Understanding Urban Poverty

City-dwellers that fall within the B40 income category are regarded as the urban poor. Klang Valley’s urban poor communities are faced with low household income, low human, social and financial capital. The community also suffers other deprivations such as inadequate housing and job insecurity, disempowerment and lack of basic infrastructure and services, insufficient social protection, and lack of access to health care, education, and personal security.

Though the urban poor across Klang Valley is quite diverse, they tend to face several common deprivations, which affect their day-to-day life. Despite many of them migrating to the city in search of opportunity, certain gaps have trapped some in poverty.

Key Issues Affecting Urban Poor In Klang Valley

Low Education Attainment

60% of household heads have low education attainment. Only 60% had finished secondary school¹⁰. Majority of these qualifications are only enough for entry level or semi-skilled careers. Jobs such as manual labour, taxi drivers, office clerks, food vendors are just to name a few. As many of these heads of households have children and it is not uncommon for the same mentality to be passed on to the next generation.

  1. 2% of those who are 7 to 17 years old are not in school10.The reality is that if basic education is not prioritised for the future generations, they are more likely to be stuck in the same long hours, the same low wages, the same poverty cycle.
  2. Additionally, many households do not have additional money to buy toys for their children or books for them to read. Although toys and books may not be as crucial compared to a proper education, urban poor children are missing out on the opportunity to spark creativity, innovation and right brain development10.

Rapid Urbanisation

Malaysia is quickly catching up to the rest of the world in terms of development. 76.61% of Malaysia’s total population lives in urban domains¹, putting Malaysia as one of the most urbanised countries of East Asia, behind Japan, South Korea and Singapore². DOSM predicts that the rate of urbanisation will increase from 76.6% (2020) to 88% by 2050³.

  1. To keep up with the changes, rural populations are migrating into urban capitals. Inspired by the promise of better job opportunities, better living conditions, and a brighter future. However, whilst cities become more and more congested, the rural regions suffer from the lack of labour force.

Employment Rates In City

Unemployment among the urban poor has doubled from 7% in September 2020 to 15% in December 2020. 1 in 3 adults in these households are unemployed⁶. UNICEF identified that the poverty rates among these families remained at 42%⁶.

  1. A sector of popular employment in Klang Valley is self employment. 1 in 5 of the heads of households are self-employed6. Unfortunately, with the recent pandemic, there has been lowered income for this demographic. 3 in 5 (63%) cited that the reason for their income reduction is due to lack of demand6. 7 in 10 (69%) female heads of households reported that this is because there was a dip in business activities. These self-employed members are mostly not protected by social safety nets. 2 in 3 of self-employed household members working in the informal sector are not registered with the Companies Commission of Malaysia (SSM). Only 1 in 20 self-employed are registered with either EPF or SOCSO6.
  2. UNICEF conducted a study on 17 low-cost housing areas and they found that 9 out of 10 breadwinners had semi-skilled or low-skilled jobs7. Another report by UNICEF on urban child poverty revealed that the heads of households worked 48 hours a week compared to the national average of 47 hours. For those working 48 hours, they only earn RM9 for an hour compared to RM12 an hour for 47 hours [8]. They work much longer and harder, they still earn much less than the average worker8. As a matter of fact, 1 in 3 heads of households earns less than RM2,000 monthly9.
  3. The working portfolio of those in the city is tailored for more white-collar positions, which requires an SPM qualification at the very least8. Regrettably, a huge factor contributing to the high unemployment rates among the urban poor is their lack of higher qualification and lack of necessary soft skills and language competency to compete. Those that do have jobs, need to get by with minimum wages and are not in a position to demand for higher wages7

High Cost Of Living Not Matching Salaries

The National Household Expenditure Survey 2019 identified the monthly expenditure of urban communities to range anywhere between RM4,402 to RM4,916 per month⁹

  1. UNICEF found that 7 in 10 urban poor in Klang Valley, have no savings6. 3 in 5 heads of households claimed they had difficulties meeting their basic expenses. This is even harder on female lead households. 57% were unable to purchase enough food and 56% were unable to pay bills on time6
  2. Households in the urban areas recorded the highest percentage of expenditure in housing, water, electricity, gas & fuel at 24%. Meanwhile, the highest expenditure of households in rural areas was in the food & non-alcoholic beverages expenditure group at 24.4%9. UNICEF found that 97% of urban poor households say that high food prices prevent them from preparing healthy meals for their children10

Affordable Housing But At A High Cost

According to the guidelines set by the Ministry of Housing and Local Governance, a property under the “Program Perumahan Rakyat” (PPR) cannot be smaller than 700sq feet (65sq metres)⁴. Each housing lot should be equipped with 3 bedrooms, 1 living room, 1 kitchen, and 2 toilets and the property is within range of other basic amenities such as a prayer room, nursery, a playground and nearby eateries⁴. This kind of housing would be sufficient for an average sized household of 3.9 persons (parents and two children), however, there are still existing PPR flats that are as small as 400sq feet⁵. These cramped living conditions are unhealthy for families and they do not take into account growing families.

  1. Some PPR flats are plagued with ineffective management services and the construction has many visible defects. Common defects include leaky roofs, uneven floorings, sub-standard quality plumbing and electricity connection and inadequate ventilation. It is common practice that despite these building faults, a ‘Certificate of Fitness’ is still issued to residents after inspection.
  2. When it comes to home owning, the cost of these places are no longer ‘affordable’. Ideally, payments for a house should not exceed 30% of a family’s monthly income. However, even with affordable housing schemes, a family would need to have an income of at least RM2,500 to own a PPR unit5, barring any underlying and additional costs for the repair, furniture and maintenance. For this reason, the urban poor simply opt to rent, paying only RM124 per month4. In the long run, urban poor communities keep paying rent with no house to call their own.

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