The State Of Households II

State of Households II
19 September 2016
Khazanah Research Institute

KhazanahResearchInstitute
Authors
• Intan Nadia Jalil
• Dr Muhammed Abdul Khalid
• Yap Gin Bee
• Jarud Romadan Khalidi
• Nazihah Muhamad Noor
• Tan Theng Theng
• Adibah Abdulhadi
2

Executive
Summary
3

Executive Summary
Households are better off
o Compared to 2012, households in 2014 have a higher median (RM4,585) and average income (RM6,141).
The growth in the incomes of the lowest 40% of households (the B40) has been the fastest.
o Cash transfers (like BR1M) have improved incomes, particularly among the less well-off.
o The gap between rural and urban households and households of different ethnic groups is closing and the
Gini coefficient (a common measure of inequality) has improved to 0.401.
o Access to basic infrastructure (eg schools and public health facilities) continues to improve and we are a
more wired nation as more people and households have internet access.
o Poverty has declined and hardcore poverty is minimal although the poverty rate for Orang Asli in the
Peninsula and the Bumiputeras in Sabah and Sarawak are still a concern.
o Unemployment, which has increased slightly, is still low at 3.1% in 2015.
More women have entered the workforce
o The participation rate of women in the workforce is now (2015) 54.1% and peaks at 87.7% for young
women with a tertiary education.
We live longer
o Life expectancy at birth is 77.4 years for women and 72.5 years for men. Men who are 60 years old can
expect to live to 78.4, and women, 80.9 years. It is a far cry from 1970 when the life expectancy at birth for
men was 61.6 years.
4

Executive Summary
But some disparities remain
o 84.8% of Kelantan and 81.1% of Perak households earn less than RM6,000 a month, whereas 64.4% of
Kuala Lumpur and 69.2% of Putrajaya households earn more.
o Disparities in wealth (measured by EPF and ASB savings) are more pronounced than that of income
(reflecting the fact that those with higher incomes can save more).
o There is a concern that many will not have saved enough for a 20-year retirement and are taking on too
much debt.
Low wages and youth unemployment are of concern
o The median salary is only RM1,600 per month, although those who live in an urban area or are educated
earn more.
o Youth unemployment, while still low, is, at 3.4% in 2014, higher than overall unemployment, and a large
proportion (33.8%) of the unemployed have a tertiary education.
Food prices have risen faster than overall inflation
o In selected urban areas, the cost of feeding a family of five with a diet that meets the Ministry of Health’s
recommendations is high compared to the poverty line.
o We have also seen price anomalies in imported and locally produced foodstuffs like vegetables, milk, and
chicken that deserve further investigation.
Birth rates are falling:
o Coupled with our longer life expectancy this means that we are becoming an ageing population. As a
society we will have to learn to balance and prioritise public spending between the needs of the young and
the needs of the old.
5

Contents
6

Table of
Contents
1. State of Households
2. The Malaysian Workforce
3. Population Ageing
• State of Households
• State of Household incomes
• Inequality
• Household Expenses
• Households and Food
• Household Savings and Debt
• The Malaysian Workforce
• Women in the Workforce
• Population Ageing

State of Households
8

Malaysia continues to prosper
Although nominal GDP per person fell from USD10,432 in 2012 to USD9,766 in 2015 at market exchange rates, it
rose from USD23,100 to USD26,891 in purchasing power parity (PPP) terms.
+State of Households
Chart 1: Index of Malaysian nominal GDP and
GDP per person, 1980 – 2015
0
500
1,000
1,500
2,000
2,500
1980
1985
1990
1995
2000
2005
2010
2015
GDP
GDP per
person
Country USD
Current
International $
Costa Rica 10,630 15,377
World 9,996 15,465
MALAYSIA 9,766 26,891
East Asia & Pacific 9,337 15,693
Turkey 9,130 19,618
Mexico 9,009 17,277
Brazil 8,539 15,359
Upper middle
income
7,737 15,697
Table 1: Nominal GDP per person for middle income
countries, 2015
All sources and notes pertaining to data and measurement may be found in the State of Households II 9
1980 = 100

