URBAN POVERTY DEBTS AND INEQUALITY

Urban low-income families are much more likely to be unemployed or have lower working hours with lower pay, and greater challenges in accessing healthcare.

A. POVERTY AND DEBTS

The migration of low-income groups from rural into urban areas, the increase in unemployment and the influx of foreign workers have contributed to the rise in urban poverty, adding to pressures on urban services, infrastructure and the ecological environment. As a result, Malaysia poverty has become more urbanised.  

The UNICEF 2020 Report has shown that low income female-headed households are exceptionally vulnerable, with higher rates of unemployment at 32% compared to the total heads of households. Female headed households also registered lower rates of access to social protection, with 57% having no access compared to 52% of total heads of households.

The recovery of low-income families in Kuala Lumpur has been partial and uneven, with many still struggling to purchase enough food for their families while an increasing number of households have no savings.

Indeed, the national household debt-to-Gross Domestic Product (GDP) ratio had already surged to a new peak of 93.3% as at December 2020 from its previous record high of 87.5% in June 2020, according to Bank Negara Malaysia (BNM).

1] THE PERSISTENT POVERTY

i) That 7 in 10 households reported that Covid-19 had affected their ability to meet basic living expenses, with 37% saying they struggle to purchase sufficient food for their families. Another 35% are unable to pay their bills on time.

ii) That 68% of households had no savings, compared to 63% in December last year, while those who still had savings have seen the average figure decline by 35%. The situation is worse for female-headed households and heads of households with disabilities, where average savings are at RM342 and RM74, respectively.

iii) That while median household income has increased by 23% to RM2,233 in the months after strict restrictions on movement were lifted, the amount is still 10% lower compared to pre-crisis levels.

iv) That only 14% of heads of households expect their financial status to be better in the next six months, while 37% expect it to be worse. The majority remains pessimistic; though there are some signs of improvement compared to during the MCO.

Most families continue to pawn their valuables and have started to default on their rental payments as cash becomes scarce. 

2] ENDURANCE IN EDUCATION

i) The restart of economic activities during the May to September 2020 had led to a 29% rise in monthly household expenditure, driven by spending on education and transport at 283% and 59% respectively.

ii) The extra expenses on education is also driven in part by face mask costs. About 38% of all heads of households and 46% of female-headed households reported difficulties in providing face masks to their children.

iii) About 65% of female-headed households find it difficult to provide pocket money, while 30% struggle to pay for transport fees.

iv) More of concern is a sizeable number of parents had said their children are demotivated, with nearly 1 in 5 parents reporting that their child had lost interest in school. 

v) Online learning remains a major challenge due to the lack of suitable equipment. During the MCO, nearly 9 in 10 only used mobile phones as learning devices, and 8 in 10 had no access to computers. 

vi) The majority of parents do not want their children to learn online, as cramped living conditions meant that their children had no place to study. Others cite a lack of internet access or no computer, laptop or tablet.

The study suggests that children from low-income families are at risk of dropping out of school as a result of the combined financial and psychological impacts of the crisis.

3] CHALLENGES ON MENTAL HEALTH

i) Mental health remains a significant concern as 22% of heads of households reported feeling depressed or that they experienced extremely unstable emotions.

ii) 42% are worried about their financial conditions, while 32% are worried about not having enough money to buy food for their children and to support their children’s education

iii) Some household members are also experiencing new negative behavioural changes, with 27% of female heads of households experiencing tension and depression among family members.

B. POVERTY AND INEQUALITY

rakyat2 loathe a prime minister who tells citizens are poor because they are lazy, despite working countless hours or a cabinet who tells labour to work two jobs when they are already working 60 hours a week, enraged at a minister who tells rakyat2 not to spend beyond means when they are underpaid and living below the poverty line. 

1] Where, according to the UNDP 1997 Human Development Report, and the 2004 United Nations Human Development Report, Malaysia has the highest income disparity between the rich and poor in Southeast Asia, greater than that of Philippines, Thailand, Singapore, Vietnam and Indonesia.

