Wahid justifies RM5,900 per household claim

Minister says non-salary income and returns on investment was included.

KUALA LUMPUR: The preliminary report on the 2014 Household Income Survey undertaken by the government which indicated that the average household income, or mean, surpassing RM5,900 a month, included non-salary income as well as returns on investment in various instruments such as unit trusts.

Minister in the Prime Minister’s Department Abdul Wahid Omar said the figure, however, was not the real reflection of the overall household income in Malaysia and could be significantly skewed by those who have higher income.

He said the median or value at the midway point stood at RM4,258, meaning that half of Malaysia’s seven million households earned more than RM4,258 while the remaining earned below that, which provided a better picture of the household income in Malaysia.

“The percentage of households earning less than RM3,000 also had declined to 28 per cent compared with 38.7 per cent in 2012,” he said to reporters after launching the Media Appreciation ceremony organised by the Department of Statistics Malaysia here today.

He said poverty had also been significantly reduced, whereby the number of households earning below the poverty line was cut by 38,000 to 70,000 households as of June this year as compared to 108,000 households in 2012.

Meanwhile, Abdul Wahid said the ratio of wages to the gross domestic product (GDP), which expanded to 33.6 per cent last year compared with 29.3 per cent in 2008, was a positive indicator of the government’s efforts to turn Malaysia into a high-income nation.

“This showed that income through salary has increased 8.0 per cent a year compared with the economic growth which increased around 5.1 per cent a year.

“This gave an important meaning in the context of micro-economy, where we want to ensure that when productivity increases, the rakyat is given higher salary compared with the earnings achieved by companies,” he said.

He said the ratio of wages to the GDP can still be improved further and the level that is comfortable for the economy to expand and maintain competitiveness was at 40 per cent.

“The 33.6 per cent is higher than most other countries but still low compared with developed countries such as Singapore (41 per cent) and the US and UK (over 50 per cent),” he said.

He said the government had no plans to increase the ratio of wages to the GDP to 50 per cent as at that level the country would lose its competitiveness.

He added that countries that had ratio of wages to the GDP of more than 50 per cent such the UK also had a high income tax regime.

“Based on our observation, maybe the rate of 40 per cent represents the optimum rate that we want to target.

“But this cannot be increased overnight and must be done very carefully as salary increases must be supported by productivity increases,” he said.

Based on research by the Statistics Department, the ratio of gross operating surplus of companies to the GDP last year was at 64.2 per cent while the ratio of tax less subsidies on production and imports was at 2.2 per cent.

According to the department, the services sector was the biggest contributor to salary at 60.9 per cent, followed by manufacturing (23.1 per cent), construction (9.1 per cent), agriculture (5.2 per cent) and mining and quarry activities (1.7 per cent).

- BERNAMA