Did the Budget 2011 address the widening income gap?

The much awaited budget 2011 was tabled in parliament on Friday 15th Oct, 2010 with the promise that we are on the path of transformation. Earlier the 10th Malaysian 5 years plan was launched with specific target of attaining high income economy. With all the high growth from 1990 to 2007, the middle 40% and the bottom 40% of household’s income level recorded only a moderate growth. A  World Bank study found that the wage trend in Malaysia has recorded only an annual 2.6% growth during the past 10 years.  A study on wages initiated by the Human Resources Ministry reveals that almost 34% of about 1.3 million workers in the country still earn less than RM700 a month. Malaysia’s gini coefficient grew marginally from .456 in 1987 to .459 in 1997 but dropped slightly to .441 in 2007. Malaysia is 101th out of 127 countries in terms of gini coefficient. Looks like Malaysians are caught in the low income trap unless some drastic step is taken.

Did the budget 2011 outline any strategies to uplift the lower income group to higher? Minimum wages is once again postponed and left with the wages consultative council. Looks like the government really dragging its feet on minimum wages. No political will due to the pressure from Malaysian employer’s federation not to yield to workers demand. Only security guards got a confirmation of minimum wages between RM 500 to RM700 that is below hardcore poverty limit of RM720. How to increase productivity of lower wage earners?

As for education, funds are allotted to principals of high performance schools. How is high performance measured when UPSR and PMR are converted to school based examinations? The prime minister has pleased his wife with his generous allocation of RM111 million to PERMATA, his wife’s pet project. How inclusive is PERMATA in recruiting staffs and students of all races be in estates, squatters, new villages or kampong is yet to know. RM250 million for Chinese, Tamil, missionary and Religious school but no details are given. The devil is in the details. RM576 allocated to develop teachers competency. Billions were spent to teach mathematics and science in English. But after 7 years the whole project shelved. A further RM 213 million allocated to enhance BM proficiency and recruit 375 UK and Australian teachers to teach English. All these measures will upgrade the quality of education is yet to be seen.

Talent attraction measures are all about increasing the number of PhDs and upgrading lecturers and implementing skill programs. All these initiatives must be market driven to meet the market needs. It is important to reevaluate the effectiveness and results of all the various programs implemented and conducted in the past years. Lots of money was already spent on training programs. Graduates upon completing university studies need retraining. We need state of art training, forward looking attitudes and proactive initiatives. Real quality researches are not promoted in Budget 2011. No proposal for these realistic changes. Besides, there was no mention about reducing fees higher education. Private higher education is very expensive.

Having said all these, this budget is like any other earlier budget about awarding projects. Construction industry as usual is the main beneficiary. Tallest building and many more projects awarded to GLCs and cronies but nothing to ordinary SMEs and small time businesses.  No innovative ideas to reduce traffic jams besides MRTs. This budget doesn’t seem to be transformational and evolutionary nor is it 1Malaysia. It’s all rhetoric with little substance to reduce the income gap.

Explore posts in the same categories: From the desk of Senator S Ramakrishnan

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