KUALA LUMPUR, July 11 — The Malaysian Trades Union Congress (MTUC) today expressed hope that the establishment of a new national Poverty Level Index (PLI) will result in more effective public policies that can create jobs and enable workers to have better wages.
MTUC secretary-general J. Solomon said the revised PLI from RM980 to RM2,208 will lead to policies that will allow Malaysians more disposable income, as well as increasing their Employees Provident Fund savings for retirement.
“The revision of the PLI also shows that the government has taken seriously the findings of former United Nations' special rapporteur on extreme poverty and human rights Philip Alston, whose report in August last year debunked Putrajaya’s earlier claims that poverty had been virtually eradicated in Malaysia,” he said in a statement today.
Although Solomon said the RM2,208 benchmark for poverty is considerably less than the RM2,700 monthly income MTUC has been urging the government to fix as the minimum living wage, nonetheless establishing a new index for the PLI at more than double the monthly income set previously is a good indicator of the government's pledge to tackle poverty with more realistic data.
“This is very important as poverty has increasingly impacted Malaysia's 15 million workforce over the years and more so now due to the economic fallout as a result of the Covid-19 pandemic.
“Certainly, MTUC welcomes the government's acknowledgment that the RM980 poverty line has been grossly low, and has revised it to RM2,208, based on optimum food requirements and healthy eating, as well as 146 non-food items from the B40 households' spending pattern in the 2019 household expenditure survey,” he said.
Solomon added that MTUC is pleased there are enough voices of reason within Putrajaya to make important adjustments since the 0.4 per cent poverty rate that stood previously was based on an anarchic methodology of calculation which failed to capture the gravity of the problem.
“MTUC believes the government will agree that the new national poverty index of RM2,208 can be further improved, considering the benchmark is for a family of four to live actively and healthily.
“This is to cater for the high cost of living in urban areas where 75 per cent of Malaysians are employed, with many of them on low paying jobs and saddled with high household debts due to the spiraling cost of living,” he said.
He noted that Bank Negara Malaysia has estimated up to 27 per cent of households living in Kuala Lumpur are earning below the living wage.
“It must be noted that based on the new methodology of calculations, the government has now acknowledged that the national poverty rate in 2016 should have been close to eight per cent and not 0.4 per cent.
“It also means that at least for the past four years, Putrajaya failed to address the needs of millions of people who were living below the poverty line but were not recognised as poor because of the antiquated way data was collated,” he said.
Despite the drop in the poverty rate from 7.6 per cent in 2016 to 5.6 per cent last year based on the new PLI, Solomon said it is likely to worsen considerably in the coming months as hundreds of thousands of workers have been laid off, or forced to take deep pay cuts.
“Those mired in poverty are from the B40 and M40 groups of blue-collar workers whose salaries have largely stagnated and unable to sustain the high cost of living, forcing them to incur high household debts. This is a key factor that has accelerated poverty in urban Malaysia.
“MTUC calls on the relevant ministries and public agencies to give top priority to Economic Minister Datuk Seri Mustapa Mohamad's call that they pay heed to the 2019 PLI in reviewing and formulating policies related to poverty eradication and social assistance,” he said.
The Statistics Department’s methodology was recently updated to reflect the PLI changes, the first time since it was reviewed in 2005. This meant the number of households now categorised as poor has increased from 24,700 in 2016 to 405,441 last year.