Disclaimer: In Real Life is a platform for everyday people to share their experiences and voices. All articles are personal stories and do not necessarily echo In Real Life’s sentiments.
Retirement has been a hot topic in the news for the past couple of years. During the pandemic in 2020, Malaysians were allowed to withdraw from our EPF accounts to deal with the loss of their livelihoods.
Those were desperate times and a band aid solution was better than starving and losing your home. However, many called it a short-sighted solution that would doom us in the long run.
Now in 2024, we’re coming to terms with the consequences of this policy.
More than half of Malaysians have less than RM10k in their EPF
According to the Ministry of Finance, a total of RM145 billion has been withdrawn by 8.1 million Malaysians in the past 3 years.
In 2020, 4.7 million Malaysians had less than RM10,000 in their savings, but now it has gone up to 6.7 million people, which is more than half of EPF’s total members.
As a rule of thumb, you need at least RM240,000 in your EPF savings to live on RM1,000 a month for the next 20 years, assuming you retire at age 55. Considering how high the cost of living is already right now, suffice to say that RM1,000 is a gross underestimation.
So what are regular working Malaysians supposed to do? “Work harder, save more, spend less”?
Let’s be real here: even if you only survived on maggi mee kicap and nasi putih, you’d still burn through your RM 240k savings in less than 10 years.
We don’t have a retirement problem. We have a wage problem.
The real reason why Malaysians aren’t saving enough is because we aren’t earning enough to keep up with inflation.
It wasn’t until I looked through some official numbers from the Department of Statistics Malaysia when I realised that this problem has been festering for more than 10 years.
According to data by the Dept of Statistics, wages have only increased modestly over the years with an average increase of RM167 per year from 2012 to 2019.
Meanwhile, the cost of living has outpaced our wages. Due to higher fuel inflation, the inflation rate rose to 2.5% in 2021 and increased to 3.3% in 2022.
To compound the issue, there was a significant drop in 2020 when the pandemic hit and the average Malaysian wage went from RM3,224 to RM2,933.
Although the latest average wages have recovered to pre-pandemic figures, it hasn’t matched the increase in cost of living as a result of 2 years of lockdown and economic stagnation.
Average monthly wages in Malaysia from 2012 to 2022
According to a DOSM Household Income and Basic Amenities Survey Report done in 2020, 20% of the M40 group were financially devastated by the pandemic and slipped into the B40 category.
IRL spoke to Frankie, 32, who shared: “I lost my job during the pandemic. For 6 months, I went without a salary until I found a part-time job making 30% of my last drawn salary. I went from living comfortably to barely surviving.”
Those in the B40 group are already struggling, having to spend more than 60% of their wages on living essentials. This is especially concerning because people tend to start families and take on more financial commitments in their late-20s and 30s.
The highest income earners are in the 40-59 yo bracket. However there is no comparable increase in earning power as they age, and in fact it has dipped significantly in the past 3 years.
IRL spoke to Balaji, 49, a sales manager working in Seputeh: “Been working at the same job for the last 9 years. I’ve been searching for better pay, but since the pandemic, salaries in my industry have stagnated.”
The number of unemployed fresh graduates in Malaysia has doubled since 2021
Younger Malaysians on the other end of the spectrum don’t have much to look forward to either. The starting salary for fresh grads is not only known to be pitiful but the current job market is also extremely scarce for first-time job seekers.
In 2021 there were around 40,000 unemployed fresh graduates. That figure is estimated to now be closer to 90,000. And the later they enter the workforce, the longer they delay their contributions to their EPF.
IRL spoke to Azmi, 25, a fresh grad working in Subang Jaya: “I need to get out of here man. I am applying everywhere. I swear it feels like I'm being exploited. How do y’all millennials do it?”
If Malaysia is to transition into a developed nation, we should expect that a larger percentage of the population will be more educated. With that comes the need to grow the economy to provide jobs for a more skilled workforce and the appropriate wages to go with it.
If nothing is being done to address all these core issues, we may soon find ourselves a nation which is known for exporting skilled workers at the cost of their own development, such as the Philippines.
And if that happens, not only will senior Malaysians be too poor to retire, but there won’t be enough from the younger generation to replenish the workforce.
What should be done about our national wage problem?
Let us know in the comments!
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Read also: 5 Malaysians Share How They Plan to Overcome The Weakening Ringgit in 2024
5 Malaysians Share How They Plan to Overcome The Weakening Ringgit in 2024
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