Left Behind: An Uneven Economic Recovery

Last week, the World Bank released its regular monitor on the state of Malaysia’s economy. The most recent issue’s theme focuses on the need for an inclusive recovery, with special attention to Sabah and other states facing higher poverty. It’s valuable reading, and is one of a series of reports from organisations calling for broader policy initiatives to address entrenched inequalities and to ameliorate the decline and divisions that deepened during the Covid-19 pandemic. 

While there is general optimism about growth numbers — projected to reach 5.5% this year — concerns arise externally, from worrying trends in the world economy (notably the effects of the Russo-Ukrainian war, China’s Covid shutdowns and global stagflation), and internally, from those unable to benefit from the growth.

The latter deserves more discussion. History has taught us from past crises that existing inequalities deepen. This has been the case during Covid as well.

Those without access to the internet or laptops weren’t able to have the same access to education. Those with limited savings exhausted their EPF retirement funds. Those without regular incomes became more vulnerable in the face of record unemployment and uncertainty. The suffering during Covid was real, as BTL highlighted repeatedly. For many the hardships continue.

A real recovery?

So far, Malaysia’s economic recovery has been driven primarily by 2 forces: the post-Covid opening contributing to more consumption, and greater job creation. The country has also benefited from higher palm oil prices and a modest increase in foreign investments, with many projects which were previously on hold having now resumed.

The changes have been positive, but uneven. A real recovery involves creating conditions where all can benefit. Beyond public calls to address food security and debates over reimposing the Goods and Services Tax (GST) (see hereherehere and here), there’s been little attention to the issues of policy. 

This is particularly with regard to inequalities — both those endemic in Malaysian society before Covid and those exacerbated during Covid, from the pandemic itself and political responses to it.

Need for targeted policies

Recent reports highlight that this is a critical time for policy interventions and policy reform.

Here are just 2 examples:

In the first, last month, a group of experts released A National Emergency: Our Children’s Learning Loss. The report highlighted the negative impact of the pandemic on schoolchildren, pointing out that Malaysia has endured one of the longest school closures in the world (41 weeks) and highest learning loss in Asean (except Myanmar). 

An estimated 40% (yes 40%!) of children were not able to access online classes, contributing to more dropouts and serious learning gaps. Existing inequalities were exacerbated, with the vulnerable most lacking access. Sabah and Sarawak were especially affected.

The effects go beyond the classroom to mental health and, in the longer term, to lower labour productivity. They call for different collaborative interventions including staggered learning, targeted (and individual) programmes for vulnerable schoolchildren and greater support for teachers.

Secondly, the recent World Bank Monitor on Malaysia also highlighted that education’s in need of attention, arguing that deficits in investing in human capital contribute to higher poverty and inequality.

It drew attention to the number of dropouts and performance on the SPM (using 2019 data) to show how Sabah doesn’t fare well compared to other states. Its average weighted average score on the SPM was only 3.55 compared to the Malaysian average of 4.08, far below the target of 5.55.

This finding comes after other reports and initiatives, such as the Tiada.Guru campaign, which focused on teacher absenteeism in rural communities in Sabah.

The World Bank study also found that over 20% of the workforce has no formal education and that there are serious infrastructural problems which reinforce problems of quality education access.

In stressing the regional variation of experience, the World Bank isolated 5 lagging states — Kedah, Kelantan, Perlis, Sabah and Sarawak. The data on incomes, mortality and growth underscore the seriousness of the disparities and development challenges. And it’s made yet another call for rethinking the measurement of poverty and more tailored policies for different regions.

Both studies showcase that Malaysia’s economic recovery needs to go beyond opening up; it needs to meaningfully address fundamental inequalities within the society, many of which have worsened during Covid and will worsen further if not addressed.

Political obstacles

With politicians focused on their electoral fortunes and the current Prime Minister Ismail Sabri Yaakob’s government centred on perpetuating its time in (and benefits from) office, there is little appetite for needed policy reviews and interventions.

Many of these studies are just being ignored by the political elites. There’s been little discussion of these issues in Parliament as well, with attention on the hopping of politicians rather than the hurting of the rakyat.

This is a critical window for helping the children and regions being left behind.

Without greater engagement on inequalities, the legacy of this Covid crisis will live on for generations.