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Wednesday November 23, 2011

Addressing the poor-rich gap

Statistics tell us that the gap between the haves and have-nots has been widening since 1999. The obvious reason is that our human resource has not been as capable as it was a generation ago.

THE GINI coefficient index is a measure of inequality, not a measure of wishful thinking. There’s no genie in the bottle here. Instead, the Gini coefficient index summarises the gap between rich and poor in simple but cold numbers.

A score of 1.0 means perfect inequality while 0.0 means perfect equality. This explanatory line was uttered once in the present sitting of the State Legislative Assembly, which closes today.

The year-end sitting in Malaysia at all state assemblies is always primarily used to pass state Budgets. Sarawak’s roughly RM4bil Budget 2012 is among the biggest ever, with 70% to be spent on building new things, and a small remainder set aside for expenditure spending.

First and foremost, this is unlike the national Budget, which saw almost half the amount allocated next year going towards paying expenses like civil servant salaries.

But let’s not dwell on that too much because the simple conclusion is that the national civil service has swelled to comically large in numbers.

What is just as important in every Budget speech – aside from the amount to be spent and economic growth forecasts – is to look at how the poor-rich gap will be addressed.

The latest Gini coefficient index for Sarawak is from 2009.

PKR’s Batu Lintang assemblyman See Chee How told the house a week ago that, in 2009, Sarawak recorded 0.448 on the index. A decade before that, Sarawak had better results at 0.407.

The conclusion is that the rich-poor gap has widened in Sarawak during the last 10 years. But compare 2009’s figure to 1979, which stood at 0.501, and you’ll see there was an improvement in the last 20 years.

The question is: Why did the gap start widening again after 1999?

Unfortunately, statistics tell us that this is a national trend. And the most obvious reason for that is that our human resource has not been as capable as it used to be a generation ago.

Sure, the Malaysian youth of today may be more technologically savvy than, say, his or her parents. That must be true. Yet, at the same time, how much have children in neighbouring countries progressed?

And when there are more and better opportunities elsewhere, people leave. That’s simple to understand.

My own sister, who is highly qualified – she’s a double degree holder – is unlikely to ever return home from Australia, where she has enjoyed fair and equal opportunities in education and employment. She has thrived in meritocracy and I’m glad for her.

People tend to forget that, these days, the very idea of national borders is, after all, porous in the globalised world.

And let’s not be hypocrites here: Malaysians are enjoying the benefits of having huge numbers of foreign workers in this country, from labourers to expert engineers and doctors.

Malaysians may disagree on many things, like how to improve our education system, but only because no one disagrees that the system is broken.

How frustrating it is to compare today’s typical Malaysian secondary school graduate to one from Singapore. Our youths are much less confident, with less ability to think outside the box and definitely less able to speak fluent English.

Our universities, where innovation can thrive, are ranked far below regional champions. Malaysia’s richest (including patriotic politicians) send their children for private education and then onwards to foreign universities.

In the private sector, it is often joked that success in Malaysia is more about “know who” than “know how”.

(It should be said that this is true in most developing countries. In China, “know who” is called guang xi, meaning connections, but I’m digressing).

By the way, before I go further, let me make clear that the Gini coefficient statistics quoted here are from Malaysia’s own Economic Planning Unit.

As such, no allegation or claim of statistics skewed by parties with vested interests is to be entertained.

Moving on, around 240,000 households in Sarawak earn less than RM2,300 monthly. When the Gini coefficient index for Sarawak was calculated in 2009, it was estimated that 40% of the state’s households had a combined monthly income of only RM1,440.

These are not numbers to be proud of. These are numbers that need improving vastly. The middle class must grow.

The middle class is better equipped to deal with inflation. And if there’s one thing that characterises the last decade, it has been inflation.

See highlighted this in the state assembly:

“Figures revealed by the National Statistics Department this year have shown that a Malaysian household’s expenditure in accommodation, water and electricity has jumped by 102% from 1994 to 2009/2010.

“Transportation expenses has inflated 94.6%, and food and non-alcoholic beverages have risen by 60.9% in the same period. The basic expenditure on essentials for a Malaysian household now stands at RM2,190 per month.”

There was no politicking in See’s speech, which I believe to be among the best in state Budget 2012 debates presented this time around.

At the close of the assembly today, the state Budget would be adopted and ready for implementation over the next 12 months.

Will the Gini coefficient index show a wider or narrower gap in a decade’s time?

If the situation we are in continues – where mindless matters overwhelm bread-and-butter, real world and long-term matters – a narrower gap will be wishful thinking.