UBI-style scheme needed as uncertainties loom!

Health or the economy? Putrajaya is desperately juggling both these issues, whether to continue the MCO beyond 4th February, 2021 since the Covid infection figures seem to be still hovering around 3000-5000 cases daily.

It is obvious that health will have to be prioritized over the economy. But if MCO is extended to curb the increase in cases, the rakyat will need a safety net to fall back on when non-essential sectors of the economy are expected to be shut down.

Those that have lost their jobs since last MCO in March,2020 have attempted to start small food and beverage businesses, putting up small stalls around the city. But they too are having a difficult time to survive under the MCO 2.0. With offices closed and people working from home, they are struggling to see returns after having invested their savings to start up their stalls.

With so many uncertainties surrounding the Covid-19 pandemic , long term impacts will see a significant portion of the B40 and even the M40 being pushed to poverty. Even though the Finance Ministry announced a speedy release of the Bantuan Prihatin Rakyat (BPR) as it was brought forward to February 2021 from May 2021, the first phase cash assistance of RM300 will not go far. Finance Minister Tengku Zafrul stated that around 8.1 million people will benefit from this scheme that will cost the government RM 6.5 billion. Families with a household income of less than RM2, 500 a month and with one child will receive RM1, 200. RM300 would be the first phase cash handout from the RM1, 200 for those eligible.

But how much impact will it have to cushion the financial burden of these families especially those that have abruptly lost their income? Every day we hear how concerned individuals, NGO’s and elected representatives have to distribute food packs and groceries to hundreds of families struggling to put food on the table daily. Living costs for a family of 5 in the city would easily range from RM2, 500 to RM3, 000 a month easily. How far can you stretch the RM 300?

Here is where we find a gap in the various programs announced by the government since Budget 2021. Unfortunately neither the BPR nor other initiatives under JKM will be able to protect families that have lost their incomes or a significant portion of them. These initiatives cannot ensure their basic needs to get food on the table, keep a roof over their heads and continue to provide education and healthcare for their families. These programs are unable to provide a consistent monthly cash assistance to affected families until they are able to stand on their own feet again.

Since MCO 1.0, PSM has argued that the government needs to have a long term plan to put in place monthly cash handout schemes modeled after the Universal Basic Income (UBI) concept. We suggested RM1000/month basic income assistance to these targeted households. From the 8.1 million supposed recipients of BPR, the government should target those that have completely lost their source of income.

Various experimental studies have proven that when families are supported by UBI, they would rapidly recover from financial distress and bounce back to their income level as before. Families that receive no such assistance tend to fall further into a spiral of poverty, trapped in debts, evicted from their homes, haunted by loan sharks and so on. These families often suffer depression and sometimes even consider suicide.

It’s disappointing that Putrajaya is still skirting around these realities faced by the rakyat and failing to look beyond the BPR- or BPN-styled cash assistance schemes. Instead of spreading out funds through various schemes under BPR, Jabatan Kebajikan Masyarakat, etc., (which overlap sometimes) the government ought to focus on a UBI-modeled scheme targeting those households that need it the most. A monthly cash transfer of RM1000 per month is more significant for families that have lost all income compared to a RM 500/year cash transfer to a household that still has a steady monthly income of RM 4,001 to RM5,000. Under the current BPR scheme, incomes of those that can apply are spread out from less than RM2,500 up to RM5000.

Thus, PSM again urges the government to immediately implement a UBI-modeled cash transfer scheme to assist these many families that are suffering in silence. Any further delay in rolling out such a UBI-style scheme will prove disastrous to the most needy Malaysians.

A.Sivarajan
Secretary-General
Parti Sosialis Malaysia

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