DURING this difficult time, people are doing their best to make ends meet while trying to save for a rainy day.
Unfortunately, the current economic environment, which is influenced by supply and demand, such as rising food prices, is not helping to ease their burden.
One way to go about this in the near term is for government to provide additional cash assistance.
A survey conducted by the Malaysian Institute of Economic Research (MIER) in the fourth quarter of last year (4Q’20) and reported in a daily, shows that around 65% of respondents expressed their worries over expectations of inflationary pressures, especially among rural folk.
MIER’s Consumer Sentiment Index (CSI) also registered a 6.3-point drop to 85.2 points in 4Q’20, which indicates that consumer confidence towards the economy and their well-being remain low as the reading stayed below the 100-point level.
Although the country registered a deflation of 1.2% for the whole of last year, it does not entirely reflect the price movement of each CPI component.
Inflation still exists for the food and non-alcoholic beverages group. Since food is a necessity, the increase in prices is worrying for consumers.
Based on the 2019 Household Expenditure Survey released by the Department of Statistics, at RM783 (17.3%), expenditure on food and beverage holds the second largest share of a household’s mean monthly consumption after utilities.
If wages are not rising in tandem with food prices, it is justifiable to say that the outlook remains pessimistic as we are yet to witness a full economic or livelihood recovery due to the uncertainty over when the Covid-19 pandemic will end despite ongoing efforts to kick-start the vaccination programme.
EMIR Research’s recently-released second part of poll findings have shown that there is a high degree of worry towards socioeconomic matters in 4Q’20 due to the pandemic – losing jobs (81%), insufficient incomes (79%) - and the crisis has also led to another worrying consequence like mental health (75%). These were relatively more evident among the urbanites, according to the findings.
Labour market uncertainty remains and the people’s social safety net has also become more vulnerable.
The unemployment rate went up by 0.1 percentage point to 4.8% in 4Q’20, with a higher number of unemployed at 760,700.
In the same quarter, skill-related underemployment had also increased from 1.76 million to 1.89 million.
In tackling cost of living matters to support the rakyat in affording at least basic necessities to survive on a daily basis given the high number of Covid-19 infections and the extended movement control order (MCO 2.0), additional cash aid to the needy should be considered instead of only an acceleration of payment as announced in the latest Permai package.
Although the government has so far announced stimulus packages worth RM320 billion beginning with Prihatin (about 22% of GDP), which appears large overall, estimates by Institute of Strategic and International Studies analyst Calvin Cheng show that direct fiscal injection only accounts for 4% of GDP.
This is the second lowest in the Asean region after Vietnam (1.6%) whereas other neighbouring countries have a higher share of fiscal measures in their total stimulus packages such as Singapore (19.8% of GDP), Thailand (9.6%) and the Philippines (7.4%).
Even for Budget 2021, EMIR Research’s poll findings show that more than half (59%) of the respondents agree that there is a need to increase budget allocation for vulnerable groups and a total of 52% of them do not think the national budget is sufficient to meet the needs of the people.
Despite the government’s maximum price scheme policy implemented during festive seasons, food prices are said to be high during normal days, which strengthens the need for additional cash assistance such as Bantuan Prihatin Rakyat.
Perhaps an expansion in beneficiary coverage can be considered for B40 households.
This is crucial given the restrictions of MCO 2.0 and many have been badly affected in terms of earnings and employment.
The increase in monthly assistance from the Social Welfare Department as announced in the Permai package is welcomed although the amount of increase was not made known in the announcement.
It is hoped that it will be sufficient for the registered vulnerable groups to be able to afford basic necessities.
Finally, awareness about the importance of social protection for informal sector workers needs to be propped up to ensure a proper and sufficient safety net for them, particularly during tough times.
So, there needs to be more campaigns to promote Socso’s Self-Employment Social Security Scheme and EPF’s i-Saraan.
Cash assistance might not appear as something sustainable and it can be unhealthy for people to continuously depend on it.
But the current unprecedented and unfortunate circumstances should make it an exception for the underprivileged to be assisted this way on a short-term basis until they are able to get back on their feet.
Sofea Azahar is research analyst at EMIR Research, a think tank focused on strategic policy recommendations based on rigorous research. Comments: letters@thesundaily.com
