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Budget 2026 comes at a time when Malaysia’s economic recovery appears steady, but not yet even. Inflation has eased, but for many households, the pressure on daily living costs remains. As we head into the next Budget, it’s time to take stock. Have last year’s social protection measures like PekA, Skim Perubatan MADANI, Program Anak Kita, Sejati MADANI and Santuni MADANI, been enough to shield vulnerable Malaysians from economic uncertainty? Or is it time to rethink how we target and design support? On this episode of #ConsiderThis Melisa Idris speaks with Dr Amjad Rabi, Social Security Economist with Universiti Malaya’s Social Wellbeing Research Centre.
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00:00Hello and good evening. I'm Melissa Idris. Welcome to Consider This. This is the show where we want
00:23you to consider and then reconsider what you know of the news of the day. Budget 2026 comes at a time
00:30where Malaysia's economic recovery appears to be steady, however slightly uneven. Inflation has eased
00:37but for many households the pressure of daily living costs remain. So as we head into the next
00:43budget, I think it's time to take stock. Have last year's social protection measures been enough to
00:50shield vulnerable Malaysians from economic uncertainty or is it time to rethink how we
00:57target and design support and social protections? Joining us on the show today to help us think this
01:03through is Dr Amjad Rabi who's a social security economist attached with University of Malaya's
01:09Social Wellbeing Research Centre. Amjad, good to have you back on the show. I know it's been almost
01:17a year since budget 2025. I'm wondering if we could look at the overall state of economic well-being
01:25for lower-income Malaysians. In terms of your assessment, has Malaysia's national economic
01:32performance actually translated into some real improvements for our security and the resilience
01:40of Malaysian households? Thank you very much Melissa for having me. It's hard to believe
01:46that's been one year since the last budget but it's also, I'm glad that we are allowing for reflection
01:53on past year. I would say maybe the most significant, I would say most significant measure is the increase
02:00of minimum wage. That affects many people. In Malaysia, at least 30% of the workers, they earn around the minimum wage.
02:10So that can be allowing people to receive higher income and that helps them for the cost of living.
02:19And especially if we know that minimum wage was the last time was increased. It was a couple of years ago in 2022
02:27to 1,500. So as a percentage of median income, it was 62% when it was in 2022. But when you leave it with that
02:35indexation, it went, it decreased. So it's good to see the government delivered on that one.
02:43And what we also have seen is the expansion on SDR, the social assistance program. It's in terms of coverage
02:52as well as the amount of money and also some ad hoc measures that we're taking, including the 100 ringgit
02:59for all citizens. So maybe like we can unpack, you know, SDR, it goes back longer time. So it's hard to,
03:11you know, to see the impact isolated for this year. The 100 ringgit, it's also, it's important to understand
03:18100 ringgit out of, you know, like it can provide food for households for the whole week, you know,
03:25grocery for those in the lower income. So it must have an impact. But for us in academia, usually when
03:30we say impact, we love to see an evaluation done to assess quantitatively what does that mean for
03:40multiple, like multiple objectives. So I would say we don't have enough information to really assess
03:49the impact of it. But one measure we wanted to go back to the wages, I think that when we can assess
03:55the impact of the minimum wage increase is in Malaysia starting actually 2013-14,
04:03all the way to the COVID-19 GDP per capita, if you take GDP divided by the population was growing
04:13at the same level with wages. So wages were growing, that means that return to capital or
04:20and return to wage was going nicely together. But what we've seen in during COVID, it's this decouple,
04:27we started seeing wages fall, both fall, but the return to capital was very resilient. So you started
04:35seeing GDP per capita increasing. So we hear economy is doing well. But at the same time, wages did not
04:42increase, wages has been very kind of sticky did not go with wages. So you started seeing this gap.
04:51And hopefully the minimum wage would have helped to, and we've started seeing some evidence that helped
05:00to bring growth of wages to be matching the growth of GDP per capita. And why is that important? Because
05:08household, low-income households, they spend a lot of their money on the grocery, on necessities.
