Wed. May 29th, 2024

Media Statement by the Member of Parliament for Bukit Bendera, Syerleena Abdul Rashid in Georgetown, Penang, 4 October 2023:

Advancing Social Mobility and Alleviating Poverty in Malaysia: Exploring Effective Strategies

Malaysia, a melting pot of cultures and a beacon of economic potential in Southeast Asia, continues to wrestle with the shadows of enduring poverty, despite having achieved notable economic strides. As per the insights from Bank Negara, our economic landscape witnessed a moderate expansion in the second quarter of 2023, marking a growth of 2.9%, a deceleration from the 5.6% in the first quarter. However, the economic numbers present a stark contrast to the subdued and almost gloomy realities confronting many Malaysians.

The soaring cost of living acts as a barrier to social mobility, placing a straitjacket on the lower-income populace and restricting their avenues for socioeconomic progress. This ongoing struggle underscores the urgency for our policymakers to formulate and implement resilient and holistic solutions that can navigate the multifaceted dimensions of poverty and effectively uplift social mobility.

The climbing cost of living in Malaysia, propelled by inflation, elevating prices of essential goods, and the surge in housing costs, has intensified the battle for survival for those less fortunate. This economic pressure constraints access to quality education, healthcare, and employment opportunities, thus obstructing paths to social progression.

To mitigate the detrimental impacts of poverty, policymakers have put forth the notion of investigating alternatives to a minimum wage. This proposition, while intended to guarantee a basic standard of living for all workers, also brings forth apprehensions regarding potential job losses stemming from elevated labour costs. In 2020, Malaysia established its minimum wage at RM1,500. Recent data from the Department of Statistics, Malaysia (DOSM) indicate that this policy has catalysed a noteworthy 7.7% augmentation in the median wage in 2022, climbing to RM2,424, an increment from RM2,250 in 2021.

Minimum wages are meant to protect low-income workers, reduce inequality and poverty, while ensuring basic income, which can improve living standards. This can be a helpful tool in fighting extreme poverty and economic inequality. However, some critics worry that setting a minimum wage too high could cause job losses, especially for small and medium-sized businesses that might struggle to pay higher wages. This could potentially reduce job opportunities for workers with lower skills and lead to higher unemployment among them.

Another concern is that implementing a minimum wage could lead to inflation. This means that businesses might raise prices on their products or services to cover the increased costs. As a result, the cost of living could go up, which might offset the benefits of higher wages for low-income workers, especially in areas where living expenses are already high.

The impact of a minimum wage is complex and is shaped by various elements like its amount, how well it is enforced, and the overall economic environment. While the goal of a minimum wage is to improve the financial standing of low-income employees, it might also result in the loss of jobs, especially in smaller businesses. Furthermore, increased wages might lead to higher prices for goods and services, which could, in turn, indirectly impact the very group it aims to assist.

Investing in education and vocational training empowers individuals with the skills necessary for secure employment, a strategy exemplified by Germany’s globally recognized and highly successful vocational training system, which significantly bolsters the nation’s industries.

For Malaysia to meet high-income aspirations, initiatives like TVET must succeed, emphasizing the importance of vocational training in the country’s economic advancement. TVET is vital because it helps to close the skills gap by matching education with what industries need, creating a skilled and flexible workforce, and therefore, making Malaysia more globally competitive and appealing for high-quality investments. It fosters enduring and inclusive growth by presenting a variety of learning avenues crucial for revitalizing and transitioning the economy towards a more sustainable pathway. TVET’s contribution to diversifying the economy, enhancing innovation, and strengthening Small and Medium Enterprises (SMEs) is also vital, helping to build a strong and diverse economy. Additionally, collaborating with international partners can help improve the quality and relevance of TVET, ensuring our workforce meets international standards.

Nations around the world employ diverse strategies to combat poverty. For example, Singapore focuses on a progressive wage model that relies on skills training as a route for improving income, encouraging the ongoing improvement of skills and wages in certain industries. On the other hand, Nordic countries favour universal welfare models, stressing the importance of redistributing income to achieve economic fairness and social well-being. These differing strategies, based on education, training, and fair income distribution, have proven to be significantly effective in reducing poverty and enhancing social mobility. They provide insightful lessons for developing comprehensive strategies to alleviate poverty.

Tackling poverty in Malaysia calls for a comprehensive strategy that surpasses merely establishing a minimum wage. While such an initiative is crucial, it is imperative to meticulously weigh the possible repercussions. By integrating successful measures including the fortification of social safety nets, placing emphasis on education, and adopting progressive wage models, Malaysia can profoundly mitigate poverty and bolster social mobility. This way, we can cultivate a future enriched with prosperity and inclusivity, ensuring well-being and opportunities are accessible to all.