Incomes for the B40 have grown the
fastest
Chart 3: Index of nominal GDP per person and nominal average household income, 1979 – 2014
Middle 40%
Top 20%
0
200
400
600
800
1,000
1,200
1,400
1979
1984
1987
1989
1992
1995
1997
1999
2002
2004
2007
2009
2012
2014
GDP per person
Bottom 40%
10
1979 = 100

GDP and GDP per person improved in
all states
Chart 5: Nominal GDP, by state, 2012 and 2014 Chart 6: Nominal GDP per person, by state, 2012 and 2014
0 50 100 150 200 250
Perlis
Kelantan
Terengganu
Melaka
Kedah
N. Sembilan
Pahang
Perak
P. Pinang
Sabah
Johor
Sarawak
K. Lumpur
Selangor
Nominal GDP
RM b 0 20 40 60 80 100
Kelantan
Kedah
Sabah
Perlis
Perak
Terengganu
Johor
Pahang
N. Sembilan
Melaka
Selangor
P. Pinang
Sarawak
K. Lumpur
Nominal GDP Per Person
2014
2012
RM k
11

Most households have more than one
breadwinner
Chart 7: Average household size and number
of income recipients, 2014
Chart 8: Household distribution, by number
of income recipients per household, 2014
3.7
4.2
4.3
4.4
4.5
0 2 4 6
Average Household Size
Bumiputera
Others
MALAYSIA
Indians
Chinese
1.7
1.8
1.8
2.0
1.8
0 1 2
Number of Income
Recipients
One
43.3%
≥ Five
1.2%Four
4.1%
Three
12.2%
Two
39.2%
12

Household incomes grew faster than
GDP per person
3,626
4,585
5,000
6,141
3,457
4,150
4,766
5,558
0
1000
2000
3000
4000
5000
6000
2010 2011 2012 2013 2014
Nominal average household income
Real average household income
Nominal median household income
Real median household income
Nominal GDP per person per month
Real GDP per person per month
RM
Chart 9: GDP per person and household incomes, nominal and real terms (RM)
13

Hardcore poverty has almost
disappeared
Chart 10: Hardcore and total poverty, 1984 – 2014
0%
5%
10%
15%
20%
25%
1984 1987 1989 1992 1995 1997 1999 2002 2004 2007 2009 2012 2014
Total poverty
2014, 0.6%
Hardcore poverty
2012, 0.2%
14

Poverty is not just income
Dimension Indicator
Education Years of schooling
School attendance
Health Access to health facilities
Access to clean drinking water
supply
Living Standards Condition of living quarters
Number of bedrooms
Toilet facility
Garbage collection facility
Transportation
Access to basic communication
tools
Income Mean monthly household income
Infrastructure continues to
improve
o Rural households in Kedah,
Kelantan, Sabah, Sarawak, and
Terengganu have improved
access to pipe water and are now
closer to secondary schools and
health facilities
We are a wired nation
o 44.3% of all households have
internet access, 52.8% have
laptops, and 65.9% have Astro
o According to MCMC around one
in three mobile phones users use
a smartphone
o Broadband penetration rate is
72.2% as at 2Q 2015
The Multidimensional Poverty Index (MPI), looks at
other indicators
15

