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12 Things Malaysians Should Know About Social Protection

Social protection is essentially the policies and programmes in place to ensure the basic needs of a citizen are met from cradle to grave. This includes: 

  1. Access to essential health care
  2. Safeguarding the basic rights of a child 
  3. Ensuring basic income security for those who are unable to earn sufficiently
  4. Basic income security for the elderly. 

Broadly, a country’s social protection system should include the 3Ps:

  • Protecting individuals who have fallen below a minimum standard of living
  • Preventing people to fall further down the income groups e.g. from M40 to B40 category 
  • Promoting upward mobility of its people to fortify their resilience in the face of adversity[1] 

Social protection consists of two components; social security and social services. Social security is further broken down to social assistance which is funded by the taxes-paid such as the Bantuan Prihatin Malaysia and social insurance that is privately run and voluntarily subscribed such as life insurance policies. 

Over the years, Malaysia’s social protection system was sufficient to provide a safety net to our people who are below the poverty line and B40s.  However, the recent pandemic exposes the fallible state of our current social protection system.

Here are the 12 things about social protection we should be aware of:

Not all Malaysians Benefit From The Increase In Social Assistance Programmes 

  1. The number of social assistance programmes excluding the COVID-19 stimulus package run by the government has increased from 95 in 2012 to 137 in 2020 [2]. The spending, however, has reduced from RM45.5 billion to RM25.5 billion during the same period [2]. The recorded expenditures excluding fuel subsidies, Bantuan Rakyat 1 Malaysia (BR1M) or Bantuan Sara Hidup 2020 (BSH) is no different from what was spent back in 2008 [2]. The spending-cut in social protection programmes indirectly translates into the inadequacy of these programmes in reducing poverty incidences and inequality wholly[3]
  1. There are  40 social assistance programmes targeting children that amount to RM3.5 billion of total spending [2].The considerable provisions to children’s education are a combination of potentially overlapping schemes by various ministries i.e. Ministry Of Education, Ministry of Defence suggesting that the spending is spread thinly across multiple schemes. The reach of these schemes are also limited to specific target groups such as children from poor households, children in boarding schools and disabled children rather than benefiting all children in Malaysia. 
  1. At the end of the life-expectancy cycle, there are only 10 programmes for senior citizens with an expenditure of around RM1 billion to safeguard our ageing population [2].The spending on the ageing population is alarming as it has been cited that social assistance schemes targeting this age group come with their own set of eligibility requirements i.e. retirees who have served in the specific public sector. Our current social protection for senior citizens is not universal and those who don’t fit under the set criterion are left out.
Source: Vulcan Post

Pitfalls Of The B40 bubble

4. The focus assistance for the B40 demographic (monthly household income below RM4,849) may be costly to other households. The 2.6 million people in the B40 income bracket is a wide portion to be tackled effectively. The existing BSH/BR1M only provided social assistance to 53.2% of the B40 group [3]. The arbitrary B40 grouping requires redefinition to ensure only the most vulnerable groups benefit from it and a larger chunk of financial aid can be provided[4].

5. Recently, at least 580,000 M40 (monthly household income of RM 4,850 – RM10,959) households fell to the B40 category[5]. Taking into account the living standards, the income disparity and household composition of residing in different locations nationwide; a middle-class household’s living standards are similar to those from the upper segment of the B40 group (monthly income of RM 3,970 – RM 4,849)[4].

With RM1 difference in earnings, the lower segment of M40 (RM 4,850 – RM5,879) can easily be tilted to the B40 income bracket when hit by a crisis and this is the group which has not been shielded sufficiently by the current social protection programmes. 

6. A household with a joint income of RM5000 (assuming each parent earns RM2500), does not qualify for any social assistance (i.e. Bantuan Kanak- Kanak and Bantuan Prihatin Rakyat) or participate in the tax system[6]. The child-related assistance in Malaysia not only excludes households in the middle-income groups, it also does not take into account that only 15% of Malaysia’s workforce file income taxes. The promised child care benefits are still out of reach for many Malaysians[2]

Some People Are Left Out And Not In The System

7. The working world is prone to changes. To the young jobseekers, stepping out of schools in search of an opportunity results in income insecurity and the reliance on their parents to tide them over.  At least 60% of our unemployed youth belong to a household with a monthly income less than RM4000 in 2019 [7] and the coverage of the employment insurance scheme is exclusively to those who have been retrenched, excluding the pre-employed individuals. 

8. Malaysian e-hailing drivers were found to only earn RM 2,300 per month, lower than the average employee salary of RM 3,224 in 2020 [7]. Additionally, the subsidised full contribution of the injury scheme for the self-employed only covers selected delivery riders, public service contractors and volunteers with the allocated RM 24 million in Budget 2021 [8].

Source: Today Online

9. Women who decide to become mothers have to think twice about whether they have enough to cover maternity and labour expenses. 315 complaints were received by the Department of Labour in relation to maternity pay or allowance between 2010 and 2020 affecting workers in retail, manufacturing and support services [2]. At the same time, Malaysia is yet to meet the Maternity Protection Convention 2000 (No.183) which extends coverage of cash benefits to all employed mothers; including self-employed women and unpaid family workers with no basic income security [9,10].

10. During the pandemic, foreign workers were affected more severely by retrenchment and unemployment increased by 134.0% [2]. With no social insurance in place and cash handouts were only for citizens, this group lacks the support to stay afloat. 

To Age With Grace


11. Only 1 in 5 senior citizens in Malaysia were protected from longevity or old age, lower than the world average of 1 in 2 in 2017 with our current old-age benefits for civil servants [2].

12. Malaysians may not have enough savings to allow them to live comfortably beyond retirement. Here’s why – With a basic EPF saving target of RM 240,000 by retirement age (assuming a monthly expenditure of RM1000), a senior citizen can afford 20 years of retirement aligned with the likelihood that a Malaysian would live up to 75 years old [11]. However, data shows that only 18% of all EPF members after post-COVID 19 withdrawals are estimated to meet the savings target of RM 240,000 by 55 years old[2]. This implies that at least 82% of EPF contributors would have trouble sustaining themselves during retirement. 

Explore our sources:

  1. S. Devereux, and R.l Sabates-Wheeler. (2004). Transformative Social Protection. Institute of Development Studies, 1–27. Link
  2. Khazanah Research Institute. (2021). Building Resilience: Towards Inclusive Social Protection in Malaysia. Link
  3. World Bank (2021). Aiming High : Navigating the Next Stage of Malaysia’s Development. Washington, DC: The World Bank. Link
  4. H.Abdul Hamid, G.Wai Son Ho, and S. Ismail. (2019). Demarcating Households: An Integrated Income and  Consumption Analysis.  Kuala Lumpur: Khazanah Research Institute. Link
  5. FMT Reporters.(2021). 580,000 M40 households fall into poverty. Free Malaysia Today. Link
  6. C. Yeap. (2019). The State of the Nation: Finding Room to Lighten the Middle-Income Tax Burden. The Edge Markets. Link
  7. E. Goh and N.Omar. (2020). Gig Work: Side Hustle or Main Job? Part 1. The Reality of Hours Worked in the Gig  World. The Center. Link
  8. Department of Statistics. (2021). Salaries and Wages Survey Report 2020. Putrajaya: Department of Statistics. Link
  9. International Labour Organization. (2012). Social Protection Floors Recommendation, 2012 (No. 202). Link
  10. International Labour Organization. (2014). Maternity and Paternity at Work: Law and Practice across the World. Link
  11. Department of Statistics. (2021a). Abridged life tables. Malaysia, 2019-2021. Link

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