SUBANG JAYA: Malaysia will soon face a retirement crisis, according to social and economic thinktank Blindspot.
This is because more than half of its citizens do not have enough savings or no retirement savings at all, its co-founder Azlan Awang said.
Azlan said millions of Malaysians were in danger of not having enough money to maintain their current standard of living after retirement.
“The government should be looking into this issue. If the matter is left unchecked, it will only get worse.”
Azlan said the shortfall in savings could affect the national economy as the aged, who were increasing in number, would be forced to cut down on their consumption and depend fully or partially on their families.
Life expectancy in Malaysia has increased to 77.4 years for women and 72.5 years for men. This is a far cry from 1970 when life expectancy for women was 65.5 years and 61.6 years for men.
“We do not have social security, as practised in developed countries,” he told FMT.
Malaysia has a workforce of 14 million. Out of that, 6.5 million are Employees Provident Fund members. But 70 per cent of the members do not have enough savings for retirement.
The government employs 1.3 million people, who will receive life pension upon retirement.
“It shows the remainder, almost six million people, do not have any sort of retirement savings. What will happen to them?”
Azlan added that the figures for people not having retirement savings were increasing every year and that the majority of senior citizens were falling short in savings and would be below the poverty line.
The crux of the issue remains that Malaysians are being paid low wages, according to him.
He said this was where the seeds of the crisis were being planted.
“They don’t earn enough money to put away extra for later years. Malaysians are being paid low but are unable to raise the issue as only six per cent of Malaysians are in unions.”
In terms of gross domestic product (GDP), which is the monetary value of all the finished goods and services produced in a country within a specific time period, the wages to GDP ratio in Malaysia is 33 per cent.
“This means only 33 per cent goes towards wages of workers, while 67 per cent goes to companies as profits.
“In advanced countries, the distribution is almost reversed where 50 to 60 per cent of GDP goes towards wages and the remainder goes to the company as profits.”
Azlan said it showed capital owners in Malaysia could accumulate more money by paying lesser wages.
This was because Malaysian workers did not have bargaining powers similar to that possessed by workers in countries such as Sweden.
He said almost all the employees there were in unions, after being encouraged to join unions by the government.
“The employers there find that when staff join unions, they manage to improve the company’s productivity because issues are discussed. Of course, not everything that is demanded is given but at least both are on a level playing field.”
Azlan added that the 1Malaysia People’s Aid (BR1M) given by the Federal Government to Malaysia’s poor was different from the social security offered in Sweden to the unemployed or old.
“The Swedish Government helps those who do not have a job to get a job. Their policy is everyone must work.
“Once a person is employed, a tax account is opened and money from the taxes is used for the welfare of others.
“Their wages are high. Taxes are high. But they have the social security they can depend on when in need. The aged are also looked after.”
Azlan said the government should look at ways to hike up the salary of Malaysian employees and assist them in saving for old age.