B40 households depend on current
transfers the most
Chart 15: Main sources of income for heads of
households, 2012 and 2014 (percentage)
Chart 16: Sources of household income for the B40
households, 2009 – 2014 (percentage)
48.1 47.8 49.5
20.9 21.5 19.2
13.2 12.8 12.6
17.8 17.8 18.8
0
10
20
30
40
50
60
70
80
90
100
2009 2012 2014
PercentageofHousehold
Income
Paid employment
Self-employment
Property and
investments
Current transfers
received
69.9 67.0 66.1
13.3 16.8 14.8
10.4 9.4 11.1
6.5 6.8 8.0
0
10
20
30
40
50
60
70
80
90
100
2009 2012 2014
Income
Paid employment
Self-employment
Property and
investments
Current transfers
received
72.8 72.1 69.6
13.4 16.2 15.8
11.1 9.0 11.4
2.7 2.8 3.3
0
10
20
30
40
50
60
70
80
90
100
2009 2012 2014
Income
Current transfers
received
Property and
investments
Self-employment
Paid employment
Chart 17: Sources of household income for the
M40 households, 2009 – 2014 (percentage)
Chart 18: Sources of household income for the
T20 households, 2009 – 2014 (percentage)
Property income includes “imputed rent”, which is based on the estimated value of the owner-occupied house.
16
%
% %
66.6 65.0
17.2 16.0
9.7 11.4
6.5 7.6
0
10
20
30
40
50
60
70
80
90
100
2012 2014
Income
Current transfers
received
Property and
investments
Self-employment
Paid employment
%

The income gaps are narrowing
Chart 22: Urban-rural gap across time, 1995 – 2014 Chart 24: Income gap, by ethnicity, 1995 – 2014
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
1995
1997
1999
2002
2004
2007
2009
2012
2014
PercentageofMedianHouseholdIncome
Rural
Urban
0%
20%
40%
60%
80%
100%
120%
140%
160%
1995 1997 1999 2002 2004 2007 2009 2012 2014
PercentageofMedianHouseholdIncome
Chinese
Indians
Bumiputera
Others
17

Gini coefficients have fallen
Chart 23: Gini coefficients by strata, 1970 – 2014
0.30
0.35
0.40
0.45
0.50
0.55
0.60
1970
1974
1976
1979
1984
1987
1989
1992
1995
1997
1999
2002
2004
2007
2009
2012
2014
Malaysia
Urban
Rural
The Gini coefficient has dropped
to 0.401 in 2014 from 0.430 in
2012.The Gini coefficient was the
highest in 1976 at 0.557.
o For urban households, the Gini
fell by 2.6 percentage points
from 0.417 to 0.391 in 2014.
o Rural households also
experienced a similar drop of 2.7
percentage point from 0.382 to
0.355 in the same time period.
18

Household income distribution has
improved
Chart 20: Household income distribution
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
<RM1k
1k-<2k
2k-<3k
3k-<4k
4k-<5k
5k-<6k
6k-<7k
7k-<8k
8k-<10k
≥10k
DistributionofIncome
Monthly Household Income Categories
22.6% 55.2%
74.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
<RM2k
2k-<3k
3k-<4k
4k-<5k
5k-<6k
6k-<7k
7k-<8k
8k-<9k
9k-<10k
10k-<11k
11k-<12k
12k-<13k
13k-<14k
14k-<15k
≥15k
Monthly Household Income Categories
11.7%
42.1%
65.0%
2012 2014
19

Rich states, poor states
30.8
35.6
48.0
53.0
60.0
63.1
65.0
65.9
73.5
73.9
74.0
77.1
79.1
80.3
80.3
81.1
84.8
0 10 20 30 40 50 60 70 80 90
Putrajaya
K. Lumpur
Selangor
Labuan
Johor
Melaka
MALAYSIA
P. Pinang
N. Sembilan
Sarawak
Sabah
Terengganu
Kedah
Pahang
Perlis
Perak
Kelantan
Percentage of Households
Below RM 2k 2k - < 3k 3k - < 4k 4k - < 5k 5k - < 6k
%
20

