INTERACTIVE: KL household incomes worst hit by pandemic

PETALING JAYA: In Kuala Lumpur, many self-employed high-income earners have yet to see their livelihoods fully recover from the impact of the Covid-19 pandemic.

More employees in the city are earning lower salaries, while the number of high-income workers in the city has also declined due to job losses during the pandemic lockdowns.

This is why official data shows a lower median household income last year in the federal territory compared with 2019, even as all other states and federal territories saw growth, say economists.

According to the Statistics Department’s Income, Expenditure, Poverty and Inequality 2022 report, Kuala Lumpur’s median household income experienced a 1% decline in compounded growth rate (CAGR) in 2022, with households earning RM10,234 last year, compared with RM10,549 in 2019.

(The CAGR is the annualised average rate of growth between two given years.)

This is an estimated RM105 drop in the yearly household income from 2019 to 2022.

In comparison, the CAGR between 2016 and 2019 for Kuala Lumpur (KL) was among the highest at 5% or an estimated RM492 increase yearly.

The self-employed in Kuala Lumpur, which made up 19.5% of the workforce in 2019, shrunk by 6.4 percentage points to 13.1% in 2022, with its average income dropping by 32.4% from RM2,580 in 2019 to RM1,744 in 2022.

Those earning RM20,000 and above faced the biggest decline at 20.8 percentage points, from 33.9% to in 2019, to 13.1% in 2022.

Why KL’s median household income fell

The competitiveness of earning a living in KL partly explains the reason why the pandemic has been especially tough on the livelihoods of some households.

A drop in income also has a bigger effect in KL compared with other states and federal territories.

KL is a magnet for job-seekers who include migrants, housewives and youth.

Added with the higher cost of living, a pay cut or job loss for a member of the household would lead to a significant drop in overall income of the household.

Sunway University professor of economics Prof Yeah Kim Leng said the size of the high-income self-employed group is likely to be volatile depending on prevailing market conditions and business cycles.

“The average performance of small and medium-sized business ventures was slightly worse off in 2022 compared with 2019,” he said.

Prof Yeah added that the fall in median household incomes in KL could also be explained by the impact of the pandemic on high-income earners.

More people joined the workforce in KL in 2022, as those in the paid employment category grew from 64.2% in 2019 to 67% in 2022.

However, the percentage of high-income earners – people who earn above RM12,000 per month – fell between four and six percentage points in 2022 compared with 2019, while the percentage of people earning lower incomes of RM2000-RM3,999 grew by 8.3 points in the same period.

Commenting on the outlook for this year, Prof Yeah said lower economic growth could result in a weaker contribution of high-income self-employed households to the median income in KL.

“This is because the income of self-employed and entrepreneurs are relatively unstable and cyclical.

“Nevertheless, the household income level in the federal territory is expected to remain at the pole position despite negative or stagnant growth due to the high base,” he said.

Malaysia University of Science and Technology Research and Innovation provost Prof Geoffrey Williams said the drop in the median household income in KL was also caused by more people earning lower wages.

“During the pandemic, people continued to move to KL to find work, so the number of workers rose, but they found jobs with low salaries.

“There are more housewives and young people here, so when they join the labour force it has a bigger effect.

“More people had low wages, which may also include part-time jobs, so 50% point of median income fell and this cut the overall household income,” he said.

He said the effect was also bigger in KL because of the city’s relatively high cost of living.

“The cost of living here is higher so when one household member loses their job or has a lower income, the others have to chip in,” he said.

How other places fared

While Kuala Lumpur saw a fall in the median household income, other states saw growth at varying levels.

Kelantan grew the slowest at RM17 or 0.5% CAGR, followed by Kedah at RM26 or 0.6% CAGR and Melaka at RM52 or 0.8% CAGR between 2019 and 2022.

At the other end of the scale, Selangor recorded the biggest growth in median household income with an average of RM9,983 in 2022, a 21% growth or 6.5% CAGR from RM8,210 in 2019.

This is an estimated average salary increase of RM591 yearly between 2019 and 2022.

In comparison, the annual growth rate of household income between 2016 and 2019 was RM328.

This was largely due to the steady rise in the share of most high-income earners, both involving paid employees and the self-employed.

Sarawak household income grew the second highest, with an estimated RM145 yearly increase from 2019 to 2022, or a CAGR of 3%.

Between 2016 to 2019, its estimated annual increase in salary was RM127, or a CAGR of 2.9%. It recorded a median household income of RM4,978 in 2022, compared with RM4,544 in 2019.

Sabah households earned an increase of annual income of an estimated RM114 yearly between 2019 and 2022, a 2.6% CAGR, compared with a RM42 annual increase or 1% CAGR between 2016 and 2022.

The following shows the median household income by state and district:

Find out which income group your household belongs to in the table below: