23 Aug - 3 min read
A report by the Department of Statistics Malaysia (DOSM) has shown that a majority of Malaysian households has experienced a decline in income due to the ongoing Covid-19 pandemic, causing many of them to fall from their current income group into a lower group. The Household Income Estimates and Incidence of Poverty Report 2020 that was published earlier this month revealed that this trend is apparent in all B40, M40, and T20 income groups.
Specifically, DOSM’s report noted that 20% of households from the M40 group (income between RM4,850 and RM10,959) have fallen into the B40 group – which is consistent with an earlier commentary made by several economists. Similarly, 12.8% of the T20 group has also shifted into the M40 income group.
More worryingly, there was an addition of 12.5% in households with income less than RM2,500 in 2020.
Additionally, DOSM pointed out that there has been a larger decrease in income for the B40 and M40 income groups as compared to the T20 income groups. This effectively caused the income distribution for B40 to decline to from 16% in 2019 to 15.9%, and for M40 to drop from 37.2% in 2019 to 36.9%. T20 group, on the other hand, owned the remaining 47.2% of income distribution – which, interestingly, saw an increase of 0.4% from 2019.
Aside from that, the report also showed that the overall household incomes have dropped in 2020, with the mean of monthly household gross income decreasing by 10.3% to record RM7,089 as compared to RM7,901 in 2019. The median of monthly household gross income – which was recorded at RM5,209 – also declined by 11.3% as compared to 2019 at RM5,873. This, too, is consistent with the findings from an earlier DOSM report that highlighted a decline in mean monthly salaries and wages in 2020.
According to DOSM, this decline in monthly household gross income is attributed not only to the loss or reduction of income among employees and self-employed individuals, but also by the reduced working hours. An increase in skill-related underemployment, too, has also contributed to the situation.
The report further highlighted an increase in the number of poor households, rising from 405,400 households in 2019 to 639,800 households in 2020. The incidence of absolute poverty also increased from 5.6% in 2019 to 8.4%, whereas hardcore poverty is estimated to increase from 0.4% in 2019 to 1%.
Despite the somewhat bleak data for 2020, however, DOSM believes that this situation is only temporary and will improve. “Overall, the outbreak of Covid-19 pandemic has had a significant impact on the household income and subsequently affected the structure of household groups. The impact may be temporary as the economy is expected to improve and recover as the spread of pandemic can be contained,” it emphasised.
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