Household Well-being: Linking Income, Work and Health

On 8th December 2020, KRI and Yayasan Hasanah jointly organised a webinar to discuss the findings of three reports under The State of Households 2020 (SOH2020) series, revisiting the progress of Malaysian households over the last decades. This latest series takes a long-term view of Malaysia’s development, coinciding with the Vision 2020 period. The webinar featured an author from each report under the series, namely Adam Manaf Mohamed Firouz (author of “Welfare in Malaysia Across Three Decades”), Siti Aiysyah Tumin (“Work in an Evolving Malaysia II”) and Nazihah Muhamad Noor (“Social Inequalities and Health in Malaysia”).

The three authors discussed highlights from the State of Household 2020 reports. Adam spoke on the welfare of Malaysians and summarized trends in household income, expenditure and poverty; Siti highlighted the changing structure of the economy and the different realities of work in Malaysia; while Nazihah looked at welfare through the lens of health, linking health with income and work.

Welfare in Malaysia Across Three Decades

Looking at the country’s development across three decades, it was highlighted that there have been significant improvements in social welfare. For instance, average household income more than tripled in real terms from RM2,580 in 1989 to RM7,901 in 2019. However, household income growth slowed in the 2000s and 2010s, especially compared to the faster growth rates observed in the 1990s, before the Asian Financial Crisis. The moderation of household income growth can be better understood when seen in relation to the different sources of household income. Over time, there has been decreasing importance of productive sources of income such as salaries and wages from paid employment, and a higher share of income sourced from non-productive income sources such as current transfers, and properties and investment. This suggests slower growth of wages relative to other income sources.

With the increase in household income levels, more Malaysian households are out of poverty. While Malaysia recorded laudable reductions in absolute poverty, relative poverty—which counts the number of households falling below 50% of the median household income—saw only marginal improvements over the years. Additionally, while the percentage of total households in absolute poverty has declined, the number of households within that bracket in 2019 is almost similar to what it was in 1989, as the country’s total household numbers have increased over time.

Coinciding with the increase in household income is the increase in household expenditure. This indicates households are enjoying a greater variety of goods and services, but it also alludes to the greater cost of living and fewer savings, due to changing consumption patterns and the emergence of new forms of necessities. This is particularly true for the period 2009 to 2014 when the growth of household income lagged behind the growth of household expenditure.

As unemployment increases, it was emphasised that there is a need for more social spending to avoid families from falling into absolute poverty. An income shock of just RM700 could push an additional 800,000 households to be in absolute poverty. The role of NGOs was highlighted as a means in addressing poverty as NGOs are considered to know their communities better. Citing the example of providing laptops, NGOs will highlight that it is an important prerequisite for children to do online learning, although it may not necessarily be deemed as a basic necessity from the view of the government.

Work in an Evolving Malaysia

As employment is a major source of household income, the session moved on discussing the changing economic structure of Malaysia and the different realities of work. Taking a regional perspective, it was found that the trend of income growth recorded in the past three decades was not uniform between states: Higher-income states such as Kuala Lumpur, Selangor and Putrajaya recorded faster growth rates in the 1990s whereas lower-income states only caught up in the later decades.

Underpinning these developments were structural changes to the economy. While it is typically expected that a developing economy to shift from an agriculture-based economy to manufacturing and then services, the extent of these movements were different across the country. For example, as the service sector became more important to the economy, we see differences in the type of services activities that concentrate in different state groups. Modern services, which entail higher value-added activities that provide high-paying jobs, are more concentrated in higher-income states, whereas traditional services are more prevalent elsewhere.

Similarly, with the reduction in the employment share of semi-skilled jobs, the increase in skilled and low-skilled jobs was concentrated in different regions. Growth in skilled jobs was concentrated in higher-income states while low-skilled jobs expanded in lower-income states. Following this display of inequitable growth and distribution of jobs, the agenda on decent work was highlighted. This encompasses not only ensuring the availability of jobs but also making sure these are good quality jobs which allows people to meaningfully participate in and contribute to society. A more coherent active labour market policies were emphasized as these would ensure workers are continuously trained to meet the changing demands of work. Currently, training programmes are ad hoc or tied to employment conditions.

Social Inequalities and Health in Malaysia

The discussion on the health of Malaysians firstly highlighted the gains in life expectancy. While the life expectancy of Malaysians has lengthened by about 12 years from 1990 to 2019, the gains were mostly made in the earlier decades, with much smaller improvements in the later decades. Like income and jobs, the gains in life expectancy was uneven across states, too.

While life expectancy has gone up, the number of years lived in poor health, meaning living with disease or disability, has also increased. This underscores the importance of considering actual health outcomes in evaluating the wellbeing of Malaysians.

Looking at the sources of health loss in 2019, about three-quarters of Malaysia’s disease burden were from non-communicable diseases. It was also noted health disparities between income and working groups, with those in lower-income groups and more vulnerable employment groups such as unpaid workers were more likely to have selected diseases such as high blood pressure. The link between health and income and work indicates the importance of such social factors in determining health.

More investments in preventative care should be allocated too, including health education campaigns, health screening programmes, vaccination programmes, etc. Using the example that those with pre-existing health conditions are at higher risk of contracting severe Covid-19 and succumbing to the disease, preventing diseases earlier on could also reduce the risks of dying from Covid-19.

The panellists also discussed the provision of effective working from home environment, particularly for families with children. Parents may struggle in balancing their work-life and home-life, with the burden of childcare usually falling more on women.

The discussion concluded with the authors sharing their future research areas, namely exploring new sources of growth for Malaysia and how we can ensure that the country produces more decent work and high-value-added jobs.