Implement a Modified UBI Urgently!


YB Liew Chin Tong, a good friend of mine, is one on the very few Pakatan Harapan leaders who is turning his mind to the economic challenges the country will be facing for the remainder of 2020. In his opinion piece in Malaysiakini on 12/5/2020 (A Post Covid 19 Economic Agenda for Malays) YB Liew identifies the various sectors of the global economy that will be affected adversely by the Covid Pandemic and the impact that this will have on Malaysia. He surmises, correctly, that unemployment will be a huge problem in Malaysia, but then goes on to suggest a solution that is somewhat off the mark.

The solution suggested by YB Liew is “to create jobs that pay decently. Everything else flows from here. All other objectives should be subjected to this primary objective. The creation of decently paid jobs should be front and centre as far as economic discourse is concerned.”

I would beg to disagree. Job creation is of course an important objective and most of the 10 suggestions of YB Liew to create jobs have their merits, and should be explored within the limits of our financial capacity. But we have to be realistic. We are not going to be able to create enough jobs for the 2 to 3 million people who are going to lose their jobs in the next few months. These will include workers employed in aviation, the airports, hotels, the tourism sector, workers in factories whose overseas orders have been cut down drastically, Malaysians working abroad who come back to Malaysia because they have lost their jobs, construction sector workers, oil and gas sector workers, helpers in the night bazaars that are either closed or downsized because of the need for social distancing, and many others.

While creation of well-paying alternative jobs is a valid long term goal, the primary objective currently should be to ensure that no family is left without an income sufficient to procure the essentials – food, shelter, basic utilities and health care – during this recessionary period. Other needs can be postponed but the above four cannot be, and we have to as a society, ensure that every family has the means to get the essentials. We cannot compromise on this.

The best way of ensuring that no family goes short on food is by implementing a modified UBI (Universal Basic Income) scheme which would pay RM 1000/monthly to the households listed in the Bantuan Prihatin Negara which meet the eligibility criteria. These criteria are to screen out (exclude) the families which have at least one parent who is from any one of the following categories – person for whom a company is contributing to SOCSO, government servants, the 1.8 million individuals who paid income tax in 2019, and government pensioners with a pension of more than RM 1000. These are persons with an adequate and stable income who do not require the assistance of the UBI to meet essential needs.

The rationale for income support is this – none of the 2 to 3 million people who are going to end up unemployed can be held personally responsible for their predicament. It is not because they are lazy or that they refused to go to work. Their predicament is due to a failure of the market economy. And those who lose their jobs will find it difficult to land alternative jobs until the world economy comes out of the recession, and that will take one to two years. We cannot let them and their families go hungry or are unable to avail the health care they need! A caring society with a slogan of “Shared Prosperity” must make sure that no one is left behind! It’s high time to “walk the talk”!

The UBI scheme should also be extended to all single individuals above the age of 21 using the same exclusion criteria as outlined earlier. The singles eligible for UBI could be paid RM 300 per month. This isn’t a huge sum but would help these individuals manage in these difficult times until they get a job.

An UBI payment of RM 1000 per month for a family is just enough for provision of a simple diet for the family. But it may not be enough to meet other basic needs such as rent. There is a need for a separate program to handle the issue of rent for families where the breadwinners are laid off. (The PSM statement released on 30/4/2020, sketches out the features of a rent support program – There is also a need to consider rebate for the first RM 30 of the water bill and the first RM 100 of TNB charges.

This UBI scheme will pump in RM 2 to 3 billion into the Malaysian economy every month. The families assisted would tend to buy foodstuffs with low import content (as they are cheaper) and this will expand the market for the food supply chains in the country. This in turn will help preserve the jobs of Malaysian farmers, workers in Malaysian factories processing food, workers in the transportation and distribution of food, petty traders in our markets and night markets. The UBI will serve not only as an emergency lifeline to the retrenched workers and their families, but will also help arrest the decrease in employment.

How we deal with widespread unemployment isn’t an abstract academic issue that can be debated in a leisurely manner. The Bantuan Prihatin Nasional scheme paid out RM 1000 to close to 4 million B40 families in April and another RM 600 to these families in May. It was a great help to the families which received it. But this scheme ends with the RM 600 payment. June is only 2 weeks away and many families are staring at the prospect of retrenchment of their wage earner(s) in June. The luckier ones, who work in the formal sector, would benefit from the Employment Insurance Scheme which will pay them a monthly stipend on a reducing scale for the next 6 months. But those in the non-formal sector, or those returning from overseas, will not have the benefit of this scheme and will be in dire straits by the middle of June.

Malaysians all over the nation came together to collect money and arrange emergency rations to families in need over the past 2 months. This is laudable and it demonstrates that there is an underlying spirit of solidarity amongst the peoples of Malaysia. But private initiative will not be enough to tackle need at the scale we are going to witness. Government has to step in, and implement a comprehensive income support scheme to all those families who find themselves without a job. The PSM believes that the modified UBI as sketched out above is the best way going forward, and we hope more Malaysians will come forward to lobby for this and other programs that flesh out the principle that we should handle the Covid-induced recession on the basis of solidarity and ensure that no one is left behind!

Dr.Jeyakumar Devaraj
PSM Chairperson

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