The fact that many rakyat2 had not attained parity despite +60 years of neo-liberal-enforced economic development is the existence of a new class of compradore capitalist nurtured by political elites

2] Where the share of the wealth is acutely benefitting the high-income group of capital-endowed class – especially the top 1% of bumiputera ethnocapital class is way above the national income, and of, other communities incomes, too.

This is a decomposition of growth rate of real income per adult, 2002 to 2014 (pre-tax national income) : Khalid 2019

3] Where the difference between income earned, and wealth disparity, had been accentuated through the years :

Source: Martin Ravallion 15 April 2019. However, through the years, what the ruling regimes had shown are RACE, RELIGION, ROYALTY, and POLITICS but not equality in the distribution of wealth.

4] Where succeeding oligarchy regimes  had continued maintaining a clientel ethnocapitalism domination over the working class rakyat2 with 1% of the bumiputera population (see Khalid lse.blog) or about 40,000 ethnocapital   political families  running and looting – and ruining – the national economy.

5] Where the Department of Statistics Malaysia (DOSM) figures released had shown that the average monthly salary and wage received by workers in the country was RM3,224 in 2019; a typical apartment in the Klang Valley is one hundred times say on this basic monthly salary. Presently, there is a total of about 10 million salary and wage recipients in Malaysia. The Household Income & Basic Amenities Survey Report 2019 by DOSM showed that the country’s 2019 median income of a household of four is RM5,873. This means it is sixty times of both parents’ monthly salaries to get a decent shelter. 

To read: STORM, The Struggle for Shelter

Malaysia’s 50 Richest 2020: Forbes. With globalisation, rentier capitalism attaches to the neo-imperial monopoly capitalism and its link to the global commodity chain dimension because of the multiple roles of rent intermediaries between capital and its accumulation; immediate consequence is capitalists accentuating wealth disparity with the working class.

On Engels thesis, present urban poverty reality has little to do with a lack of jobs or housing shelters , but rather it is firmly rooted in the mode of capitalism itself, and the exploitation and alienation of labour, upon which the system hinged.

C. THE CHALLENGES AHEAD

1] POVERTY ERADICATION

i) There is a need to eliminate the neoliberalism approaches towards economic development because the +60 years of a Neo-Imperialism dominated economy under monopoly-capital that connected with our clientel capital has stagnated the economy (Sudhdave 2020) and indebted the country where the unequal exchange of production has not eradicated, less of all eliminated, poverty in the country.

ii) Indeed, throughout the 2002-2014 period, the poor population among bottom 50 per cent of rakyat2 has been consistent, that is, we are ALL still poor: 73 per cent were still bumiputera,  17 per cent were Chinese, and 9 per cent were Indians:

see Khalid lse.blog

iii) Presently, the top 20% of population – the T20 – possess 46.2% of the national income share, while M40 have 37.4% of the national income share but the bottom 40% of population – the B40 – only get 16.4% of the national income share of wealth.

2] DEBT MANAGEMENT

i) World Bank Group lead economist Richard Record had indicated that Malaysia has already depleted much of its available fiscal space and would emerge from the current pandemic crisis with a larger burden of debt and contingent liabilities despite the debt ratio had been approved by Parliament to increase from 55% to 60% of the gross domestic product (GDP). There would be difficult intertemporal constraints to further expand expenditures on relief and consumption-supporting stimulus over the near term.

This scenario shall leave national economy less endowed to invest in lasting recovery while maintaing growth in the future.

A paper published by the International Monetary Fund titled ‘Debt and Growth: Is There a Magic Threshold?’’ stated that countries with a debt-to-GDP ratio of 90 per cent and above could experience a dramatic decline in economic growth.

Even Moody Services had stated that the still-wide deficit for 2021 would increase the government’s fiscal consolidation challenge over the next few years. Further, any back-loading of efforts to reduce its debt burden over the year 2022 and 2023, will leave our national debt to the next generation of political leaders, and the present youth populace, to burden.

