Monday, October 15th, 2018
THE HAGUE, Oct 15 — Chinese premier Li Keqiang today called for free trade to be protected, as political tensions and a trade war with the United States escalated. “We want to jointly reaffirm our commitment to free trade and multilateralism,”…
AMSTERDAM, Oct 15 — The Dutch financial markets regulator, already scrambling to process a flurry of relocation requests from UK-based companies, will need about 10 per cent more staff to cope with the extra work caused by Brexit, sources close to…
PARIS, Oct 15 — AstraZeneca has suspended investments in Britain due to the lack of clarity over the country’s departure from the European Union, the pharmaceutical firm’s non-executive chairman Leif Johansson told France’s Le Monde…
SINGAPORE, Oct 15 — Beleaguered water treatment firm Hyflux has managed to secure a deadline extension from Maybank to find a buyer for its S$1.47 billion (RM6.1 billion) Tuaspring plant. The Malaysian bank is the only secured lender of Hyflux’s…
NEW YORK, Oct 15 — Wall Street stocks were mostly lower early today as investors debated whether the market has fully pivoted from a dramatic two-day selloff in the middle of last week. About 10 minutes into trading, the Dow Jones Industrial…
WASHINGTON, Oct 15 — Retail sales in the United States, a motor of growth, slowed unexpectedly in September as Americans bought less gasoline, and shopped and dined out less, according to government figures released today. Auto sales were a bright…
KUALA LUMPUR: Wide disparity in income of households in different states means that one-size-fits-all policymaking without local context will fail to perform, said Khazanah Research Institute (KRI) director of research Dr Suraya Ismail.
KRI's “The State of Households 2018: Different Realities” report, launched today, showed that there is significant geographical diversity in household incomes across Malaysia whereby a top 20% (T20) household in Kelantan, Perlis or Pahang may have income similar to a bottom 40% (B40) household in Kuala Lumpur.
The report noted that between the different states in the country, degrees of urbanisation are most associated with income disparities while within the states, it is education levels that are most associated with income disparities.
“This is the big issue about policy-making in Malaysia. If you don't root policies in the context of what the street is experiencing, then definitely, for example affordable housing, we will miss the target,” Suraya said at the launch of the report.
Therefore, a one-size-fits-all threshold for public policy outcomes will lead to gross generalisation and, thus, policies around welfare, housing and education must consider threshold differences across states during implementation.
Quoting affordable housing as an example, Suraya said having one price as the threshold is not right because different states have different income levels. For example, if affordable houses were priced at RM180,000 in Selangor, it would already be considered mid-range or unaffordable for people in Kelantan.
“But this somehow or rather does not resonate in some policy-making. We tend to think that everybody lives in the same reality and have one benchmark or one number to then say this is affordable housing. Or even have one number for income eligibility for social housing. These are some things that we need to really iron out,” she added.
In order to come up with proper targeted policies, she said policy-makers must understand the realities at state level, or even at district level, and all works on policies must be specific to the conditions of society.
Suraya said if this can be done, policy-makers can come up with proper policies that are targeted and useful.
“Secondly, we keep on thinking that international benchmarks are great but we have to understand our baseline. Can we actually do this? Can our supply side, our firms especially for housing, bring down the cost of building homes, for us to reach the target of more affordable homes?” she asked.
Suraya said policy-makers must understand both the baseline of households and of firms, and understand their capabilities. They must have evidence and data to support targets.
“Don't ask questions only … you have to give actionable solutions which take into account the capabilities of all the agencies. You can't just thrust in policies but you don't see the limitation of execution. People say 'wonderful policies, bad execution' but I disagree. It's not a good policy because you didn't take into account the limits of execution, limits of institutional strength,” she said.
KUALA LUMPUR: Khazanah Research Institute (KRI) found that the influx of foreign workers in the country has only marginal, if any, impact on both labour market outcomes and productivity in the short term but could be more pervasive in the long term in the country’s efforts to become a high-income economy.
