Today, the combined wealth of the forty – not 40 percent – highest earners in Malaysia amounts to 40 percent of the national gross domestic product (GDP) of Malaysia. The combined net worth of the top 10 richest Malaysians is a staggering US$54.8 billion – nearly one sixth of the nation’s GDP of US$312.4 billion.
This level of inequality has been tinged with a racial slant by the pre-independence colonial powers who divided economic power by ethnicity. Post-independence, the government sought to use the New Economic Policy to reduce the wealth gaps between the races. However, in the decades that followed, the chasm has exacerbated.
The BN government’s stock remedy for income inequality has been, and continues to be, race-based affirmative action policies. It must be stressed that we (the writers) make no negative assertions towards affirmative action as a concept, yet the Malaysian experience has been an abysmal one.
Despite tremendous investment in these policies both in monetary and human capital terms, it has not been as effective as it should be, and in some areas, counter-productive to a more equitable society.
Every year – excluding those with economic downturns – saw increases in income inequality as measured by the Gini coefficient. In fact, the years following 1970 saw the largest increase in income inequality ever since Malaysia started recording inequality statistics. This despite the implementation of affirmative action policies.
Economists and academicians continue to argue the point that while income inequality between races is high, disparity is even higher within each ethnic group.
The fact of the matter is, inter-racial inequality has not been fixed, and intra-racial inequality is turning into a monster wreaking havoc in silence. All this whilst the top 20 percent of Malaysians combined earns three times more than the bottom 40 percent as a whole.
The change we want to this untenable situation should be gradual and a strategic rebalance away from affirmtive action policies towards education instead.
Massive cut in allocation
By both convention and theory, equity-promoting policies have to be pursued at the expense of economic growth. However, education policies, when implemented inclusively, could be an economic magic pill that achieves both equity and growth.
After all, the contestation for development between education and the economy need not be a zero sum game.
The Barisan Nasional 2015 budget saw a massive cut of allocation for teacher development, down by 38 percent from RM1.54 billion to RM900 million. This is a gross misallocation of austerity in the face of mounting evidence that the quality of teachers is the single most important factor in determining student achievement.
Opposition members of parliament have pointed out these things within and without Parliament but despite MPs asking for an explanation, the response has been only a deafening silence.
BN supporters have been spotted using the ‘extraordinary times call for extraordinary measures’ line, saying BN ought to be praised for making tough decisions to weather these tough times. Some have even taken an attacking stance by asking where else the government find the money to fix the deficit that is often harped on.
Perhaps the RM174.28 billion lost as graft from 2001 to 2010 in Malaysia could explain this extraordinary ‘fiscal discipline’. In effect, the BN government has failed to adequately respond to falling education standards, indicated by stagnating Pisa test scores and declining Timss performance.
This declining quality leads to many problems pertaining to income inequality and standards of living, two of which are discussed here.
Private tuition danger
Firstly, it increases the real cost of education. Poor teaching quality leads many parents to believe that their children are not receiving what they need to succeed in the future. This increases the demand for private tutoring. In fact, in 1990, 83 percent of all Malaysian students have received private tutoring by the time they reached upper secondary level.
This means that even though the government has achieved near universal access to education, access to decent education is limited to the affluent. Education in its current form thus becomes a force for inequity, and for all intents and purposes, a vicious and self perpetuating cycle.
This because the wealthy who spend more on education become more skilled and earn higher incomes. Conversely, the poor and unskilled remain unskilled, cementing them to a low-income status.
Furthermore, a very large private tutoring industry also means there is an entire education system that is not monitored or regulated by the government – a thought that should horrify most people. This means that teaching methods used may amplify the most damaging aspects of our current education, such as an excessively large emphasis on examinations.
The second problem stemming from poorly-trained teachers is that they are unable to bring out the full potential of a student. Without a thorough grasp of the syllabus content, an understanding of child psychology and a variety of teaching approaches, creativity will likely be stymied in favour of blind obedience to the status quo.
The importance of vibrant human capital cannot be understated. The World Bank has provided data that education levels correlate strongly to income levels, with over 50 percent of the 33 percent earning above the national median of RM5,900 having at least post-secondary and tertiary education. This is in comparison to 51 percent of the population earning RM2,120 to RM5,900, of which only 19 percent of this group has had tertiary education.
A shameful laugh
Intangible human resources are necessary if Malaysia is to achieve its aim of transitioning from an investment-driven, export-led economy to one driven by innovation, or a knowledge-economy.
This change is also necessary if Malaysia is to maintain strong economic growth, a precursor to higher incomes and better standards of living.
The teacher development training allocation should have been increased substantially and revisions must be made as soon as possible. Great caution must be taken to distribute these resources equitably, lest today’s education inequality lead to future income inequality.
Malaysians had a painful and shameful laugh at the revelation that one in three English Language teachers in the country have been classified as ‘incapable’ or ‘unfit’ to teach the subject in schools. It was also discovered that about 70 percentout of the 60,000 English Language teachers, who sat for the English Language Cambridge Placement Test (ELCPT), performed poorly.
It is solidarity and not blame that should be extended to these teachers for it is the BN government’s education policy that have caused this, and with the aforementioned cuts, it’s only going to get worse.
Income inequality has dominated discourse in Malaysia for many years. It will catalyse social unrest. The scary part is that some of the arguments raised can be convincing to those who are exposed to racial messaging day in and day out however ridiculous and downright racist. Unless we can rise above such superficial views, income inequality will continue to strangle Malaysia.
As for the actual policies implemented, they will only change if public discourse matures significantly. This article will hopefully act as one of the many kindling points for that change. We as lawmakers, will continue to provide alternatives and added pressure from the opposition benches.
The road ahead maybe long and hard as both inequality and the education system need be treated for and heal from decades of abuse. But I have never been so hopeful that things can be changed. Times have changed; and Malaysians have definitely changed.