NOVEMBER 17 ― During a lecture the other day, we revisited the role of money in the economy. Naturally, no such discussion can take place without considering the views of the father of classic economics, Adam Smith. In his view, the real price of a commodity is relative to the number of hours of labour necessary to achieve or produce it.
For example, assuming a worker is paid RM10 a day, while the price of 10 eggs is RM5. This means that the worker has to put in half a day’s worth of labour to be able to buy 10 eggs. In other words, the value of 10 eggs to the worker is half a day’s work.
Which brings us to the important question. How many hours of labour would a fresh graduate or average Malaysian living in Kuala Lumpur have to put in in order to survive a day?
According to a recent Nielsen survey, an average salary for a fresh graduate in Kuala Lumpur is RM2,100 (excluding EPF and SOCSO deductions for the purposes of our illustration).
Assuming he works eight hours a day every week day in November, his hourly wage would be RM12.50. Based on the Ministry of Domestic Trade and Consumerism’s website, the controlled price of chicken is RM7.50 per kg. Based on an average weight of 1.6kg a bird, the price of an average-sized whole chicken would be RM12. Thus, a fresh graduate in Malaysia would be able to afford one chicken with his hourly wage of RM12.50.
In London, however, the price of one whole chicken at my local Tesco’s is £3.50 (RM23.30). As the national minimum wage is £6.70, this means that an unskilled worker in London would be able to afford almost two chickens compared to the Malaysian with a university degee.
Not only does the Malaysian graduate have to work twice as hard for the same amount of food compared to an unskilled worker in London, he is also likely to work extra hours without extra pay (as is common in our culture, punching out on time is usually frowned upon).
And this does not take into account his PTPTN loan, car loan and the toll that he has to pay to get to and from work. Would all this not only deflate the value of his wage?
If the story above sounds depressing, imagine how it is for Malaysian workers who don’t have any tertiary qualifications. It is no wonder that two-thirds of our population is reliant on BR1M handouts.
But, is 1MDB to blame for the country's economic woes?
To date, the sovereign investment fund has accumulated debt of over RM42 billion. Critics have zoomed in on the company’s auditing problems, such as the RM8.24 billion said to be hiding somewhere in the Cayman Islands, the controversial bond issuance programmes, and allegations of overpayment for power assets, essentially bailing out politically connected companies with expiring contracts.
Most recently, Malaysians were given a glimmer of false hope (of getting to the bottom of the whole issue) in the form of a highly anticipated public debate between 1MDB’s chief critic Tony Pua and the sovereign fund’s CEO Arul Kanda.
Just as the nation prepared itself for a nationally televised debate that would hopefully answer the many questions on people’s minds, the Speaker of Parliament took the unprecedented move of warning Pua that he would have to remove himself from the Public Account Committee’s investigation of 1MDB if he proceeded with the debate.
The Minister of Communication and Media quickly dismissed the offer of a replacement debater in place of Pua.
As the economy continues to slow down, the public mood will continue to slide down with it. One thing for sure, the multi-billion ringgit 1MDB scandal has not helped to elevate confidence. Even if everything is all well and dandy as the government assures, the fact remains that the perception is that there is something very fishy going on.
Unfortunately for the government, perception rules and the public verdict is that 1MDB is nothing but bad news, as proven by the falling ringgit and the capital flight that has occurred.
Is 1MDB to blame for all our economic woes? Such a conclusion is simplistic, but when no answers are forthcoming, it only succeeds in raising even more questions. And when questions go unanswered, people jump to conclusions.
*This is the personal opinion of the columnist.