Rich states, poor states
69.2
64.4
52.0
47.0
40.0
36.9
35.0
34.1
26.5
26.1
26.0
22.9
20.9
19.7
19.7
18.9
15.2
0 10 20 30 40 50 60 70 80 90
Putrajaya
K. Lumpur
Selangor
Labuan
Johor
Melaka
MALAYSIA
P. Pinang
N. Sembilan
Sarawak
Sabah
Terengganu
Kedah
Perlis
Pahang
Perak
Kelantan
Percentage of Households
RM 6k - < 7k 7k - < 8k 8k - < 9k 9k - < 10k 10k - < 11k 11k - < 12k 12k - < 13k 13k - < 14k 14k - < 15k ≥ 15k
%
21

Some households are more equal than
others
Chart 29: Average household size and household income, by ethnicity, strata, and gender, 2012 and 2014
Median
2012
Average household income
2014
Average
household size Median
Female Male Malaysia Ethnicity Malaysia Male Female
3,626 3,671 5,248 5,000 National 6,141 6,355 4,923 4.3 4,585
3,282 3,404 4,654 4,457 Bumi 5,548 5,717 4,580 4.5 4,214
4,643 4,508 6,700 6,366 Chinese 7,666 7,988 5,821 3.7 5,708
3,676 3,304 5,624 5,233 Indian 6,246 6,511 4,919 4.2 4,627
2,762 4,097 3,786 3,843 Others 6,011 6,236 5,125 4.4 4,372
Urban
4,239 6,010 5,742 National 6,833 7,071 5,478
4,129 5,502 5,301 Bumi 6,340 6,520 5,275
4,646 6,985 6,622 Chinese 7,933 8,275 6,006
3,840 5,885 5,491 Indian 6,455 6,732 5,073
5,674 5,230 5,323 Others 7,195 7,316 6,663
Rural
2,387 3,225 3,080 National 3,831 3,961 3,109
2,368 3,148 3,010 Bumi 3,787 3,908 3,130
2,795 3,951 3,806 Chinese 4,389 4,581 2,991
2,224 3,539 3,271 Indian 3,674 3,818 2,906
2,149 2,487 2,432 Others 3,204 3,473 2,377
Min: 2,149 Max: 8,275
22

Richer older men
Chart 30: Household median income, by age of head of household (RM)
0
1,000
2,000
3,000
4,000
5,000
6,000
15–24
25–29
30–34
35–39
40–44
45–64
≥65
Total
2004
2007
2009
2012
2014
RM
23

One in five EPF members nearing retirement have less than
RM10,000 in retirement funds. Wealth inequalities far exceed
income inequality
Chart 31: Gini coefficients, 2014
0.836
0.658
0.401
ASB
EPF
Household Income
In 2014, Active EPF members aged 51 – 55
had average savings of RM159,952
Excluding the richest 1.6% (6,413 members),
the average was RM137,605.
As at February 2016, the savings of the top
20,867 (0.3% of members) was more than
the savings of the bottom 3,117,610 (47%)
members.
The low savings reflect low incomes. As at
December 2015:
o 91% active EPF members earned less than
RM6,000 a month (2013: 96%);
o 83% earned less than RM4,000 (2014:
85%); and
o 58% earned less than RM2,000 (2013: 62%).
Although the average investment in ASB
increased in 2014, distribution remains
skewed.
o In 2012, the bottom 73.7% had an
average savings of RM611 in their
accounts.
o By 2014, the average savings for the
bottom 71.5% had fallen to RM536.
o Meanwhile, the average savings for the
top 0.2% of unit-holders grew by
RM52,591 to RM745,038.
o Since the maximum that ASB unit-
holders can invest is RM200,000, the
high account balances of the wealthy are
from many years of accrued dividends.
Average savings
Bottom 13.5% RM 5,621
Next 6.5% 9,585
Top 1.6% 1,600,000
Table 6: Savings of EPF members in 51 – 55 age
group, 2014
24

