Tuesday, September 25, 2012

Poverty line income in 2012? The number of poor in Malaysia increasing or decreasing

The BN government happily tells us that our poverty rate is dropping. Reading a lot of speeches and reports we see how thanks to the BN government, our poverty rate has dropped...we are given statistics (percentages) of how much it has dropped - BUT the question is always what exactly is that poverty line income that is being used. How is it calculated? Is it reasonable? What was the earlier poverty line incomes? How do you even derive this percentages showing dropping poverty rates... is it based on a survey of all Malaysians, or just a sampling, and if a sampling what the number sampled, etc. Was it just workers in the public sector and their families that were sampled? Malaysians need to know all this - our trust and belief in the ruling government and its Ministers are faltering...trust is disappearing....and only transparency may help regain some of the lost trust.

The state’s poverty rate dropped from 24.2 per cent in 2004 to 19.7 per cent in 2009, Chief Minister Datuk Seri Musa Aman disclosed yesterday. He said the marked decrease in the poverty rate is in the interior areas which recorded a 13.2 per cent reduction from 29.0 per cent in 2004 to 15.8 per cent in 2009. - Government Transformation Program Website, Borneo Post, 7/9/2012, Poverty rate drops drastically in interior – CM

What is Malaysia's poverty line income? The Human Resource Minister said that it was RM720 in a speech on August, 2010, but then a Malaysian Insider report, aparently in reliance with the 10th Malaysia Report released on June 2010, and the New Economic Report released in April that year tells us that the poverty income line for Malaysia in 2009 is RM800.
"...The other reason is, according to our National Employment Returns 2009, 34% of 1.3 million workers in the study earn less than RM700. It could be more. Our Government has determined the poverty line to RM720, so we have by virtue of the wage mechanism itself, we are creating poverty in about 34% of people on the go, without doing anything else at all. So when the Government decided the poverty rate is RM720 and our wage mechanism by virtue implementation as we have, shows that 34-35% of below poverty line and that is something to do and to think about...." - 







Now, those figures were for 2009, what then is the new poverty line income for 2012 - given that subsidies for sugar have been reduced, and certainly cost of living has gone up....oh yes, now we even have to pay that extra service tax...mmm 

The BN government really must be transparent as to how the poverty line income is calculated, and also reveal information about past poverty line incomes...and when it changed, etc. 

If Peninsular Malaysias, poverty line income is RM763, then...

“RM5.80 is supposed to pay for three meals, transport costs, rent, recreation and the other components for ONE person in ONE day. Tell me, can a Malaysian in the Peninsula even buy three meals a day on RM5.80?

Looking at the poverty income line for 2009, it is obvious that it is higher for Sabah (RM1048) and Sarawak (RM912), whilst for Peninsular Malaysia it is RM763.

So, how can the BN government justify setting the minimum wage for Peninsular Malaysia at RM900, and for Sabah, Sarawak and the Federal Territory of Labuan at RM800. Rightly, the minimum wages of workers in East Malaysia should have been so much higher at the very least equivalent to their poverty line income.

Someone told me once that to show a country's poverty rate is dropping is something that could very easily be achieved the poverty line income, or keeping the poverty line income low... Wonder whether that is what our government need to demonstrate how successfully it has eradicated poverty in Malaysia? What do you think?

How poor are we, really?

July 21, 2010
KUALA LUMPUR, July 21 — The government likes to boast that Malaysia has almost erased poverty. It is the one unchallenged success that is shouted out again and again to show how far we have come since Merdeka.

The line is familiar: “In 1970, 49.7 per cent of households were living in poverty. Now it is only 3.8 per cent.” Or out of 6.2 million households, only 228,400 can be classified as poor.

These 228,400 are households that earn an average of RM800 a month and below.

Is RM800 a fair cut-off point? Because it effectively means that if a household of four earns RM900, RM1,000, or even RM1,500 a month, they cannot be considered poor.

If that is the case, then why are there more and more media reports of families complaining that they cannot make ends meet even when they earn RM2,000?

