KUALA LUMPUR: Households income in Putrajaya and Kuala Lumpur declined in 2022, post Covid-19 even as overall Malaysian household income grew one per cent, according to a report by Khazanah Research Institute (KRI).
Household income grew at a much slower rate compared with the pre-pandemic trend, remaining significantly below potential projections.
Specifically, median income was 12 per cent below the pre-Covid-19 trajectory, and mean income was 13 per cent below, indicating a substantial lag in recovery.
Additionally, the widening gap between mean and median incomes suggest increasing income inequality, with higher earners benefiting more compared to the rest of the population.
KRI said Selangor surpassed other states with an average absolute increase of RM410 and a compound annual growth rate (CAGR) of 5.1 per cent.
The report, titled The State of Households 2024: Households and the Pandemic 2019-2022 (SoH 2024), noted that all states except Sabah enjoyed positive real median household income growth from 2016 to 2019.
In contrast, between 2019 and 2022, Putrajaya (-1.3 per cent) and Kuala Lumpur (-2.5 per cent) experienced significant declines in real median household income.
"Districts in Selangor, except Klang and Petaling (-0.7 per cent and 0.21 per cent growth, respectively), were in the top percentile of CAGR growth in Malaysia.
"The highest growth districts in 2019 to 2022 were Kuala Langat (11 per cent), Sepang (10 per cent), and Ulu Langat (8 per cent)."Some districts in Sabah and Sarawak also demonstrated resilience during 2019-2022, positioning themselves in the top growth percentile," it added.
KRI said many districts in Sabah and Sarawak that showed low-percentile growth from 2016-2019 showed vast improvement in the 2019-2022 period.
However, the report said the national average real median household disposable income dropped significantly from RM110 during 2016-2019 (2.1 per cent) to just RM16 (1.0 per cent) in the 2019-2022 period.
"All states and federal territories across Malaysia had a positive CAGR and average absolute change during the 2016-2019 period."Between 2019 and 2022, only five states showed an increase in disposable income growth: Selangor (4.6 per cent), Sarawak (0.7 per cent), Johor (0.7 per cent), Pahang (0.4 per cent), and Sabah (0.2 per cent)," it added.
The research institute highlighted that Selangor was particularly notable, recording an average absolute increase of RM303, with seven districts outperforming and ranking among the top percentiles for growth in median household disposable income.
The report also revealed that in 2022 showed slower growth in inequality adjusted household income alongside more diverse drivers of growth among districts.
"Adjusted household income only rose by 7.9 per cent in 2022 compared to the 12.0 per cent in 2019, mainly due to the lower growth in household income in 2022."Several districts experienced a decrease in adjusted household income in 2022 while its drivers of growth were more diverse as they had multiple combinations in the change and magnitude of household income and Gini coefficient," the report said.
However, KRI noted that using the Gini coefficient alone to evaluate inequality is not definitive, as certain states and strata showed a decrease in Gini while also experiencing an increase in inequalities at both ends of the income distribution.
The report said that household residual incomes have decreased across all income deciles, disproportionately impacting both lower- and middle-income households.
"In the bottom 10th decile, they experienced a -108.2 per cent decline from RM200 (nominally) in 2019 to - RM16 in 2022."This trend is further exacerbated through the Covid-19 related Employees Provident Fund (EPF) withdrawal schemes, that collectively resulted in over 90 per cent of EPF members under 30 not having enough in basic savings for retirement," it said.