Recently, a news report stated that the Minister in the PM’s Department Datuk Abdul Wahid Omar said the average household income in Malaysia had risen to RM5900. When I read that, I shook my head in disbelief.
Really, has Malaysians’ household incomes increased to RM5900? Has it even increased at all?
Let’s take a gander back to our Standard 6 maths class to remind ourselves what “average” (also known as “mean”) is.
“Average” or “Mean”: The value obtained by dividing the sum of a set of quantities by the number of quantities in the set. An example is (3 + 4 + 5) ÷ 3 = 4. The average or mean is 4.
What probably happened is, the survey asked some people what their household incomes were, added them up and divided the answer by the number of people surveyed and arrived at the answer: RM5900.00 per household. It gives the impression that every household in Malaysia is earning RM5900 a month to feed their family, pay rent, make car repayments, etc., doesn’t it?
Now, let me show you why taking the “average” is not a good indication of what the average really is.
Let’s say, there is a room filled with 15 clerks who have the same monthly salaries of RM2000. If you added all their salaries together and divided the answer by the number of clerks, you will get the “average” of RM2000 i.e. the average income of every person in the room is RM2000. Here is the calculation:
RM2000 times 15 (number of clerks) divided by 15 (the number of clerks) = RM2000
Now, let’s say, Bill Gates walks into the room. His net worth is RM243 billion. His monthly income is probably in the millions. Let’s say, he receives RM 1 million a month. So, what is the average income of the people in the room now?
RM1,000,000 (Bill Gate’s salary) + RM30,000 (total salaries of the clerks) divided by 16 (the number of people in the room) = RM64,375
Wow! Just by getting Bill Gates to stand in the room with the clerks, the average salary rose to RM64,375.00 per person! Does that mean that we are over paying the clerks? Nope. Their salaries are still RM2000/month, actually. Nothing has changed for them. However, statistically, their “average” salaries have risen 32 times!
Come on back down to earth, Mr. Minister. The average income of Malaysian households is definitely not RM5900.00. How can it be when 80% of households in Malaysia earned less than RM3000 last year and needed the assistance of BR1M. Are you saying that miraculously, their income jumped to RM5900 recently?
Here is something scary: 20% of Malaysian households probably have an average income of RM17,500.00/month. How did I arrive at that? Well, it is Form 3 maths.
80 times RM3000 (80% of household incomes) + 20 times (x) (20% of household incomes) divided by 2 = 100 times RM 5900
(Actually, 80% of households earn less than RM3000 but I have put it at an “average” of RM3000 to make the calculation simpler.)
Therefore, (x) = RM17,500. 20% of households in Malaysia have an average income of RM17,500/month. In other words, while 80% are struggling with RM3000 or less per month, 20% of Malaysians are enjoying an average income of RM17,500. That is RM14,500 more than the bottom 80%! How do you like that income disparity?
Ideally, a good social structure should be a large middle income group with small low and high income groups. However, in Malaysia, we have a very large low income group who needs financial help every year. The saying, “The rich get richer while the poor get poorer” seems appropriate right now.
Even owning a home, one of the universal human rights, seems far fetched for many Malaysians. They have trouble affording their own roof-over-their-heads. Well, how are they able to when they do not earn enough to take a loan to buy one? The government has announced that they would build affordable homes to rectify this problem. Unfortunately, I have heard this promise repeated since twenty odd years ago. Property prices keep going up and out of reach for many Malaysians, making them rent and become tied to this burden forever. Incidentally, both Barisan and Pakatan governments have promised to build affordable homes for first time home owners.
Dear Paprika, I cannot help but worry about your future. Like all fathers, I want to see you earn a good living and enjoy life as it is meant to be enjoyed. However, looking at the current statistics, you have a higher chance of ending up in the bottom 80% who will need the assistance of BR1M. Till Malaysia’s income gap closes and things change for the better, do not forget to double check your maths before making your calculations public less you embarrass yourself and your family.
Your loving father,