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.

Com­ments: let­ters@the­sundaily.com

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