8th June 2023 - 3 min read
Economist Geoffrey Williams has said that young Malaysians are falling into bankruptcy due to two key reasons: unemployment and low pay. This is based on the data revealed in two studies released last year, namely the Labour Market Review Q4 2022 and the Salaries & Wages Survey Report 2022.
Williams – who is also a professor at the Malaysia University of Science and Technology – said that both studies showed that the total unemployment rate for young adults aged between 25 to 34 stood at 32%. Additionally, these individuals earned an average income of RM2,053, with some earning even less than RM2,000 – which is far below the living wage proposed for Malaysians.
For context, Bank Negara Malaysia (BNM) had previously stated that the living wage is set at RM2,700 for an unmarried adult based in urban areas, as of 2018. Meanwhile, the living wage for a couple without children and with two children is set at RM4,500 and RM6,500, respectively.
Given the developments since then, and taking into account inflation, Williams suggested that the living wage for an individual based in Kuala Lumpur in 2023 should now be increased to RM3,089. Similarly, the rate for couples should also be marked at a higher RM5,149.
“High debts accumulate due to low income and unemployment. This is not just a problem for young people, but also for families with low incomes. This means young people have to take jobs with low wages to support their families,” said Williams, adding that these groups will also likely resort to bank loans to support their needs.
Additionally, Williams highlighted the plight of university and college graduates, stating that many of they are pushed deeper into debt because of their inability to repay their loans due to low wages.
Meanwhile, professor at the Faculty of Business and Economics of Universiti Malaya, Nazari Ismail believes that in many cases, youths’ fixation with a lavish lifestyle and the tendency to live beyond their means are key factors to blame for their increasing debts. “Such values are wrong, where people view owning luxury cars and houses, and going on expensive holidays as the ultimate signs of success,” he said.
Ismail also noted that youths often fall into this trap as they are influenced by politicians and business people. He further emphasised that a new set of values needs to be developed, where youths active view being in debt as something to be avoided.
(Source: Free Malaysia Today)
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