Source: Northern Corridor Economic Region 2020

ii) Since 1997, the country had relied extensively on these Malaysian Government Securities for budget deficit financing where part of the budget deficits was financed by creating or printing new currency notes
(“helicopters’ monies”). Also part of the debt papers was monetized; therefore, money supply and currency in circulation increased sharply since 1999:

“helicopters’ monies” circulating in the market since AFC1997 Government issuance of new debit papers: floated upward in the AFC1997, then the bitcom burst of 2001, followed by the GFC2018 spike that continued upward thence; see Budget Deficit and the Federal Government Debt in Malaysia
by Mohamed Aslam and Raihan Jaafar,
published: May 11th 2020
DOI: 10.5772/intechopen

In short, the amount of money floating around is not to generate wealth but within the circuit of financialization capitalism  components of FIREs (finance, interests, real estate) are in furtherance of repaying mortgage loans, hire purchases, insurances, real estates tax dues and other debt interests.

iii) Therefore, it is contrary to reason that the government is more concerned with housing developers making high-rise profits than building affordable homes for ordinary Malaysians, particularly when one in four Malaysian families has yet to own a shelter. It is inconceivable, too, that a government refuses to increase the minimum wage (RM$1,200) when the poverty line is now almost double that amount at RM$2,208.

iv) It is difficult to believe that a country – rich in agriculutral resources, minerals endowment besides oil and gas reserves – has one in two of those with a monthly household income of below RM4,000 did not receive the Bantuan Sara Hidup Covid19 relief fund, while only 2% of the self-employed received the SME Special Grant.

v) The Employees Provident Fund (EPF) has revealed that out of Malaysia’s 22 million working-age population, 62% are self-employed, outside the formal labour force, and not covered by any form of social protection such as the EPF or government pension scheme.

Additionally, the low financial literacy rate of 36%, putting Malaysia well behind Singapore and Taiwan, leads to poor spending decisions. Indeed, 70% of Malaysians do not have a “rainy day” fund for emergency expenses, and subsequently high debt.

Yet, EPF contributors are urged to withdraw specific amount from their own accounts to sustain themselves during this stressful period than policy-makers be designing policies to address the deficient gap to reach the target groups as urged by Stephen Barrett, Unicef Malaysia’s social policy chief.

vi) Overall, social protection remains inadequate for low-income workers in the country, as 4 in 10 of those surveyed by the commissioned UNICEF and UNFPA longitudinal study – in partnership with DM Analytics, a Malaysia-based public policy and research led by Dr Muhammed Abdul Khalid – shows that low income families in Kuala Lumpur have been disproportionately affected by the COVID-19 crisis.

The study showed that seven per cent of children residing in Kuala Lumpur’s low-cost flats are living in poverty

3] TOWARDS EQUITY AND EQUALITY

i) Short-term – operational – cash aid should be continued to be the most useful assistance for the majority of low-income families, for instance, with rental exemptions being equally helpful.

ii) Mid-term – tactically – Dr. Rashed Mustafa Sarwar, Representative for Unicef in Malaysia, said the country must take opportunities created by the budget and within the 12th Malaysia Plan to rethink social protection in Malaysia “to ensure that no family, and no child, is left behind” (see Towards A Post-2020 Political Economy; REFSA April 2021; blogs.World Bank 2021; PSM 2021, For a better Malaysia; Re-examining Urban Poverty : 2-hour webinar organised by the Center for Market Education, Embassy of Belgium and Bait Al Amanah, KualaLumpur, 15/4/2021).

iii) Long-term – strategically – we need to visionise on building communal organizations and governance to step onto a progressive path beyond capitalism and the capitalist state in economic development and socioeconomic management, and towards a socialist undertaking that shall benefit everyone than the few.

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More Malaysian MANUSCRIPTS

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THE STRUGGLE FOR SHELTER – THE CLASS STRUGGLE IN HOUSING

1. INTRODUCTION

Never has a concerned nor concerted effort to house the poor in the country.

Housing as planned, built, and sold by the corporate capital operates in the same social relations of production, and its accompanying exploitation, as by any other commodity. For its housing-developer producers, such housing is merely one mode of capital accumulation among many.

The value of housing – as determined by the costs of land, labor, raw materials, location, infrastructure deployment, approval licences and the availability of finance – is so high that most people are unable to purchase it in one complete transaction. Consequently, they are compelled to acquire a housing unit without outright ownership, either through rent paid to a landlord or mortgage payments to a financial lender, see Norman Ginsburg, Class, Capital and Social Policy (London: Macmillan, 1979).