0%
20%
40%
60%
80%
100%
<RM2k
2k–<3k
3k–<4k
4k–<5k
5k–<6k
6k–<7k
7k–<8k
8k–<9k
9k–<10k
10k–<15k
15kandabove
Housing & utilities
Health
Education
Alcoholic beverages & tobacco
Recreation & culture
Clothing & footwear
Miscellaneous goods &
services
Furniture & household maintenance
Food & non-alcoholic
beverages
Transport
Restaurant & hotels
Communication
Biggest expenditure items are housing
and utilities, transportation, and food
Chart 32: Average household spending,
real and nominal terms (RM)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1993/94 1998/99 2004/05 2009/10 2014
Real
Nominal
RM
Chart 34: Percentage monthly spend on goods and services,
by income category, 2014
The richest households only allocate 9.9% of their monthly expenditure or RM992 per month on food
at home (RM992 per month). In contrast, the poorest households who earn less than RM2,000 spend
RM403 ie 30.4% of their monthly expenditure.
25

Modern conveniences
Chart 37: Ownership of electrical appliances, by
states, 2012 and 2014 (percentage)
0% 25% 50% 75% 100%
Putrajaya
K. Lumpur
Selangor
Melaka
Johor
Labuan
P. Pinang
N. Sembilan
Pahang
MALAYSIA
Kedah
Perak
Terengganu
Perlis
Kelantan
Sabah
Sarawak
Air-conditioner
2014
2012
• 83.9% of households own a car in 2014 (77.8% in 2012).
• Almost all households own refrigerators, washing machines, televisions and mobile phones.
Marque Quantity
Mercedes 10,859
BMW 7,515
Volkswagen 6,405
Lexus 2,101
Audi 1,592
Mini 756
Volvo 619
Porsche 567
Land Rover 525
Total 30,939
Table 8: Number of luxury cars sold by official
distributors, 2015
26

Can Malaysians afford nutritious food?
Table 9: Minimum daily expenditure for a food
basket to meet the MDG
Chart 39: Minimum monthly expenditure for a food basket that meets the MDG, 2014
City
Derived daily
expenditure per
household
Derived daily
expenditure per
person
Kota Bharu RM 25.21 5.04
Alor Setar 26.17 5.23
Johor Bahru 27.76 5.55
Kuala Lumpur 28.43 5.69
Kuala
Terengganu
29.38 5.88
Kota Kinabalu 33.06 6.61
Kuching 38.45 7.69
Table 17: Monthly food basket per household
Food item
Monthly quantity
per household
Daily quantity
per household
Rice 25.0 kg 800 g
Bread 300 slices 10 slices
Chicken 9.5 kg 312.5 g (a quarter of a chicken)
Eggs 150 5 eggs
Fish 16.2 kg 540 g (around 5 kembung)
Legumes 30 kg 1 kg (e.g. dhal)
Milk 2.3 kg 77 g powdered milk
Fruit 47.7 kg 1.6 kg (e.g. papaya)
Vegetables 35.1 kg 1.2 kg (e.g. kangkung)
Cooking oil 5.0 kg 160 g
Onions 6.0 kg Around 2 onions
27

Food is getting more expensive
Chart 40: Index of monthly consumer price
indices, 2010 – 2015
CPI
Non-Food
95
100
105
110
115
120
125
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Food
95
100
105
110
115
120
125
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Food and
Non-Alcoholic
Beverages
Food at Home
Food Away
from Home
Non-Alcoholic
Beverages
Chart 42: Index of monthly price indices for F&B, Food at
Home, Food Away from Home, and Non-Alcoholic
Beverages, 2010 – 2015
28
2010 = 100 2010 = 100

Food is getting more expensive
Chart 43: Components of the Food at Home Index, 2015 (percentage)
29

Some prices are seasonal
Chart 46: Index of monthly prices for mustard green, red chili, chicken egg, and tomato, 2010 – 2015
Chicken egg - Grade A
(Telur ayam)
Red Chilli - Local
(Cili merah tempatan)
Tomato - Highland
(Tomato tanah tinggi)
Mustard green
(Sawi hijau cerah)
50
70
90
110
130
150
170
190
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
v v vv v v v v v
v
Chinese New Year
Hari Raya Aidilfitri
2010 2011 2012 2013 2014 2015
30
Jan-10 = 100

