Nearly two decades ago, I was enlightened and inspired when I read The End of Poverty: Economic Possibilities for Our Time by Prof Jeffrey Sachs.
In the book, Sachs said that it was possible to eradicate extreme poverty globally by 2025 … until Covid threw a spanner in the works for every country in the world.
While the book received mixed reviews, the ‘big plan’ put forward by Sachs provided some solutions in the battle against poverty. It focused on the need for national governments and international aid agencies to integrate activities on multiple fronts, taking into account the multiple diverse factors at play – definitely not a “one-size-fits-all” approach.
The war on poverty is not unique to Malaysia. It is one of the most urgent global challenges of our time – even if the focus of many governments and politicians may be simply on staying in power!
The World Bank reports that over 700 million people – about 9% of the world’s population – live in extreme poverty, surviving on less than $2.15 per day.
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Even first world countries still struggle to eradicate extreme poverty.
For example, research published by the Joseph Rowntree Foundation found that six million people in the UK were in “very deep poverty” in 2021-22. This especially affected children, pensioners and minority ethnic groups.
In the US, the poverty rate has climbed to 17.8%, with a significant wealth inequality gap.
Sub-Saharan Africa has the highest poverty rates with South Sudan at 82.3%.
Only some of the Gulf and Nordic countries have reportedly wiped out extreme poverty.
It looks as if the world may not meet the UN’s sustainable development goal of eliminating all forms of poverty by 2030.
Yet Prime Minister Anwar Ibrahim declared in early 2024 a 100% success rate in eradicating hardcore poverty in Kuala Lumpur, Malacca and Negeri Sembilan. Penang is expected to join the ranks soon. Ending hardcore poverty is a key aspect of his “Madani” (civil and compassionate) agenda.
Recent government reports state that the percentage of hardcore poor households (those with a monthly income below RM1,198) has dropped to 0.2% in 2022 – down from 0.4% in 2019. Eight districts in Sabah, however, recorded rates higher than the national rate, ranging from 2.4% to 5.9%.
Grassroots activists involved in feeding the urban poor have challenged the PM’s claim of zero hardcore poverty. They say they have actually seen more people in the homeless community and longer lines at food distribution centres.
Even government reports show the rate of urban poverty has actually increased from 3.9% in 2019 to 4.5% in 2022.
A Unicef study of 755 low-income households in Kuala Lumpur found that, while monthly household earnings has risen slightly, hardcore poverty persists at 8%. Such poverty especially affects women, children and people with disabilities. Eight out of 10 households in this study have inadequate income to cover essential expenses.
So, did the PM lie?
Technically speaking, he did not.
As clarified by the Economy Minister Rafizi Ramli in Parliament, the eradication of hardcore poverty in these states does not mean there will be zero poverty. What it means is that all hardcore poor families registered in these areas, and targeted and recorded by relevant government agencies in official government reports, have been assisted to lift them out of extreme poverty.
Of course, this begs the question how comprehensive, accurate and up-to-date these reports are that the government relies on. What is the likelihood that all the hardcore poor in remote areas, especially in Sabah and Sarawak, and among the seemingly ‘invisible’ marginalised urban communities have been captured in government surveys and statistics?
Do these reports include the millions of refugees and migrant workers – documented and undocumented – and the stateless who have lived in Malaysia all these years?
The newly launched central database system Padu had been touted as able to overcome these deficiencies and provide accurate and timely data for targeted socioeconomic support. Hopefully, it can also weed out the frauds and prevent leakages, especially through corrupt individuals within the system. So the government should share how effective Padu has been, not only to prove critics wrong but also to regain trust.
One could also raise more technical questions about the validity and reliability of current economic indicators like the poverty line income (PLI) and other measurements of poverty used by various government agencies.
To be fair, the government has made improvements in this area in recent years. The PLI has been revised and raised, taking into account the need for an optimum quality of life and regional differences.
In 2016, the government introduced a multi-dimensional poverty index (MPI) that uses not just monetary and consumption-based poverty measures but also non-monetary dimensions like access to education and healthcare and standard of living. This means that poverty can be measured more accurately and meaningfully.
In addition, the government also adopted the 2030 Agenda for Sustainable Development. This has a range of goals, targets and numerous indicators to “achieve development in a more sustainable, resilient and inclusive manner”.
However, questions still arise over how well the current MPI indicators are able to accurately capture the incidence and intensity of poverty, as the current indicators are limited in scope. It is also not clear how well this MPI has been integrated into policymaking by the different federal and state agencies.
In practice, aid-distribution agencies, both at federal and state levels, appear to be relying heavily – if not solely – on income levels and monetary indicators to gauge eligibility for cash handouts and government aid.
