Academic journal article Journal of Southeast Asian Economies

Malaysia: Towards a Social Protection System in an Advanced Equitable Society

Academic journal article Journal of Southeast Asian Economies

Malaysia: Towards a Social Protection System in an Advanced Equitable Society

Article excerpt

I. Introduction

In the New Vision Policy 2001-10, Malaysia aspires to become a developed nation in its own mould, emphasizing the need to build a resilient, competitive nation and an equitable society to ensure national cohesion and social stability. In such an advanced equitable society, a necessary component to accompany the status of a developed nation is its social security system. Moreover, the World Social Forum in Copenhagen in 1995 declared that "Governments must develop and implement policies to ensure that all people have adequate economic and social protection during unemployment, ill health, maternity, child rearing, widowhood, disability and old age". However, governments, including Malaysia, continue to emphasize economic growth over social policies, viewing the latter merely as a dividend rather than as an essential contributor to sustainable development (Singh 2007). For a number of reasons that will be elaborated below, this situation cannot go on as Malaysia strives to move up the income ladder.

Given this situation, the objectives of the paper are, first, to examine the social safety programmes that Malaysia already has; second, to describe what challenges they face; and third, to determine whether they are just and sustainable. The paper will also put forward some policy recommendations with respect to, first, improving the currently available programmes, and second, the possibility of introducing new programmes to substitute or complement the current programmes. In order to fulfill these objectives, the paper is organized as follows. The next section will enumerate why there should be an expanded formal social security system in Malaysia. Section III will describe the various types of social security programmes available, while section IV will depict the challenges facing them and assess how just and sustainable these programmes are. Some policy recommendations will be made in section V, while section VI concludes the paper.

II. Rationale for a Formal Social Security System (1)

The 1997-98 East Asian financial crisis revealed the inadequacy of social safety net programmes in the affected countries (World Bank 2000; Ragayah, Lee and Saaidah 2002; Ragayah 2005a). Asher (2002) points out that demographic trends manifested in rapid individual and population ageing, globalization and associated changes, urbanization, industrialization, and changing family structures and attitudes all suggest greater reliance on formal social security systems in Southeast Asia.

Table 1 shows that the population average annual growth rate rose at about 2.6 per cent (2 per cent for citizens and 11 per cent for non-citizens) between 2000 and 2005 and fell to 1.3 per cent (1.4 per cent for citizens and 0.1 per cent for non-citizens) between 2006 and 2010. This growth rate continued to slow down with the declining fertility rate (defined as the number of children a women bears during her reproductive age) among citizens as the country continues to develop. The sharp contraction in the increase of non-citizens is due to the government trying to curb the over-dependence on low-cost unskilled foreign workers, which has depressed wages and hampered the move of companies to higher value-added activities, as well as contributing to the continuing outflow of local talent (Malaysia 2010).

The age structure of the Malaysian population has been changing towards an ageing population. The proportion of population below fifteen years declined from 33.3 per cent in 2000 to 27.6 per cent in 2010, while the proportion of population aged sixty-five years and over rose from 3.9 per cent in 2000 to 5.1 per cent in 2010. As a result, the median age has risen from 23.6 years in 2000 to 26.2 years in 2010. However, the decline in the proportion of the population under fifteen years old is larger than the increase in the proportion of older persons (sixty-five years old and over). Consequently, the total dependency ratio fell from 59. …

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