Chapter 3 - Socio economic problem

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TOPIC 3

SOCIO ECONOMIC

PROBLEM


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3.1 Overview of socio economic

problem

Poverty

Inequality ofIncome

Distribution

Unemployment

Pollution

No specific definition :measured by PLI

Wealth distribution (money and non money) to

the people in one country

The number of adults (16 to 64) who are

willing, able to work and actively seekingjobs through they could not find one

Bad thing happen to environment


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3.2 Poverty

Def: Not enough income to fulfill basic needs,

measured by PLI

PLI : Poverty Line Index

HQI : Human Quality Index

PQLI : Physical Quality Life Index

HPI : Human Poor Index

HDI : Human Development Index

2009 : Household

size ( 5 ) : RM 730

Sabah : RM830 ,

Sarawak : RM800


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3.2 Poverty

Dr. Syed Hussin Ali

Dr. Kamal Salleh

Prof. Diraja Ungku

Aziz

Poverty cause by culture, personalitydemography and less technology

Poverty cause by inadequacy of

income, social power, less education

and less factors of production

Characteristic : vulnerability, limited

access, limited option

Influence by monopsony and

monopoly

Absolute poverty and relative


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3.2 Poverty

Type of Poverty :

Absolute

poverty

Hard-core

poverty

Relative

poverty

Minimumhousehold income

for one month to

buy foods, drinks

and etc

2002 min HS 5 :

RM730( in

Peninsula)

Half of theMinimum PLI

2002 min HS 5 :

RM375( in

Peninsula)

Link to incomeinequality

between groups

Ex: Between

races, High and

middle income


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3.2 Poverty

Poverty from Islamic PerspectiveTypes:

Miskin

(Poverty)

Fakir

(Hard-core)

Eligible for sadaqah and zakat Islam encourage to work hard

Imam Syafie: Fakir means:

their income can covered half

daruriyat,no property, no

permanent work

Imam Syafie: Miskin means:

their income can covered

daruriyat,cannot covered

hajiyyat property less than

nisab, self efficiency


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Poverty In Malaysia

In Malaysia, poverty is more predominant amongst the Malays

and other Bumiputeras. Although the incidence of poverty ofall ethnic groups have been reduced, it is higher for the Malay

and other Bumiputeras (see figure 1).

0

500

10001500

2000

2500

3000

3500

4000

4500

1970 1976 1979 1984 1990 1995 1999 2002

year

Averageincom

e(RM)

Bumiputera Chinese Indian


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0

10

20

30

40

50

60

70

1970 1976 1984 1987 1990 1997

Malays Chinese Indian

Figure 1. Incidence of poverty by ethnic groups,

1970-1997


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poverty incidence has dropped from 52.4% in 1970to 5.1% in 2002 (reduction of about 47.3% in 30years.

Rural poverty incidence is higher, decreasing from60% in 1970 to 11.4% in 2002.

Urban poverty is relatively lower, reducing from22.3% in 1970 to 2% in 2002.

The number of poor households decreased from574,000 in 1990 to 267,000 in 2002.

hardcore poor defined as households with incomesbelow the poverty line income (PLI).

Poverty and Income Distribution


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Rural Poverty

Factors influence

Economic activities Unbalance development

Rapid industrial growth

Educational standards Rate of birth increase


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Year Rural-urban Disparity Ratio

