Income gap between rich and poor states went up in 2 years, says think tank

June 25, 201510:59 am376 views
Income gap between rich and poor states went up in 2 years, says think tank
Income gap between rich and poor states went up in 2 years, says think tank

The income gap between the richest and poorest states have gone up in two years, said think tank Institut Rakyat, where the median income of the richest, Kuala Lumpur, is almost three times the level of the poorest, Kelantan.

The widening gap is expected to put more pressure on Putrajaya’s goal in the 11th Malaysia Plan (11MP) of sharing the national wealth more fairly between all parts of the country.

An Institut Rakyat study found that even though the median income level of nine states in Malaysia had gone up in two years, they were still below the national median income level of RM4,585 in 2014.
This is even though the national median income level had gone up by 11.7% to RM4,585 a month in 2014 from RM3,626 in 2012, said Institut Rakyat assistant research director Ginie Lim.

At the same time, five states, Kuala Lumpur, Selangor, Malacca, Johor and Penang recorded median income levels above the national median, said Lim.

The median represents the income at the middle of society between the richest and poorest, and economists use this measurement to see how fairly income is distributed between all levels of society.

Median is considered more accurate than average household incomes, which can be skewed by extreme high and low numbers among the richest and poorest in society.

Kuala Lumpur, Selangor and Johor were the top three states with the highest median income levels at RM7,620, RM6,214 and RM5,197 a month, respectively.

Kedah, Pahang and Kelantan were the three states at the bottom of the scale with median incomes of RM3,451, RM3,389 and RM2,716 respectively.

“Those in Kuala Lumpur who earn above RM7,620 a month have incomes 2.8 times half of all Kelantanese or those who earn above RM2,716 a month in Kelantan,” said Lim.

The figures used in Institut Rakyat’s calculations were taken from the Statistics Department 2014 household income survey that was published recently.

Lim said the gap between the states with the most income equality and the ones with least income inequality has also gone up.

The state with the most income equality was Malacca which had a Gini co-efficient of 0.316. The closer the measurement is to zero, the more equal a society is in terms of income.

At the other end is Kuala Lumpur, which has a Gini co-efficient of 0.407, which is even higher than the national level of 0.401.

“In 2007, Perlis had the highest level of income inequality at 0.454 which is 1.23 times the level of Johor, which had the lowest at 0.368.”

But in 2014, Kuala Lumpur’s level of inequality was 1.29 times that of Malacca, meaning the gap between the most equal and most unequal has gone up, said Lim.

The gap between different regions, she said, was important if Malaysia wanted to really achieve its goal of creating a more equitable society under the 11MP.

“We are so used to looking at income inequality nationally and across ethnic groups but I think we should also look at it across different states,” Lim told The Malaysian Insider.

About one third of the 11MP is focused on inclusive growth, which includes narrowing the infrastructure gap between urban and rural Malaysia, and on lifting the incomes of the bottom 40% of Malaysians.

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