2. THE SHELTER CHALLENGES

Increasingly, there is a significant and growing majority who are unable to enter into transactional relationships with property owners and financial institutions because they lack sufficient resources to pay market rents, fulfil mortgage obligations or save enough money for a deposit.

The commodification of housing constitutes the major barrier to its equitable distribution, with construction and allocation determined not by need but by the accumulation of capital.

This comes at a time when we are seeing a huge demand for housing, but a steep fall in homeownership across all age groups. The major factor in this shift has been the soaring prices of housing, which has inadvertibly displaced the working class rakyat2 from the property market. The gap between wages and house prices in the country has steadily widened, too.

The Department of Statistics Malaysia (DOSM) released figures to show that the average monthly salary and wage received by workers in the country was RM3,224 in 2019; a typical apartment in the Klang Valley is one hundred times say on this basic monthly salary. Presently, there is a total of about 10 million salary and wage recipients in Malaysia. The Household Income & Basic Amenities Survey Report 2019 by DOSM showed that the country’s 2019 median income of a household of four is RM5,873. This means it is sixty times of both parents’ monthly salaries to get a decent shelter.

Basing on Engels thesis, present real estate reality has little to do with a lack of housing stock, but instead, we shall express that it is firmly rooted in the mode of capitalism itself, and the exploitation upon which the system hinged. The housing crisis, Engel had once argued, was one of “the numerous smaller, secondary evils which result from the present-day capitalist mode of production.” see Engels, The Housing Question.

Between 2010 and 2019, in the country, the average y-o-y height of increase in house prices was 7.9% surpassing income’s increment of only 5.6%.

Affordability was aggravated by the property hype during the 2010-to-2014 period, when property prices rose double digits annually — and peaked at 13.2% in 2012. The average annual appreciation for the 2012-to-2014 period was 11.2%.

According to VPC Alliance (KL) Sdn Bhd managing director James Wong, Khazanah Research Institute (KRI) defines housing affordability as a function of both house prices and income, and a yardstick of “affordable” is a median multiple of 3.0 times.

By applying the median household income 2019 published by DOSM and the affordable housing range based on KRI’s calculation of 3.0 times the median multiple, affordable house prices in most states are lower than the median house price. It appears that house prices are not within the affordability of the household, except for Putrajaya and Melaka, where at the former precinct many government officers reside.  If one is not owning a house, a room rental costs at least four times more nowadays while salary has not moved much once inflation is factored in, according to a tenant. 

Through the years, the wages and salaries of Malaysian workers had grew less than 1%, or about RM17 in real terms, Bank Negara Malaysia data had shown. Even with a 4.2% GDP growth rate, it is belied by persistent joblessness which rose to 13% of employment in 2016, according to the central bank.

These sobering realities pose another enormous challenge to rakyat2  enduring class struggle as their savings rate of 1.4% in 2013 is really razor-thin as reported by a Khazanah Research Institute (KRI) study in 2016.

In comparison, the US household savings rate, which is generally considered to be extremely low, is at 5%. Another comparison landmark, in 1996, the average UK property cost little more than twice the average annual salary; by mid-2016 it cost five times the average, House Price Index, April 2016, Nationwide. Now, we are bracketed within the same status.

There is no sizeable saved incomes because we are in a financialization capitalism environment where the circuitry of capital dictates the  direction of capital accumulation  – to corporate capital and kleptocrates and their associates – while diluting or decimating workers’ incomes.

Another predominant fact to be highlighted is that the top 0.4% of EPF account holders have more money than the bottom 51.91% combined. The EPF data had also shown that two-thirds of its members aged 54 have less than RM50,000 in their EPF account while 2 in 10 have less than RM8,000.

Moreover, Bank Negara data shows that only 1 in 10 Malaysians can survive more than six months if they lose their main source of income.

Then, there is this wide-spread inequality in investments –  as proxied by the Amanah Saham Bumiputera holdings – is equally high. The average savings in the ASB accounts of the bottom 73% stand at just RM538 while that of the top 0.2% amount to RM778,000.