1970 1:2.14

1980 1:1.77

1990 1: 1.702000 1:1.81

2002 1:2.11

Rural-Urban Income Disparity Ratio


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Rural Poverty

Strategies to overcome rural poverty

Resettlement program - FELDA

In-situ developmentrehabilitation and consolidation of the

land, new planting technique

SMI agriculture base

Decrees the middleman role

Formal education and training

Provide the training facilities

Provide infrastructure

Improve a quality of life

Double cropping @ off-season cropping @ mixed

farming


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Rural Poverty

Strategies to overcome rural poverty fromIslamic Perspective

Encourage people towork hard

Government role insocial life

Zakatfardu ainVoluntary help


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Urban Poverty

Factors influence

Little access to basic

amenities

Lack of job

opportunities in rural

areas

High cost of living

Increased of basic goods

and amenities


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Urban Poverty

Strategies to overcome urban poverty

Job Opportunities

Housing

Educational Facilities

Better Town Planning

Private investment

Human Resources

Development

Bussiness incentive

Control foreign workers

Price Control


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Hard-core Poverty

The incidence of HCP declined from 3.9% in 1990 to1.4% in 1997, but increased slightly to 1.6% in 1999,due to the impact of the financial crisis, and declinedfurther to 0.5% in 2002.

The rate of decline in poverty eradication was slowerduring the later years, as it gets harder to eradicate theremaining HCP incidence.

Implies that it is difficult for the growth process totrickle down to the hardcore poor, which explainsthe persistence of HCP and that is it getting moredifficult to eradicate low levels of poverty.


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The very poor and the poor invariably have larger averagefamily size compared to the non-poor (UKM & SERU).

Age and education - the very poor are older and have a

lower educational attainment as well as having a higherproportion of family members who only completedprimary education.

House ownership - although the majority of the very poor

live in their own house, a large portion of the very pooralso live in rented premises.

Expenditurethe poor spend a larger portion of theirincome on food, which between 41.1% and 53.5%.

Understanding the Poor and HCP


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Strategies to overcome hard-core poverty

Amanah SahamBumiputra Scheme

NGOs Programmed

Increase income

Development Programmed for

the HCP

Health and nutrition

Hard-core Poverty


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3.4 Income Distribution

Introduction

Income distribution :

wealth distribution

(money and non-money)

to the people in one

country

Four Strata of income

distribution

1) Races

2) Regions

3) Urban and rural

areas

4) Income level


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0

0.5

1

1.5

2

2.5

1970 1976 1979 1984 1990 1995 1997 1999 2002

year

rati

os

Bumiputera/Chinese Bumiputera/Indian

Urban/ rural Gini ratios

Figure 3: Income Inequality Ratios, 1990-2002


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Income Distribution Analysis

Income Distribution Early Independence

19571970Inequality income distributions

among races

Malay

Chinese

Indian

Urban

Rural

1957 (RM 139)1970 (RM 177)

per-month

1957 (RM 300)1970 (RM 399)

per-month

1957 (RM 237)1970 (RM 310)

per-month

1957 (RM 319)1970 (RM 432)

per-month

1957 (RM 173)1970 (RM 202)

per-month

Factor

contributed to 13

May 1969


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Income Distribution During NEP

19711990

o Rapid economic growthbetween 1987 to 1990

o Income distribution not equal according to

racers and regions

o Income gaps between racers

Income Distribution During NDP

19902000

o Rapid economic growth8% (1997-2000)

o Multi development program


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Malay

Chinese

Indian

Urban

Rural

1990 (RM 940)1999 (RM 1984) per-month

Continue.

1990 (RM 1631)1999 (RM 3456) per-month

1990 (RM 1209)1999 (RM 2702) per-month

1990 (RM 1617)1999 (RM 3103) per-month

1990 (RM 951)1999 (RM 1718) per-month


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Factor Inequality

Differences in human skills and ownerships of asset

Differences in access to capital

Differences in educational attainment

Differences in employment Patten

Measure to Solve

Employment restructuring

Mobility of labor

Private participation

Bumiputra opportunities

Bumiputra in business

Increase productivity

Control inflection

Increase government role


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Wealth Distribution from Islamic Perspective

The way wealth distributevery important Measureto Solve

Positive Measure

Prohibitive Measure

Law of inheritance Zakat

Prohibitive of interest Prohibitive of hoarding

of wealth

Wasteful expenditure Unhealthy business

1. Legal Measures


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Wealth Distribution from Islamic Perspective

The way wealth distributevery important Measureto Solve

Optional charity

Charity Surplus

(Sadaqah)

2. Optional Measures

Waqaf

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Chapter 3 - Socio economic problem

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