package (PRIHATIN) worth RM250 billion in an effort to provide immediate assistance and lessen the burden of those who are affected the COVID-19 crisis throughout the country. The allocation of the RM250 billion is as follows:
- RM128 billion channeled towards ensuring the people’s welfare
- RM100 billion to bolster businesses which include SMEs
- RM2 billion to be pumped into the economy for the purpose of strengthening it
The remaining RM20 billion was included in an earlier stimulus package which was unveiled in February.
In an effort to soften the blow for those who are adversely impacted by the 28-day MCO, it was announced that one-off cash assistance called Bantuan Prihatin Nasional will be granted. Among the payments consisted of RM1,600 and RM1,000 for households who earn less than RM4,000 a month to those earning between RM4,000 to RM8,000 per month respectively.
While it is comforting knowing that financial aid is given to those who need it, the financial assistance provided is a one-off payment. More corrective action has to be taken to address the severe widening income gap which, as mentioned earlier, has doubled over the course of 20 years. As for what we can do to help, we should not panic buy groceries in bulk as some may find it costly to stock up and more importantly, stay safe at home to prevent the spread of the virus and to not exhaust our frontline who are working hard in the midst of these testing times.