The minister for the economy has stated that the classification of the population into the bottom 40% of households, the middle 40% and the top 20% will be gradually phased out. Instead, the focus will be on net disposable household incomes and a shift towards targeted subsidies. The PM reiterated this at a recent symposium on eradicating poverty.
This move is in the right direction, but its effectiveness depends on how it will be implemented.
So, while it all looks good on the surface of it and in glossy government reports, the devil is in the details. To date, actual policy outcomes and the reality on the ground leave much to be desired.
Despite all the development plans, bigger budgets allocations and poverty intervention measures, many people still face daily struggles. Far too many have become victims of badly implemented or failed government policies.
For the lower-income group, the cost of living has outpaced the increase in their incomes, if any. Low entry-level wages and wage stagnation or suppression are among the root causes of poverty in Malaysia. Wages have simply not kept pace with economic and productivity growth.
Some labour activists, civil society groups, academics and socialist party PSM have called for a living wage that would cover more than just essential needs, instead of the static minimum wage of RM1,500, last upgraded in 2022.
The prime minister said recently that a shift to net disposal income when measuring poverty would take into account basic minimum living expenditure. This expenditure would cover food, clothing, accommodation, basic utilities and transport. It will also take into account regional differences and household size.
The government hopes to ease some of the issues related to wage stagnation through its progressive wage policy, implemented this year as a pilot project targeting 1,000 companies. More information should be provided on the progress so far.
While we await more reforms to reduce living costs and improve essential services like primary healthcare, affordable housing and quality education, many people have slipped through the cracks of the current inadequate social safety net.
The social safety net must be widened and strengthened so that at least basic needs can be met at all times, especially during unforeseen circumstances like the death of a breadwinner, unemployment, sickness, disability and old age.
Let’s acknowledge the government has made some improvements over the years. The Social Security Organisation (Socso) has commendably expanded its coverage to include protection and a range of benefits for housewives and self-employed workers in 20 sectors. These include gig workers, hawkers, taxi and ride-hailing drivers, and independent contractors.
But even with the initial subsidy incentive from the government, the number of those who have opted in to Socso voluntarily has been low since its introduction a few years ago.
Human Resources Minster Steven Sim has proposed to automatically add gig workers to the scheme when they register with online food delivery companies such as Grab and Foodpanda and to make it mandatory in more sectors.
More workers might be interested in Socso if their earnings actually rose, perhaps through a reduction in the commissions deducted by such tech companies. These companies are already reaping huge profits, especially as there is no contribution from employers at all for these workers.
Older adults are another vulnerable group facing poverty with Malaysia expected to become an ageing nation by 2030. Despite acknowledging the issues related to a fast-ageing population, the government has not put in place enough social protection measures to tackle poverty among older adults.
Over 60% of older adults in Malaysia have no pension and have inadequate or no retirement savings at all, which means they would have to rely on family support – that is, if they have close relatives.
PSM has proposed that those over 60 without any existing pension should be a given a monthly pension of RM500 per person, which cost about RM11bn in total. Many civil society groups, including Aliran, have endorsed its call.
PSM and economists like Geoffrey Williams have even outlined how this limited means-tested pension can be funded – even if a universal pension is “off the cards and not something we can afford”, as one senior official in the prime minister’s office said recently.
The PM has said that the Madani Budget 2025, to be tabled on 18 October, aims to address cost-of-living issues and raise living standards. Can we expect some meaningful allocation and initiatives to ease poverty among older adults?
Mahatma Gandhi once said that the world has enough for everyone’s need, but not enough for everyone’s greed.
Do we have enough for the needs of all who call Malaysia home? Or will the goal of eliminating extreme poverty in Malaysia by 2030 be Prime Minister Anwar’s delusion?
Mary Magdaline Pereira
Co-editor, Aliran newsletter
12 October 2024
AGENDA RAKYAT - Lima perkara utama
- Tegakkan maruah serta kualiti kehidupan rakyat
- Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
- Raikan kerencaman dan keterangkuman
- Selamatkan demokrasi dan angkatkan keluhuran undang-undang
- Lawan rasuah dan kronisme
To complement the pursuit of FDI and GDP growth, Malaysian Government must help the marginalised communities to break from the poverty trap and uplift their livelihood such as universal pension, welfare to the OKU, those with health challenge using SDG tools. There are many projects, subsides and schemes with high cost and low benefits can be cost out or scrapped to fund these welfare projects, improve health care and education.
If everyone had a job there would be no poverty.
Our country is inundated with foreign workers, while our own citizens are unemployed. If every employable person had a job , where is the poverty.