The State of Households 2018 report lead author Allen Ng said reliance on foreign workers, for example, is found to be associated with lower levels of technical adoption in most economic sub-sectors and could in part lead to an economic structure that relies more on low-cost labour, which could impede upon the country’s economic transition towards becoming a high-income economy.
“If we dwell in this longer, it (foreign workers) could negatively affect the trajectory of Malaysia’s development, and that’s a bigger problem that we should look at, not the direct competition of foreign workers on local wages and local employment,” he said.
In 2017, foreign labour represent 15.5% of all employed persons in Malaysia. Sectors hiring the most foreign workers are agriculture (37.4%), construction (23.6%) and manufacturing (20.5%).
The increase in foreign workers is slowing, but foreign workers remains high at 2.2 million documented workers last year.
KRI found that although the influx of foreign workers in the country is likely to generate only marginal impact, if any, on both labour market outcomes and productivity in the shorter horizon, about 1 million low-skilled rural workers in Malaysia face the threat of job displacement and wage suppression due to the presence of foreign workers.
It said most empirical studies found no significant effect of foreign workers on labour market outcomes, given that foreign workers are mainly occupying different economic roles in general compared to natives. Nevertheless, the impact can be uneven for Malaysian workers, especially those in low-skilled jobs.
On wages, foreign workers seem to have a small negative effect. A unit increase in the share of foreign workers out of total employment in each sector and year leads to a 3.8% decrease in overall average wages. But this is unsurprising given that foreign workers are primarily employed in low-skilled jobs, which tend to have lower wages. This does not necessarily mean that the supply of foreign workers suppressed overall wages, as native wages have grown in the same period.
“For high-skilled workers, the impact is marginal. For middle-skilled or the bulk of the Malaysian population, it is complementary. But low-skilled workers who are directly in the space of foreign workers will be negatively affected. On a net basis, it is impossible to find a study to show that immigration is negative for a country,” he said at a press conference.
KUALA LUMPUR: More must be done to improve women’s labour force participation and alleviating women’s challenge to balance family and work is key, as 2.6 million women, mostly educated and of prime-working age, stayed out of the labour force due to family responsibilities.
Khazanah Research Institute, in its report The State of Households 2018, said women’s labour force participation rate (LFPR) improved to 53.5% in 2017, from 44.6% in 1995, attributed to an increase in self-employed women in the workforce. However, the LFPR gap between men and women still remains large, with 58% or 2.6 million working-age women choosing to remain out of labour force last year, opting instead to perform other household duties.
Raising women’s employment levels by 30% would not only raise Malaysia’s GDP by 7-12%, but also serve as a potential remedy for an ageing population by alleviating the burden of labour force participants providing for the rest of the population by around 30%. This is provided that the gender gap is closed in the next 12 years.
Malaysian working-age women are more highly educated than men, but a large proportion of them are outside the labour force.
“We view women in the workforce to be critical,” said report lead author Allen Ng, adding that including more women in the labour force helps growth.
Empowering women economically unlocks multitudes of economic benefits in diverse ways, particularly, at a time when the future is increasingly shaped by rapid technological advancement, gender equality is of great importance as an innovation drive.
The report said flexibility in work arrangements is instrumental in enabling women who are willing to join the labour force to do so. This could be offered either through flexible hours or work places, childcare facilities at work or the like.
Redistributing family responsibilities between men and women is also as important as any other labour market measures to enable women’s economic empowerment, and at the same time to ensure the strengthening of family institution. This would involve, among others, ensuring policies aimed at facilitating work-home balance such as flexibility arrangement and parental leave as accessible options not only for women, but for men as well.
“Development goes beyond income. It has to be more holistic, we’ve to take into the angles of… are we in the right areas? Are we sustainable, resilient, do we have good institutions and governance? A lot of this comes down to investment in human capital. We cannot stop investing in human capital for us to move to the next step. We have to move beyond just looking at income, which is not a complete picture of development,” said Ng. – by Ee Ann Nee