Cereals are the largest component of
food imports
Chart 48: Food imports, by commodity, 2005 – 2015 Chart 49: Percentage of food imports, by
commodity, 2005 – 2015 (by value)
0
1
2
3
4
5
6
7
8
9
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Meat
Fish & seafood
Dairy & eggs
Vegetables
& fruits
Cereals
RM b
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
ShareofTotalImports
Cereals
Coffee, tea,
cocoa &
spices
Vegetables &
fruits
Misc. edible
products
Animal feed
meal
Dairy &
eggs
Sugar
Fish &
seafood
Meat
Live
animals
31

Malaysia depends on only a handful of
countries for its food imports
Chart 50: Sources of food imports, 2014
32

Milk price anomaly
Note: The indices used include similar (comparable) items in the
basket of commodities.
Chart 62: Monthly dairy price indices for Malaysia
and the world, 2010 – 2015
Chart 63: Monthly dairy price indices for Malaysia,
Australia, and New Zealand, 2010 – 2015
FAO Dairy Price
Index
Milk Powder &
Other Dairy
Products Index
60
70
80
90
100
110
120
130
140
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
AU export
price index -
Dairy products
& eggs
NZ export
price index -
Dairy products
MY milk
powder &
other dairy
products
index
70
80
90
100
110
120
130
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
33
2010 = 100 2010 = 100

Household debt remains high & Household savings
are low. Time for a Consumer Credit Act?
Chart 65: Profiles of borrowings, by purpose of
financing, 2014 and 2015
45.7 48.6
16.6
15.5
15.7 15
7.7 7.6
6.5 6.1
3.9 3.5
3.9 3.7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015
PercentageofHouseholdDebt
Others
Personal Financing
Non-Residential
Securities
Credit Cards
Residential
Hire purchase
o Households earning less than RM3,000
per month have a leverage ratio of 7x
their annual income on average. Higher
income households have an average
leverage ratio of around 3x.
o The bulk of national savings is by public
and private institutions.
o Household savings at 1.4% of adjusted
disposable income are low compared to
Chile and Korea, but still higher than
Japan
34

The Malaysian Workforce
35

Malaysia’s wages as a share of GDP is
low
+The Malaysian Workforce
Chart 69: Employees compensation as a
percentage of GDP
0 500 1,000 1,500 2,000 2,500 3,000
Rural
Urban
Sabah
Kelantan
Sarawak
Kedah
Terengganu
Perlis
Pahang
Perak
MALAYSIA
Melaka
P. Pinang
N. Sembilan
Labuan
Johor
Selangor
K. Lumpur
Putrajaya
Median Monthly Salaries and Wages
2015
2012
2015
2012
RM
Chart 19: Change of median monthly wages
between 2012 and 2015
In the last 5 years, wages have grown faster than productivity. But over the past 50 years,
wages have grown slower than productivity.
36
53.4
52.8
51.6
50.7
49.4
47.8
44.5
42.7
39.2
34.8
34.3
33.9
32.2
27.2
0 10 20 30 40 50 60
US
France
Japan
China
UK
Norway
Korea
Singapore
Chile
MALAYSIA (2015)
MALAYSIA (2014)
MALAYSIA (2013)
Thailand
Mexico
%

Malaysian workers have become more
educated
Chart 74: Labour force, by educational
attainment, 1982 - 2015
Source: DOS (2016c), DOS (2015g), and DOS (n.d.b)
Table 13: Median monthly wages and wage premium,
by education levels, 2015
Source: DOS (2016d)
For those with tertiary education, 44.0% have a degree and 36.0% a diploma.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1982 1987 1993 1999 2004 2009 2014
PercentageoftheLabourForce
Tertiary %
Secondary %
No formal education %
Primary %
Education level
Median
monthly
salaries and
wages
(2015)
Wage
premium,
compared to
previous level
of attainment
Wage
premium,
compared
to 'SPM
and below'
No Certificate 1,000
SPM and below 1,400 40.0%
STPM/Certificate 2,000 42.9
42.9%
Diploma 2,800 40.0
100.0
Degree 4,350 55.4 210.7
37
RM

