FOMCA strongly supports the announcement by Prime Minister Datuk Seri Anwar Ibrahim that in moving towards inclusive and sustainable growth, planning and policy formulation must “not only be about numbers” but on the “needs and wishes of the people”.
Much too often, policymakers base their planning merely on numbers such as the Gross Domestic Product (GDP) or the Consumer Price Index (CPI).
Making a statement that the GDP is improving or the CPI is decreasing and expecting that the people will rejoice with these statements will just not happen.
Indeed, there is a growing gulf between the statements of policymakers and the lived experience of ordinary consumers.
The indicators of measurement should show attention to the issues that make a difference in the lives of people.
If we rely on indicators that are out of sync with people’s real experiences, this could easily develop into a lack of trust in the government in understanding and acting in the best interests of the rakyat.
Beyond GDP and CPI, what consumers/voters are really concerned about are:
Employment with fair income for their work;
Employment for their children;
Job security;
Increasing cost of living especially for food;
Affordable housing and their ability to make the loan payment;
Accessible healthcare;
Decreasing availability of affordable childcare services ;
Education opportunities for their children; and
Water cuts
Their lived experience will determine the quality of their well-being.
For example, if the only jobs available for themselves or their children is in the gig economy or low-income job opportunities, an improved GDP is meaningless.
If a housewife who bought vegetables and fish finds that the prices in the pasar malam have increased more than doubled since the previous week, a low CPI means nothing.
In a study by Emir Research on what keeps Malaysians up at night, it was not low GDP or high CPI but:
Rising prices of daily necessities;
Inability to buy a house because of high housing prices;
Personal debt;
Loss of income;
Youth unemployment; and
Lack of job opportunities
These are the “real” concerns” of the rakyat. We thus need to move beyond measuring GDP and CPI to metrics that shape the well-being of people today.
This idea is not new. In fact, the Organisation for Economic Co-operation and Development has formed a high-level expert group led by the renowned economist Joseph Stiglitz to lead the development of the metrics for this very purpose which is to move away from GDP to an index that actually is based on the real needs and concerns of the rakyat.
While this group has developed comprehensive metrics for this purpose, it is suggested that these three areas would be particularly relevant to the Malaysian context.
Fomca suggests that the index be named the Consumer Well-Being Index.
Metrics of Subjective Well-Being (SWB): This metric measures the level of satisfaction of the rakyat with issues impacting their lives such as the cost of food, housing and healthcare.
It can also measure whether people are positive or negative about their future.
For example, in a World Bank study in Malaysia from 2012 to 2018, both rural and urban households felt growing hardship in their living conditions.
Further in urban residents, those who felt their lives were thriving decreased from 28% in 2012 to 16.2% in 2018, while those who felt their lives were struggling increased by 12% between 2012 and 2018.
SWB indicators are powerful indicators that signal wider problems in people’s lives, capture prevailing sentiments and predict behaviour.
By the way, SWB indicators better predict voting behaviour than GDP/CPI.
The indicator on metrics of economic security measures how vulnerable consumers feel to the environment that possibly could affect their personal incomes.
For example, the Covid-19 pandemic destroyed or severely impacted the economic life of many workers.
Workers would indeed be concerned about the use of digital finance and their impact on workers in the banking sector, online purchasing and their impact on the retail sector, and the use of robotics/technology and its impact on the manufacturing sector.
Recently, there has been great concern about the impact of artificial intelligence and its potential impact on almost every sector.
Further of real concern is the constant politicking in Malaysia and its impact on foreign investment and its impact on the future of employment opportunities for their children
Trust in the government is another indicator that measures the trust in government and institutions and regulators that impact the well-being of consumers.
Trust is vital for economic growth. Trust enables the government to make difficult decisions that may bring short-term pain but is necessary for the long-term benefit of the nation.
For example, the government implemented the unpopular GST but was eventually accepted by the people.
The current government is seeking to reform the subsidy system as well as the healthcare funding system.
Does there exist enough trust in the government for people to accept these changes?
International surveys have yielded evidence of large differences in trust levels across countries.
For example, in an international study in 2014 in Norway, in the sample, 68% of the population are trusting of others. In Malaysia, only 9% were trusting of others.
The study also suggested that trust was a significant predictor for cross-country variation in income per capita growth.
For Malaysia to move forward, broad measures such as GDP and CPI are useful but certainly not enough.
The policymakers, if they want to ensure “real progress” at the level of the rakyat, need to understand their perceptions and sentiments and put into policy and practice, measures to enhance the “real well-being” of the rakyat.
Dr Paul Selva Raj is the secretary-general of Fomca. Comments: letters@thesundaily.com
