“The only way I can cope with the cost of living is if I was to marry a rich man.” This is what a young graduate said in her speech at a recent event attended by Deputy Prime Minister Tan Sri Muhyiddin Yassin. Law graduate Siti Azzahra Abd Razly said she had to pay her dad RM500 (US$131) each month so she could use his car to get to work. She also said she does not have enough savings for a down payment for a house on her meagre salary, and has to share a house with seven others.
“Many of my friends and I are suffering … We, the Malay youth, are not concerned about politics, we are concerned about survival,” the 23-year-old said at the event organised by the Malay Economic Action Council, an organisation said to be representing the rights of the Malay business community and is known for its stand against the Trans Pacific Partnership Agreement (TPP).
The video of this speech has gone viral. Some call her as being spoilt brat for demanding a cushy life almost immediately after graduating. Many others agree with her over the rising cost of living in Malaysia
Rising cost of living in Malaysia
But Siti Azzahra has a point. Salaries have not been rising as fast as cost of living for the last decade or so. Maybank Investment Bank’s chief economist Suhaimi Illias was reported to have said last year that a family of four living in Kuala Lumpur would need a “survivable” household income of RM7,000 to RM10,000 (US$1,838 – US$2,625), and this includes savings. His figures are based on the assumption that both parents are working, have two vehicles, a home mortgage and child care expenses on top of the usual expenses. “Around 10 years ago, a household income of RM3,000 (US$788) was enough to keep your head above water,” he said.
In 2013, median monthly salaries and wages in Malaysia was RM600 (US$157.50) more than the minimum wage. “In other words, half of the Malaysian workers make less than RM1,500 (US$394) per month,” according to Khazanah Research Institute. Things have improved, according to the Statistics Department, but only slightly. The median monthly household income in Malaysia in 2014 was RM4,585 (US$1,204). It used to be RM3,626 (US$952) in 2012.
Parents help their children cope
Lisa and her husband are well above the median monthly household income but are trying to cope with rising cost of living in Malaysia. They got married a year ago and have only just bought a house about 20km from their workplace in Petaling Jaya. Their combined income comes up to RM10,000 (US$2,625) but once the monthly loan repayments of RM2,600 (US$683) for their new home kicks in in August, things are going to get tight. About 40 to 50 per cent of their income will go towards repaying this and other loans like car and study loans.
“It’s definitely not going to be easy. So we will cook at home more, and cut down on shopping and eating out,” said the 30-year-old, preferring to be known only as Lisa. “We managed to buy a house within six or seven months after getting married, without having to take money from our families, and are proud of it,” she tells The Establishment Post.
A number of young employees in the Klang Valley need support from families to cope with the high cost of living. Some live with their parents, even after getting married and having children. Some use cars bought by their parents to commute to work.
“But of course, they will be helping us with some minor renovations and furnishing once we move in,” says Lisa. Expenses are going to increase once they start a family and Lisa says she and her husband will need to manage with what they have to cope with the cost of living in Malaysia.
And then there is the Goods and Services Tax
A recent survey by online recruitment company JobStreet.com shows that nine in 10 working Malaysians are finding it hard to deal with the hike in cost of living, especially after the Goods and Services Tax (GST) was implemented in April. The survey of 1,454 people also showed that one in four already faced problems even before GST came into effect. More than half of those surveyed have started taking cost-cutting measures like packing lunch from home and carpooling.
Employers are planning on giving higher salary increments for 2015, according to a survey late 2014 by the Malaysian Employers Federation. Executive salary is expected to rise by 5.89 per cent and 5.78 per cent for the non-executives, so as to help employees cope with GST. A six per cent increase in salaries may not go too far.
To make matters worse, businesses, the biggest employers in Malaysia, have been reporting a slowdown in consumer spending, especially in property and retail sales.
Middle class needs help too
The 11th Malaysia Plan unveiled in May aims to increase the per capita income of the bottom 40 per cent segment of the population (B40) – about 11.7 million people – from RM2,500 per month to RM5,000 per month by 2020 (US$686 to US$1,371). Then there are the cash handouts and other social welfare measures given under the 1Malaysia People’s Aid (BR1M) programme. There are now 7.1 million BR1M recipients, which is almost 24 per cent of Malaysia’s 30 million population.
The government ought to also pay attention to the middle 20 (M20) that “has remained relatively small for Malaysia, trending around the 20 per cent when in comparison in a typical developed country situation, the percentage is closer to 50-55 per cent, according to renowned economist Tan Sri Dr Kamal Salih said. (See: Malaysia’s fuel subsidy removal: unpopular but necessary)
It is not just the lower income group that is struggling with high cost of living in Malaysia but also the middle class and this is something the government and Budget 2016 needs to address.