Youth unemployment is higher than
overall unemployment
Chart 77: Unemployment, by educational
attainment, 1982 – 2015
Chart 21: Overall unemployment rate vs unemployment
rate for 25 to 29 year olds, 1995 – 2015
Rising unemployment especially among the 20 – 29 age group cohort could signal
structural rather than cyclical challenges.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1982 1987 1993 1999 2004 2009 2014
PercentageoftheUnemployed
Tertiary %
Secondary %
No formal education %
Primary %
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
UnemploymentRate
25 –29
Overall
38

Women’s labour force participation
Chart 84: Women’s labour force participation rate by age in (a) Japan and (b) Korea, selected years
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
15–19
20–24
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
LabourForceParticipationRate
Men
2014
2004
1995
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
15–19
20–24
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
Women
1995
2004
2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
≥65
Japan
1995 2000 2005 2010 2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
≥65
Korea
1995 2000 2005 2010 2014
Chart 83: Labour force participation rate, by age for men and women, 1995, 2004, and 2014
39

The more educated, the more likely a
woman is to be in the workforce
Chart 82: Women’s labour force participation
rate in ASEAN, 2014 (percentage)
Chart 86: Labour force participation rates, by
education level and age for women, 2015
51.1
51.8
53.6
58.3
58.6
62.0
73.2
75.1
76.3
77.4
0 20 40 60 80 100
The Philippines
Indonesia
MALAYSIA
Brunei
Singapore
Thailand
Vietnam
Myanmar
Laos
Cambodia
40
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
15–19
20–24
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
Women
Tertiary
Secondary
Primary
No formal
education

Population Ageing
41

Malaysians are living longer
+Population Ageing
Chart 88: Life expectancy at birth, by sex,
1970 – 2015
Table 15: Life expectancies at selected ages, by
gender, 2015
Male
Female
60
62
64
66
68
70
72
74
76
78
80
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
years
o Can Malaysians afford to live longer?
o Even if we take the average EPF savings of those in the 51 – 55 age groups at face value
(disregarding the tail-end distortion), after adjusting for inflation and interest rates we
estimate that RM 159,952 would only last an individual 15.6 years assuming they live on
the current poverty line for urban Peninsular Malaysia.
42

Malaysians are having fewer children
+Population Ageing
Chart 89: Total fertility rate, 1960 – 2015
0
1
2
3
4
5
6
7
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
TotalFertilityRatePerWoman
43

Malaysia’s population structure is
bulging upwards
+Population Ageing
Chart 92: Malaysia’s population
structure in 2015
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
Females
Males
0m0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
Population Size
0m
Chart 93: Malaysia’s population
structure in 2035
Chart 91: Malaysia’s
population structure in 2000
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
0 - 4
5 - 9
10 - 14
15 - 19
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
70 - 74
75 - 79
80 - 84
85+ years
AgeGroup
0m
44

The end of the demographic dividend?
+Population Ageing
Chart 90: The percentage of the Malaysian population aged 60 years old and above compared to the
population younger than five years old, 2010 – 2040
60 years and above
Younger than 5 years
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2010 2015 2020 2025 2030 2035 2040
ShareoftheTotalPopulation
o An ageing society exerts increased financial pressure on the healthcare system via
medical treatments which require life-long treatment on top of having high cost of care.
45

