COVID-19 will widen the gap between the bottom 40 and the top 20 income groups, said economist Dr Muhammed Abdul Khalid.

The economic adviser to former prime minister Dr Mahathir Mohamad said inequality has already increased even before the pandemic as the accrued income of the top-earning group was higher than the B40 group.

The pandemic may not affect the wealthy as much as it affects the B40 group, especially those in the informal sector, he told The Malaysian Insight.

“This crisis will make it worse because those who lose their jobs, those who are heavily impacted, are those in the low-income bracket.

“Their income growth is much lower or could even be negative and, of course, the gap will be wider,” said Muhammed, who is also DM Analytics managing director.

The author of The Colour of Inequality: Ethnicity, Class, Income and Wealth in Malaysia said education is key for social mobility, adding that children from low-income households might fall behind because of a lack of access to equipment required for online learning.

Citing a recent Families on The Edge report, a joint study by Unicef and United Nations Populations Fund (UNFPA) on the urban poor in Kuala Lumpur, Muhammed said one in three pupils did not have serviceable equipment.

“That avenue is no longer there. So, who benefits? Those who go to better schools or parents who have equipment. They will do better, so the gap will widen.”

According to the Statistics Department’s household income and basic amenities survey report 2019, the Gini coefficient, which measures income inequality, increased from 0.399 in 2016 to 0.407 in 2019.

The higher the value of the Gini coefficient, the wider the income inequality is.

The survey shows that the median monthly household income for the B40 group increased from RM3,000 in 2016 to RM3,166 in 2019.

The M40 group saw its median monthly income grow from RM6,275 to RM7,093, and for the T20 group from RM13,148 to RM15,301.

On another note, he said, economic growth should focus on the wellbeing of the people and not just gross domestic product (GDP).

While GDP is important to measure output, it does not indicate who benefits from the growth and whether it is inclusive and sustainable.

“There is no point even if we have high-income growth but children are malnourished or if people cannot get access to quality education.”

Therefore, Muhammed said, there has to be a multi-pronged approach to measure growth, such as the poverty indicator.

While Malaysia’s economic growth has always been inclusive, it may not be wise to depend on private consumption in a crisis like this, as people might not have the money to spend, he said. – December 3, 2020.