05:16Inflation has been stable in Malaysia, but food inflation, food and transport inflation, that
05:22increased at higher rate than the growth of wages. That means that people, they have less to spend on
05:29wages, or less to spend on food basics. So they need to make decisions to transition from one food item
05:38to another. And what we've seen is transitioning from healthy choices into instant noodles and other
05:44things. So the increase of minimum wage, I think this is very significant. The expansion of STR,
05:50I think that that would help even we have some suggestion regarding STR.
05:56This is very interesting in terms of measuring success. And I think it's very important that we
06:01do a bit of reflection and evaluation. You talked about wages being one measure of seeing whether there
06:09has been progress. But what are some of your other measures that we should be thinking about,
06:14particularly when we think about success in social protections? What is it that we should be looking
06:18at and measuring? Do we look at poverty reduction? Is it social mobility? What are the indicators that you
06:26look at as an academic, Amjad? That's very important because in many countries, it's unfortunately still the
06:32thinking about social protection is a charity kind of thing. So you need to look for the most miserable
06:38looking person and give them money. If you feel good, nothing wrong about it. You know, Melissa, all of
06:43us, we are concerned about the wellbeing of our fellow Malaysians. So it's very important. But the
06:52government has multiple objectives. It's developmental approach to social protection. What I mean by this,
06:58it's sometimes, you know, when you give directly to with another target of reducing poverty, what you do
07:05is you create the incentive for people to be poor, to deserve it. It's the same example I always say,
07:12if I tell my daughter, if you fail an exam, I will give you an award. That is the wrong thing to do. We need
07:18to make sure that we give the assistance in a way that is de-linked from the income. One example, since we
07:26talk about SDR, if you look at SDR, the criteria, if you are a household with no children, so husband
07:33and wife, your income is 2,500. Under SDR, you will be entitled for 1,000 ringgit. Now, if you are a
07:43household with four children, husband, wife, and four children with income, not 2,500, let's say 2,050,
07:512,550, it's just 50 ringgit, with four children, not the other, so you will get the same 1,000 ringgit.
08:00So, and here where it's very important, because it's also like the question, why a husband and wife without
08:05children, why they have low wage, it's likely the wife is not working. So, if you give money based on this
08:12threshold that if you are 2,500 and below, you will be entitled for 1,000. If the wife gets a job
08:22to work for minimum wage 1,700, she will not make the decision that I will take the job for 1,700. She
08:29would say, if I take the 1,700, our income will increase to 4,200. So, what it means,
08:37I will lose 1,000 ringgit, which I get from STR. So, the decision becomes increment,
08:43the decision becomes based on not 1,700, but 700. And many people would say, I will not work because
08:49I will lose the benefit. So, that's the logic we wanted to see, hopefully gradually, moving away
08:55from this dependency and link to income and de-link it with income. Maybe you can link it to wealth,
09:02wealth is not easily mobile, you exclude the very rich, but it's again income, we don't want to send
09:09the signal that if you work hard, then you might lose the benefits. How do we do that? So, if you
09:16think about government's position in ensuring there's efficiency in targeting, making sure that the support
09:24reaches those who actually need it, how do you think the government should think about identifying
09:30and delivering aid to vulnerable Malaysians better? How does that process become more efficient,
09:35more precise? And this is a very relevant question, Melissa, because Malaysia now is upper-middle-income
09:41country transitioning into high-income countries. And countries, when they move into this threshold,
09:47they move away from the charity-like models into more developmental. How it can be done? Now, if you
09:53look, for instance, at STR, there are many programs, there are tens of programs in Malaysia run by so many
09:59organizations. But let's look at the biggest one, STR. STR here is the coverage now, it reached 63 percent.
10:06If you look at individual level, household multiplied by the average size, it's about 63 percent of Malaysians
10:14receiving STR. And the government is okay with also covering the middle 40, so bottom 40 and middle 40.