Policy Responses
Redefining old age
o Malaysia’s retirement age is 60; Japan’s 65; Greece and Norway’s 67
Ensuring financial sustainability of old age
o Develop annuities, issued either by the public or private sector, which guarantee inflation-adjusted income
throughout a person’s life. Like insurance, longevity risk will then be spread over many people.
o Develop reverse mortgages or similar products, so that people can draw against the equity in their property.
o Unfortunately, these options would only work if people have enough savings to begin with, so that they
could buy the annuity or property. Thus, ultimately, there is still a need to increase incomes .
Social Protection
o In Singapore, there is the Silver Support Scheme which aims to supplement the incomes of the low-income
elderly, targeting Singaporeans in the bottom 20% aged 65 and above.
Reorienting the health system towards strengthening preventative health measures
o Reorient the healthcare system towards a more public health approach with greater focus on implementing
preventative health measures, as opposed to a hospital-centric approach which is focused on curative care.
Other policy considerations: Balancing between the needs of the elderly and the needs
of the youth
o Some of the policy responses to address the needs of the growing elderly population may come at the
expense of the younger populations. For example, while increasing the retirement age may allow an older
individual to earn an income for longer, it may result in one fewer potential job for a younger person, thus
exacerbating existing youth unemployment.
o Similarly, some may raise the question of “fairness” in terms of diverting government funding to meet the
needs of specific age groups away from others. Should the government prioritise the needs of one age group
over another, and if so, how? 46

Conclusion
47

Conclusion
Households are better off
o Compared to 2012, households in 2014 have a higher median (RM4,585) and average income
(RM6,141).
o The growth in the incomes of the lowest 40% of households (the B40) has been the fastest.
o Cash transfers (like BR1M) have improved incomes, particularly among the less well-off.
o The gap between rural and urban households and households of different ethnic groups is closing and
the Gini coefficient (a common measure of inequality) has improved to 0.401.
o Access to basic infrastructure (eg schools and public health facilities) continues to improve and we are a
more wired nation as more people and households have internet access.
o Poverty has declined and hardcore poverty is minimal although the poverty rate for Orang Asli in the
Peninsula and the Bumiputeras in Sabah and Sarawak are still a concern.
o Unemployment, which has increased slightly, is still low at 3.1% in 2015.
More women have entered the workforce
o The participation rate of women in the workforce is now (2015) 54.1% and peaks at 87.7% for young
women with a tertiary education.
We live longer
o Life expectancy at birth is 77.4 years for women and 72.5 years for men. Men who are 60 years old can
expect to live to 78.4, and women, 80.9 years. It is a far cry from 1970 when the life expectancy at birth
for men was 61.6 years.
48

Conclusion
But some disparities remain
o 84.8% of Kelantan and 81.1% of Perak households earn less than RM6,000 a month, whereas 64.4% of
Kuala Lumpur and 69.2% of Putrajaya households earn more.
o Disparities in wealth (measured by EPF and ASB savings) are more pronounced than that of income
(reflecting the fact that those with higher incomes can save more).
o There is a concern that many will not have saved enough for a 20-year retirement and are taking on too
much debt.
o Do we need a consumer credit act?
Low wages and youth unemployment are of concern
o The median salary is only RM1,600 per month, although those who live in an urban area or are educated
earn more.
o Youth unemployment, while still low, is, at 3.4% in 2014, higher than overall unemployment, and a large
proportion (33.8%) of the unemployed have a tertiary education.
Food prices have risen faster than overall inflation
o In selected urban areas, the cost of feeding a family of five with a diet that meets the Ministry of Health’s
recommendations is high compared to the poverty line.
o We have also seen price anomalies in imported and locally produced foodstuffs like vegetables, milk, and
chicken that deserve further investigation.
Birth rates are falling:
o Coupled with our longer life expectancy this means that we are becoming an ageing population. As a
society we will have to learn to balance and prioritise public spending between the needs of the young
and the needs of the old.
o Should we consider raising the retirement age, Providing annuities, Social Protection, and strengthen
preventive health measures? 49

The State Of Households II

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