Earning enough to save
AN ARTICLE entitled “Don’t ignore Malaysia’s retirement crisis, says think tank” caught my eye. It posits that half the number of Malaysians do not have enough savings or no retirement savings at all.
According to think tank Blindspot, the reason why the current generation is not saving is because they don’t earn enough. And apparently why they don’t earn enough is because their employers are withholding too much profit in lieu of giving employees higher wages.
Blindspot’s co-founder, Azlan Awang, says that the wages to GDP ratio in Malaysia is 33%, which means that only 33% goes towards wages of workers, while 67% goes to companies as profits. In advanced countries, the distribution is almost reversed where 50-60% of GDP goes towards wages. He says trade union laws are a hindrance to higher wages for workers.
A big factor why salaries are so low is because of corruption.
So we have a situation where people aren’t saving enough because of how much we earn. We also have a situation where cost of things are increasing. According to recruiter jobstreet. com in a recent poll, some new hires are paying close to RM1,500 a month in just repaying their car and study loans. Not much left to save after expenses, right?
Malaysia is an expensive country, at least the Klang Valley. Every month or so, I take my mother for an outing to a shopping complex. We used to spend a fair bit, especially on books. In the last year or so, as I push her wheelchair by the book shelves, piling books on her lap, she would usually tell me to put all of them back, because they are too expensive.
All right, books might be considered a luxury. Groceries, however, aren’t. I know pensioners struggle with the rising cost of living, and many pensioners hardly go out any more for fun, what with the rise in toll rates and petrol wasted in traffic jams. Some retirees have sold their homes and moved to cheaper public housing because they need money for their expenses.
If the current generation of retirees are facing a tough time, it is no wonder that people are concerned about the coming generation. The retirees mostly rode the early 1990s boom, and yet survived the recession of the late 1980s and late 1990s. Their generation had the belief of staying in one secure place of employment, yet make bits of side income, giving tuition or investing in the stock market or other forms of investment. And aside from this, they saved.
The current generation do not have this experience. When jobs don’t pay us enough, we move on. Things are so expensive, we have no choice but to spend and not save. Just going out, we probably would have to spend between RM10 and RM50. How is it possible for us to save?
I’m not sure what the solution is, aside from the fact that the system is broken. It’s not just here in Malaysia, but also in the West where people view Wall Street with scepticism. What will it take for us to shift to a new paradigm? And what kind of paradigm would that be? The power is in the hands of the current generation, the generation whose retirement is in jeopardy.
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