How did the government calculate and decide that RM800 is the poverty line?

Jayanath Appudurai, who writes extensively on poverty for the Centre for Policy Initiatives, believes that the government’s calculations are unrealistic.

Here, he argues that we need a new standard to measure poverty — one that more accurately represents the cost of food, clothing, rent and other basic necessities, and how much it takes for an average family of four to keep themselves afloat in today’s Malaysia.

Jayanath’s assessment is based on government data in its 10th Malaysia Plan (10MP) report released in June, and the New Economic Model (NEM) that was out in April.

The Poverty Income Level (PLI) is defined as:
“An income that is necessary to buy a group of foods that would meet the nutritional needs of the members of a household. The income is also to meet other basic necessities such as clothing, rent, fuel and utilities, transport and communications, medical expenses, education and recreation.”

Plainly speaking, the PLI is how much money in a month a Malaysian household needs to meet these eight components.

Though the Government calculates different PLIs for Malaysia’s three regions, the total average PLI is RM800.

For this demonstration, Jayanath uses the Peninsula PLI of RM763.

A household living in the peninsula is considered poor only if its monthly income is below RM763.

“The government claims that it uses a World Bank standard to measure PLI. But they do not reveal the actual methodology of how they arrive at RM763,” says Jeyanath.

The World Bank standard, Jayanath says, recommends that medium-income countries should calculate PLI based on US$2 (RM6.20) per individual per day. Meaning one person would need US$2 per day in order to meet both food and non-food necessities.

If that figure were used for Malaysia, a theoretical household of 4.4 people would then need RM858 a month to not be declared poor.

The government considers a household as comprising an average of 4.4 members, says Jayanath. (Total number of households divided by total population = 4.4).

The PLI of RM763, therefore, is translated into a daily income of RM25.45 that a household needs to meet the eight components such as food, rent, clothing and fuel.

“Or, that if a member of a household earns RM5.80 a day, they cannot be considered poor.

Since, according to the government, you are able to live on RM5.80 a day.

In other words Jayanath explains:

“RM5.80 is supposed to pay for three meals, transport costs, rent, recreation and the other components for ONE person in ONE day. Tell me, can a Malaysian in the Peninsula even buy three meals a day on RM5.80?

“In fact, I’d challenge our government ministers to try that,” said Jayanath

Jayanath says countries such as Britain and Australia calculate PLIs based on the median income of its households. The median income is a country’s total income divided by half.

The PLI is two-thirds of the median income.
In Malaysia the median income is RM2,830. Using this method, the PLI would then be RM1,886.

In effect, this translates into RM14.20 per day for an individual to meet all their eight needs.

“Compared to RM5.80, is not RM14.20 a more realistic figure in terms of how much one needs per day in Malaysia?”

A former finance minister had once said, repeatedly, that if we were to revise how we measure poverty, our poverty rate would not be the vaunted 3.8 per cent. He is right, technically.

Jayanath’s calculations would put Malaysia’s poverty rate at somewhere between 31 to 32 per cent.

“Our poverty level looks good on paper but woefully ignores reality. We are so obsessed with selling this story that we are a success.”

Statistics are supposed to accurately measure our economic environment, so that in this case, pin-point policies to deal with poverty can be crafted.

The government has begun scaling back subsidies so that they would only benefit those they are meant for — the poor.

How is it supposed to do this if we cannot even accurately measure who the poor are? - The Malaysian Insider, 21/7/2010, How poor are we, really?


icare said...

That question also in my mind " Why east Malaysia minimum income lower than peninsular" Their Poverty Line RM1048 highest than Peninsular and the important thing - their goods highers than penisular....and now starting January 2, 2013 the price of Nasi Kuning for examples increased 50 cents.....??????? OMG

Unknown said...

Because sini saBah .. sikit RM for survival , boleh-bah

Unknown said...

because sini sabah-bah , everything also boleh-bah .. even with the very very very low income , survival is boleh-bah .. FYI , living cost is 30% higher in sabah , compared with peninsular