The scenario that emerges from these analyses, then, is direful in present stagnated economic performance since Post-1997. The distinctive element is that while absolute poverty had declined from a peak of 49.3% in 1970 to 5.6% in 2019 poverty rates remain high for specific groups, especially the Orang Asli in Peninsular Malaysia, 34% of whom remain below the poverty line; the poverty line income (PLI) of poor households is 405,441 households or constituting about 1.6 million rakyat2 in 2019.

3. CORPORATE-GOVERNANCE COLLABORATIVE CONNIVANCE

Present business-as-usual approach is to encourage ruling regime to perpetuate monopoly-capital by attracting transnational corporations (TNC) to continue penetration into the national economy basing on a false narrative to create high-value economic activities and employment. The underlying concerted initiatives to attract transnational corporations are ostensibly to encourage knowledge transfer as well as bring in foreign talent.

Corporate capital argues that the spillover effect would attract high-net-worth expatriates/foreign investors. This capital chain would raise an organic demand and value drivers for the Malaysia’s property market. However, this approach would thus, only benefit ultimately to real estate owners and developers – much to the detriment of working class rakyat2 struggling to own affordable shelters.

The costs of inequality underlying this collaborative colluding effort is unequality to the welfare being of all working class rakyat2 seeking for shelters. This injustice in capital accumulation distribution furthering inequalities. These inequalities hold serious costs, not just for the poor but also for the economy and society as a whole.

These consequences are that high and rising inequality “curbs medium-term growth by reducing social cohesion, undermining the quality of governance and increasing pressure for inefficient populist policies,” the Asian Development Bank had stated in a report.

Similar views on the negative and pervasive effects of inequality are expressed in recent OECD and World Bank publications which indicated that the social costs of inequality are just as severe.

This is whence inequality, especially deprivation, whether in healthcare or housing provision, may intensify the grievances felt by the downtrodden class.

Many observers had elucidated that perceived inequality is stronger in urban areas where the underprivileged are exposed to the lifestyles of the upper class, and where housing settlements are tight, congested and unhealthy.

As for the health impact, researchers Richard Wilkinson and Kate Pickett state in The Spirit Level: Why Greater Equality Makes Societies Stronger: “Inequality is associated with lower life expectancy, higher rates of infant mortality, shorter height, poor self-reported health, low birth weight, AIDS and depression.”

Inadequate housing breeds ill-health.

4. THE STRUGGLE AHEAD

A radical socialist corrective is thus required, whereby housing is delivered outside the social relations of capitalism.

An extensive program of decommodification in the form of extensive public housing is desperately needed in this country like in many other nations. This deliberate and embolden public housing program is a determined directive to sponsor collectively provided and owned residences.

The case for collective provision of housing, and the ways in which class conflict, from both below and above, has historically shaped public housing conversation in the country. These struggles have to continue today, as the ravages of neoliberalism corporate capital colluding with ethnocratic governance have pushed public housing once more onto the forefront of rakyat2 socio-economic and human rights agenda.

Active government intervention in land acquisition, construction, ownership, and construction of housing is imperative for any socialist housing policy.  This intervention should take the form of municipal housing, with local governments best placed to understand and meet the housing needs of their communities as practised in UK, see Anthony Crosland, Towards a Labour Housing Policy (London: Fabian Society, 1971).

Home ownership is from 51.5 percent in Germany to as high as +90 percent in Romania, Slovakia, Singapore and Cuba in the public housing model of asset-based welfare strategies.

The financialization capitalism in housing development through REIT (real estate in trust) –  property developers and speculators and landlordism who collectively encourages the not infrequent property price increases, consortium buying bulk property properties increasing property prices, opaque structures of control and ownership increasing property prices – is not an appropriate form of house-ownership for the post-2020 politico-economy.

What is needed is a large-scale transfer of the ownership of private rented property and to pivot a shift whereby most residents of private rented housing would eventually become municipal or local authorities housing tenants, ultimately causing the private rental market to wither away.

Capitalism is the apotheosis of class society; it must be the last class society: it must, therefore, be eliminated.

The passing of dominant interests of the monopoly-capitalist world economy seeking to define its exploitative expropriation and  deprivation of the poor cannot succeed without our class struggle ahead. And, only the working class rakyat2, as admirably said by Marx, is capable of doing that.

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