Implement a modified universal basic income scheme urgently

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We cannot let those who are laid off and their families go hungry or be unable to avail of the healthcare they need, Jeyakumar Devaraj writes.

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 May 2020 “A post-Covid 19 economic agenda for Malays”, Liew identifies the various sectors of the global economy that will be affected adversely by the Covid-19 pandemic and the impact 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.

Liew’s suggested solution 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 disagree. Job creation is of course an important objective and most of Liew’s 10 suggestions 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 two or three 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 slashed, Malaysians working abroad who return to Malaysia because they have lost their jobs, construction sector workers, oil and gas sector workers and helpers in night bazaars that have either closed or downsized because of the need for social distancing.

While the 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 healthcare – during this recessionary period. Other needs may 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 is short on food is by implementing a modified universal basic income scheme or UBI, which would pay RM1,000 monthly to the households listed in the Bantuan Prihatin Negara (National Caring Assistance) scheme which meet the eligibility criteria.

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These criteria are to screen out (exclude) families which have at least one parent who is from any one of the following categories – person for whom a company is contributing to the Social Security Organisation (Socso), civil servants, the 1.8 million individuals who paid income tax in 2019, and civil service pensioners with a pension of more than RM1,000. 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 two or three 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 emerges from the recession, and that will take one or two years.

We cannot let them and their families go hungry or be unable to avail of the healthcare they need. A caring society with a slogan of “shared rosperity” 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 21 using the same exclusion criteria outlined earlier. These singles eligible for UBI could be paid RM300 per month. This isn’t a huge sum, but would help these individuals manage in these difficult times until they get a job.

A UBI payment of RM1,000 per month for a family is just enough to buy provisions for a simple diet for the family. But it may not be enough to meet other basic needs such as rent.

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We need a separate programme to handle the issue of rent for families in cases where breadwinners are laid off. (The Socialist Party of Malaysia or PSM statement released on 30 April 2020, sketches out the features of a rent support programme.) We also need to consider a rebate for the first RM30 of the water bill and the first RM100 of electricity charges.

This UBI scheme will pump in RM2-3bn 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 involved in the transport and distribution of food, and petty traders in our markets and night markets. The UBI will serve not only as an emergency lifeline to retrenched workers and their families but will also help arrest the fall 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 Negara scheme paid out RM1,000 to close to four million families from the bottom 40% of households in April and another RM600 to these families in May. It was a great help to the families which received it.

But this scheme ends with the RM600 payment. June is only two weeks away and many families are staring at the prospect of retrenchment of their wage earner(s) in June.

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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 six 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 rallied to collect money and arrange emergency rations to families in need over the past two months. This is laudable and it shows there is an underlying spirit of solidarity among the people.

But private initiative will not be enough to tackle need at the scale we will witness. The government has to step in and implement a comprehensive income support scheme for all those families who find themselves without a job.

PSM believes that a modified UBI as sketched out above is the best way forward, and we hope more Malaysians will come forward to lobby for this and other programmes that flesh out the principle that we should handle the Covid-19-induced recession on the basis of solidarity and ensure no one is left behind.

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IT.Scheiss
18 May 2020 1.25am

Agree but I would add that the government also introduce price and rent control to prevent vendors and landlords raising prices and rents to suck up the UBI paid out.

This is a concern which I have with UBI in general anywhere in the world. It needs to be implemented along with price and rent controls to prevent profiteering.