Ever since the 1970’s, the increase in salaries in general has lagged behind rising prices of goods and services across the board.
Take the case of a fresh university graduate who joins the public sector. Back in the 1970’s he would be drawing a basic salary of RM750 per month whether he was a doctor, an administrator or an engineer.
The RM750 may look paltry today but back then the sum was enough to cover almost all living expenses plus some balance for savings for the future.
Today, a fresh university graduate who joins the public sector receives a basic salary of about RM2,400 (a three-fold rise over the 1970’s) but he has to spend frugally in order not to be in debt.
The purchase price of a 24ft x 75ft double-storey terrace house, say in Petaling Jaya, was only RM40,000 back in the 1970’s. Today, the purchase price of a similar type of house in a similar location is around RM800,000 (a 20-fold rise).
A 1,200cc Japanese car back then was priced at RM7,000. Today, a 1,200cc local car is priced at RM50,000 (a seven-fold increase) while an imported Japanese version is priced at RM70,000 or even RM80,000 (more than a 10-fold rise).
A plate of economy rice with four dishes back then cost only 60 sen. Today, a plate of economy rice is not so economical costing at least RM6 (a 10-fold jump in price).
A bowl of wantan mee or prawn mee cost only 30 sen back then. Today, a similar bowl costs at least RM3 (a 10-fold rise).
A long-sleeved shirt back then could be bought for only RM5 (locally-made) or RM9 (foreign brand).
Today, a locally-made similar shirt costs RM60 or even RM70 while a foreign branded shirt is well over RM100.
The purchasing power of today’s ringgit has depreciated about 10 times compared to that of the 1970’s.
This effect of a faster rise in prices over the rise the salaries has led to a decline in the living standards of Malaysians in general over time.
This in turn has resulted in a shrinking middle income group and an expanding low income group in Malaysia.
In the 1970’s, a fresh graduate who was employed could be classified as a member of the middle income group.
Today, an employed fresh graduate belongs to the low income group.
Small wonder many people today resort to borrowing for consumption to live through the day.
Credit card companies or even Ah Long have no shortage of clients. The national consumption debt, both public and private, is rising at an alarming rate.
The BR1M1 and BR1M2 are only quick fixes for temporary relief.
In the long run, efforts to generate a sustained increase in productivity are the only viable solutions to address the problems of price of goods rising faster than salaries.
These include downsizing the public sector, reducing corruption, adopting desired policies like meritocracy, raising educational and training standards, and so on.
OLD TIMER Penang The Star/Asia News Network