The Malaysian Trades Union Congress (MTUC) has welcomed the government’s decision to revise the national Poverty Line Index (PLI) and called for a revision of the minimum wage. MTUC secretary-general J Solomon said the revision of the PLI from a monthly household income of RM980 to RM2,208 means the country’s poverty rate is now at a more realistic level of 5.6%.

“The revision of the PLI also shows that the government has taken seriously the findings of former United Nations (UN) special rapporteur on extreme poverty and human rights Philip Alston (pic), whose report in August last year debunked Putrajaya’s earlier claims that poverty had been virtually eradicated in Malaysia,” he added. Solomon said while the RM2,208 benchmark for poverty is considerably lower than the RM2,700 monthly income the MTUC has been urging the government to set as the new minimum living wage, the fact that the government has set a new PLI at more than double the monthly income set previously bodes well for the government’s pledge to tackle poverty with more realistic data. “This is very important as poverty has increasingly impacted Malaysia’s 15 million workforce over the years and more so now due to the economic fallout as a result of the Covid-19 pandemic.

“Although the poverty rate dropped from 7.6% in 2016 to 5.6% last year based on the new PLI, poverty is likely to worsen considerably in the coming months as hundreds of thousands of workers have been laid off or forced to take deep pay cuts. He noted that Bank Negara Malaysia (BNM) had estimated that up to 27% of households living in Kuala Lumpur are earning below the living wage — the level of income needed for a household to afford a minimum acceptable standard of living. Given the mismatch between the PLI and the minimum wage, the MTUC called for the government to revisit the low minimum wage and bring it on a par with the living wage proposed by BNM.

“With the new PLI set at RM2,208, the government must now acknowledge that the minimum wage of RM1,100 to RM1,200, especially for urban areas, is not realistic nor in tandem with the cost of living.” “As the Poverty [Line] Index is now set at more than RM2,000, surely the minimum wage must also be adjusted accordingly,” Solomon said. The Department of Statistics Malaysia’s (DOSM) methodology was recently updated to reflect the PLI change, the first time since it was reviewed in 2005. This means the number of households now categorised as poor has increased from 24,700 in 2016 to 405,441 last year.

Responding to the revision of the PLI, Alston said “Malaysia’s government has taken a courageous step towards bringing its poverty line closer to reality.” He was the United Nations special rapporteur on extreme poverty and human rights between 2014 and 2020. However, Alston pointed out that the 5.6% new poverty rate was only one-third of that estimated by most independent analyses. He urged the government to include an even more realistic benchmark in the 12th Malaysia Plan.

On Friday, Minister in the Prime Minister’s Department (Economic Affairs) Datuk Seri Mustapa Mohamed said the PLI has been raised after the government adopted a new calculation methodology. The new PLI was also revealed by Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin during his presentation of the Household Income, Expenditure and Basic Amenities Survey 2019 report in Putrajaya. Datuk Seri Mustapa said, “Ministries, departments and government agencies including state governments need to take note of the 2019 PLI in designing their policies and programmes and reviewing their policies related to poverty eradication and social assistance,”. “The government can also design a more appropriate, dynamic and pragmatic approach for each target group including in preparing the 12th Malaysia Plan, 2021-2025 which will be presented early next year, ” he said.


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