In Kuala Lumpur, many self-employed high-income earners are still facing the consequences of the Covid-19 pandemic. The city has seen a decrease in both the number of high-income workers and the salaries of employees overall due to job losses during pandemic-related lockdowns. Economists point out that this is the reason behind the lower median household income in the federal territory compared to other states and territories, as reported in the Statistics Department’s Income, Expenditure, Poverty and Inequality 2022 report.
According to the report, Kuala Lumpur’s median household income experienced a decline of 1% compounded growth rate (CAGR) in 2022, with households earning RM10,234 compared to RM10,549 in 2019. This represents an estimated RM105 drop in yearly household income from 2019 to 2022. In contrast, between 2016 and 2019, Kuala Lumpur had one of the highest CAGR at 5% or an estimated RM492 increase yearly.
In 2022, the percentage of self-employed individuals in Kuala Lumpur decreased by 6.4 percentage points to 13.1% of the workforce, with an average income drop of 32.4% from RM2,580 in 2019 to RM1,744 in 2022. Specifically, those earning RM20,000 and above faced the largest decline, from 33.9% in 2019 to 13.1% in 2022, a decrease of 20.8 percentage points.
The competitive nature of Kuala Lumpur’s job market and its higher cost of living contribute to the difficulties faced by households. The city attracts job-seekers, including migrants, housewives, and young people. Therefore, a pay cut or loss of income for one member of a household can significantly impact the overall income. Sunway University professor of economics Prof Yeah Kim Leng explains that the performance of small and medium-sized business ventures was slightly worse off in 2022 compared to 2019.
Prof Yeah also attributes the fall in median household incomes in Kuala Lumpur to the pandemic’s impact on high-income earners. While more people joined the workforce in Kuala Lumpur in 2022, the percentage of high-income earners (earning above RM12,000 per month) decreased by four to six percentage points compared to 2019. At the same time, there was an 8.3-point increase in the percentage of people earning lower incomes of RM2,000 to RM3,999. Looking ahead, Prof Yeah expects lower economic growth to affect the contribution of high-income self-employed households to the median income in Kuala Lumpur.
Regarding other states, Selangor recorded the largest growth in median household income, growing by 21% or 6.5% CAGR from RM8,210 in 2019 to an average of RM9,983 in 2022. Sarawak had the second-highest growth, with an estimated RM145 increase yearly from 2019 to 2022 or a CAGR of 3%. Sabah also saw an increase in annual income, with an estimated RM114 increase between 2019 and 2022 or a CAGR of 2.6%. Kelantan had the slowest growth at 0.5% CAGR, followed by Kedah at 0.6% CAGR and Melaka at 0.8% CAGR between 2019 and 2022.
The median household income by state and district can be seen in the provided visualizations. Overall, Kuala Lumpur’s household income level is expected to remain high despite negative or stagnant growth due to the city’s high base. The drop in median household income in Kuala Lumpur was also influenced by more people earning lower wages, which is particularly impactful due to the city’s higher cost of living.
Source: The Star
