Pandemic heaps more money woes on vulnerable poor

The global pandemic continues to upend the lives and livelihoods of the most vulnerable among the urban poor in the country’s capital.

Covid-19, and government efforts to contain it, has intensified existing challenges of poverty, particularly in already disadvantaged groups such as single mothers and families with disabled members.

DM Analytics surveyed the socio-economic status and well-being of a group of 500 families with children in Kuala Lumpur’s low-cost flats over three weeks in September.

Its findings are reported in “Families on the Edge Part 2” released last week.

The report shows that among low-income households, female-headed households and families affected by disability are recovering at a slower rate and remain significantly more susceptible to future shocks. Nearly 70% of such households have no savings and no EPF or Socso coverage, increasing their vulnerability if they are unemployed.

Muhammed Abdul Khalid, who heads DM Analytics, told MalaysiaNow that the disabled are more often than not self-employed, and making self-contributions to EPF or Socso is optional.

“Shockingly, when we asked respondents why they were not registered they said that they didn’t know about it,” said Muhammed, who was the economic adviser to former prime minister Dr Mahathir Mohamad.

“Lack of awareness remains an obstacle to providing protection for this group.”

The report is the second in a series under the Families on the Edge project commissioned by United Nations agencies Unicef and the Fund for Population Activities. Future reports are expected to monitor the extent to which these families recover and offer critical insights for policymakers as Malaysia aims to “build-back-better”.

Financial hardship resulting from pay cuts, job losses or loss of business income during the initial movement control order from mid-March to early June, presented in the first Families on the Edge report, showed some improvement by September.

“Despite the slight recovery in income and employment in the survey group, this recovery is partial. For the majority of households, the outlook remains pessimistic,” said Muhammed.

“The fortunes of most urban poor are worse now than pre-pandemic levels and during the same period last year.”

“Lack of awareness remains an obstacle to providing protection for this group.”

He added that this is particularly true for single mothers.

The report says that government assistance is still required, and coverage needs to be improved as only 2% applied for the Prihatin grant.

What the poor need most is cash and food, but due to their inability to find work or other ways of generating cash during the pandemic, they also welcome job opportunities.

Some policymakers feel that more cash aid to the poor simply increases their dependence on government handouts and that job creation is more helpful.

Izlin Ismail, associate professor at Universiti Malaya’s faculty of business and accountancy, believes that from an economics perspective, it is better to give handouts to the poor rather than tax breaks to the rich.

“The poor would spend most of it and this generates more economic activity,” she tells MalaysiaNow.

“The rich are less likely to spend it in the same manner.”

Malaysia Unicef social policy head Stephen Barrett said, “The information collected in the report will support national Covid-19 mitigation efforts and a deeper examination of social protection policies. This will be critical if governments are serious about fulfilling the ‘leave no-one behind’ national agenda.”

However, as Barrett pointed out, the study does not take into account any recent circumstances since new movement restrictions were imposed in Kuala Lumpur, Selangor and Putrajaya earlier this month.

The upcoming Budget 2021 and 12th Malaysia Plan present critical opportunities for policymakers to implement more effective social policies as part of efforts to achieve goals set out in the Shared Prosperity Vision 2030.

However, as the report says, “It will also help achieve the less lofty but no less important aim that all parents have, which is to give their children a good start in life.”