The Malaysian Insight

HIGHER wages are a better solution than 1Malaysia People’s Aid (BR1M) handouts, which are only a one-off relief to help with small emergencies, recipients say, as the amount doled out remains unchanged under Budget 2018.

Several BR1M recipients told The Malaysian Insight they did not want to rely on BR1M and would rather the government looked at ways to boost wage growth.

“When I first started working, my salary was RM1,500 and after seven years, it only increased to RM1,800,” said van driver Yap Boon Sui, 36, from Seri Kembangan.

He said it was hard to start a family and live in the city with his small earnings. 

“Although I’m not married, I cannot spend my earnings lavishly. I try to have some savings every month. I don’t want to rely on BR1M. I would prefer if my salary is increased consistently,” he told The Malaysian Insight. 

The Malaysian Trades Union Congress (MTUC) has also appealed for better wage policies to address cost of living problems faced by the working class.

Secretary-general J. Solomon said BR1M was just a sweetener that did not help wage-earners with upward mobility.

“It would be more meaningful if the government came up with a decent living wage policy rather than giving out BR1M. The government should not go on saying we want to be a high-income nation and only give sweeteners, as this does not address the problem.”

Besides wage hikes, employers should also give a monthly cost of living allowance which would be of better help than BR1M, Solomon said, urging employers and Putrajaya to come to an agreement on these proposals.

For the first time since BR1M was disbursed in 2012, the federal budget for 2018 will not increase the amount handed out. Households earning below RM3,000 a month will receive RM1,200, while those between RM3,000 and RM4,000 will receive RM900.

Single individuals earning RM2,000 and below will continue to receive RM450.

These amounts were increased in Budget 2017under a RM6.8 billion allocation for seven million households, and remain the same for next year.

Economists have noted that wages are growing too slowly and will drag down private spending. Budget 2018 did not address the calls to raise the current minimum wage of RM1,000 in the peninsula and RM920 in Sabah and Sarawak, although the human resources minister has said a new wage would be announced next year.

In 2014, the median monthly salary was RM1,500 and the average monthly wage was RM2,193.

From 2015 to 2016, the median wage grew by 6.2% from RM1,600 to RM1,703, while the average monthly wage grew 6.3% from RM2,312 to RM2,463 in the same period.

Khazanah Research Institute in a 2015 report on how much Malaysians earned said low salaries were because the bulk of the workforce were low-skilled and that companies paid their employees very little. Only 32.9% of national income went to workers, while owners and employers got the rest.

Piecemeal help

Klang resident Hamran Abd Hamid, a father of six, said he has been a BR1M recipient since its first year and uses the money to buy extra grocery items for his family. 

“Sometimes I will use it to pay an outstanding amount on my car loan, or sometimes to service my car. In the current economy, every bit of monetary assistance is helpful,” the 36-year-old who works at mobile phone repair shop.

His own salary is a little more than RM2,000 each month. When he first started receiving BR1M in 2012, his pay was RM1,800.

“BR1M doesn’t help to improve the quality of life, because our life is still the same. But it reduces the burden. I would rather have an increase in salary because that is my source of income. Monetary aid is not a source of income,” he said. 

Raihan Salleh, whose household income is between RM3,000 and RM4,000, said families with small children were the ones feeling the pinch as the cost of raising children gets more expensive.

“If our salaries are not stagnant, I don’t think we will need BR1M, although it does help lift the burden when we get the handout in a particular month. For my family, the BR1M payment will be used to buy extra groceries or nappies for my child,” she said. 

Mixed message

Except for 2018, the amount Putrajaya has spent on BR1M has increased every year since its introduction. 

As such, economist Lee Heng Guie said the objective of doling the handout must be reviewed to ensure it was channelled to targeted groups.

In 2012, the total disbursement of BR1M was RM2.1 billion with about three million recipient households and individuals.

At a total of RM6.8 billion this year for seven million recipients and giving BR1M to households with income of RM4,000 did not make sense, Lee said.

“If you really go into the principles of BR1M, you should target only disabled people, the elderly (and really poor households).

“With the amount getting bigger over the years, it doesn’t jive with statements that the economy is improving or that incomes have increased.

“It begs the question, why are people relying on BR1M?” the Socio-Economic Research Centre (SERC) executive director said.

The government should make BR1M payments conditional to ensure they were being used to enhance the recipients’ lives, he said.

“The objective of BR1M was mainly to help ease the burden, as we removed subsidies gradually, but now it has become a yearly payment that when it is time for the national budget, everyone will be hoping for some adjustment to the BR1M. 

“We know it gives the recipients some relief, but there are also people who use BR1M to buy unproductive items. 

“What we need are enhancements on how to improve people’s earning capacity.” – October 30, 2017.