10:20Now, there are two ways. One way is to go to 100 percent of the public, ask them about their well-being,
10:26to identify the 63 percent or 80 percent of the public that deserve the benefit. An alternative method,
10:33it's much cheaper. And you don't know, by the way, the income of the low wage, because they are in the
10:38informal sector, they don't pay income tax, it's very difficult. And people, they, and we have evidence
10:43for that, the people, they try their different ways to manipulate the system. An alternative and better way,
10:49especially relevant to higher-income countries, is instead of targeting everyone who is poor, you don't have
10:55data, you remove the rich. The rich usually have a fingerprints in the data. You don't need to ask
11:02for it. You know, those who own two properties or more, those who own specific cars, those from the
11:11taxes. So from there, you know, they are clear in the data, the government administrative data they have.
11:20So the rule, what we are proposing, is move away from the household, as I mentioned, the example I
11:25gave you. Prioritize, for instance, senior citizens. They are disadvantaged in Malaysia. 42 percent is the
11:33relative poverty among them. Children, because again, it's developmental. You need a child to receive
11:39nutrition. Maternity, it's a very critical period in the development of the child, but also the well-being of
11:47the mother. Also, you can think of disability. You prioritize this group, and then you say we will give
11:53the cash assistance to these groups, and then you remove the ones they have
12:01wealthy threshold. Anyone is above, you know, owning two houses and more. Not one house. One house is
12:07but at least two houses and above. A certain number of cars, no question asked. We have the data,
12:12and it's good the government using MyCap, which makes life easy. So without question asked,
12:17transfer will be made. You reach the same level, but in developmental way. Instead of asking you to
12:22prove you poor, to deserve it. Now we say you deserve it, but we will exclude the ones they are well off,
12:29with no question asked, because we have the data. Administratively easier.
12:32I like that. So removing the rich from the equation, look at whoever else is left. So given that we are
12:40just a few days away from budget 2025, what would you, 2026, what would you then like to see in terms
12:47of social welfare allocations in this year's budget? What I would love to say, and I advocated many,
12:52many times, I mean, we really need to look at the most vulnerable group in Malaysia currently is
12:58actually senior citizens. Now, the assumption in Malaysia every time that if you give people money,
13:03they will become lazy, but senior citizens, they already passed the age of working. So there is no,
13:08the dependency is not fair, you know. So, but why I'm worried about, about this group is that,
13:13as I mentioned, relative poverty among them is 42% in comparison to 16% national average of relative
13:22poverty. Do some data. So this is, you know, one out of two, almost. And then why, why it's important,
13:28because we did the study, we, we, so how they, they have many people don't have EPF altogether.
13:35Many, many people out of the 24 million in the working age, only 8.5 million in EPF active members.
13:43So many, they don't, and especially women, they live longer. And when we ask, okay, you don't have EPF,
13:48you don't have anything. How you, like we did the study there, on average, they receive, on average,
13:54senior citizens above the S-65 receive 532 ringgit each senior citizen from their children, adult
14:02children. So if I imagine 500 is almost one-fifth of the median income. Imagine the pressure on,
14:10on your, your age, you know, middle-aged people that they take care, not only, you know, like,
14:15not only take care of children, you know, which is supposed to, you know, like now is very expensive
14:19in tuition, nutrition, everything is expensive, and let alone to buy an apartment. At the same time,
14:26they are obliged to provide for their parents. And they are, what we produced a paper at SWRC,
14:33Social Living Research Center. We call them the sandwich generation. It's really, they pressure both
14:38ways. One to, to take care of their children and themselves also, at this, at the same time,
14:43taking care of their parents. So if you prioritize the old age group in the, in the targeting mechanism,
14:51that would reduce the pressure on everyone, not only dignified old age in Malaysia, but also their
14:58other children that they feel pressure. Amjad, thank you so much for being on the show with me today.
15:03Dr. Amjad Rabhi there from University of Leia's Social Wellbeing Research Center. We're going to take a
15:09quick break here on Consider This. We'll be back with more. Stay tuned.
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