One would certainly doubt the figure when the federal minister's claim that malaysian household's make an average RM5900 per month. There is one article who summarize well how the figure derived from and what does it mean here. To summarize short:
- Income not only mean wages and salary, but include investment income from properties, stocks, and probably EPF.
- "mean" figure means rich people who earn many money will tend to distorted the figure. " median" income is a more realistic assessment.
- some of the income are imputed, means income are counted even though you consuming self-produced goods and services. For example, if you living on your own house, the survey will assume you will receive an income (rent) from your house with as the amount you will received if rent it out to others in the rental market. If you cook your own meal, the survey will assume you received income (from yourself) on the cooking services that you provided.
What should be interesting, is how the income distribution go, and what can we do about it.
For example, if you read p29 from 2012 household income survey (here), it can be seen that Malaysia's Gini Index according to household income is about 0.431. This implicates a high income inequality distribution taking place in Malaysia. The sources of the income inequality could be from different in education received, as indicate in table below from Malaysia Salaries & Wages Survey Report (here). It can be seen from the table that, although degree holder generally earn higher salaries and wages (mean = RM4571) from diploma holder (mean RM 2839) and below (mean RM 1721 for SPM holder to RM992 for no cert). Only 12% of current workforce hold a degree.
Table: Average salaries and wages according to education level , Source: Malaysia Salaries and Wages Survey Report
Few measures i believe can help to ease the inequality in income distribution.
Measures 1 : Increase the coverage of quality higher education. The chances of getting a higher education in Malaysia is increasing thanks to more public universities built, more private college and universities allowed to open, and PTPTN loan. but the quality of education received may not keeping pace. (see here and here for story of graduates jobless or in job mismatch with education received)
Measures 2 : Restricting the number of foreign workers at low skill category, both legal and illegal.
As salaries and wages in the market is determined largely by supply and demand, large influx of foreign workers in low skill category will continue suppress the salaries of the locals in that particular category. Thus, restricting their numbers, thus altering the demand and supply in the job market, will be the most effective way to increase the salaries and wages of low income workers compared to minimum wages policy. There are only two problems, first, the small and medium enterprises (and plantations) who heavily relied on cheap labours to remain competitive will not be happy about this, Second, as large number of foreigners had been granted citizenship in Sabah, the supply of low skill workers in job market may still higher than demand, thus keep suppressing wages in this category.
Measures 3 : Easing the income inequality through tax and transfer system. More specifically, increase the aid for low income group under BR1M, and fund the increase by taxing the rich. Few of the new taxes targeting rich people that can be introduced include,
i. Capital Gain Tax
ii. Real property gain tax for second home owned
iii. Estate tax and gift tax
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