There seems to be no end in sight to the woes of rising living cost.

This year witnessed an array of price hikes -- in public transportation and toll fares, the introduction of consumption taxes that had caused a hindrance among middle and lower-income groups. The notion of saving for retirement continue to be a far-fetched ambition, for less than 10 per cent Malaysians could grasp.

So, where did we go wrong?

With merely years to go before Malaysians realised the national dream of becoming a high-income nation by 2020, the current state of domestic economy couldn't be any bleaker.

More than 50 per cent of salary earners in the nation's capital earn less than RM2,000 a month, as the rate of increase in the price of goods, continue to escalate faster than ever.

For Malaysians living in rural areas, particularly in less-developed states -- were devastated by the lack of development in their areas.

Case in point: The nominal Gross Domestic Product (GDP) per person in Kelantan is lower than that in the highly-devastated, Sri Lanka.

While inter-state widening gap between wealth and wages continue to surge, it is an undeniable fact that the nominal GDP per person in Kuala Lumpur in recent years, is found to be similar to South Korea.

However, despite the relatively higher median income than the rest of Malaysians, those living in urban area continue to be beleaguered by the devaluation of their salary, thanks to the high rate of inflation.

The increase in essential food items has been steady for many years but the weakening of the Malaysian currency due to the crash of crude oil price made importing goods and food more expensive.

And Malaysians import more than 40 per cent of our food, in US Dollars.

It comes as no surprise when Khazanah Research Institute (KRI) recently released a report that validated the concerns raised.

Many Malaysians are holding back from purchasing 'big ticket items' such as cars (about 15 per cent dropped from January to June this year compared to the same period, last year).

Overall consumers spending fell by 50 per cent, while retail sales dropped to four per cent. Slower property market and household loan growths are indications of economic downturn that can no longer be ignored.

The economic slump, coupled with a relatively lower disposable income, is further causing a series of uncertainties among consumers.

KRI Director Dr Muhammed Abdul Khalid said national median wage growth is felt only slightly across the country at RM50.

Salary earners in the urban areas, however are experiencing negative salary growth due to incessant inflation rates.

"Average wage growth in Malaysia is extremely slow. In areas such as KL, Kuantan and Penang, the growth is simply isn't there. The rate is actually negative.

"Now, why is this so? One of the catalysts is the dampening of global and domestic economy. At the same time, there are an overwhelming number of job seekers in the market with limited positions available.

"Unemployment rate increased by 10 per cent on the first half of this year alone so how can we expect median salary to increase any time soon when there is more supply than demand?," he said.

"When you look at the concentration of developments in the city centre, we have hospitals, schools, commercial centres propping up every now and then whereas the urban area gets lagged behind.

Muhammed added that despite the decrease in disparity across ethnic line (especially when it comes to wealth and income inequality) -- the gap between classes continues to expand.

"The government's policy is geared towards protecting high-income and skilled jobs. Doctors, architects and engineers from abroad can't simply practice here without proper clearance. But when it comes to low-income jobs, we are doing next to nothing.


"There are still Malaysians with only secondary and lower education, who depend on low-income jobs such as construction. When there is no regulation, foreign workforce from Bangladesh and Myanmar comes in to take their place for a much lower salary," he said.

Our individual tax structure is also to blame for the rise in inequality.

Muhammed said the current structure is not tax acquired just as inherited wealth are, whereas a regular salary man gets taxed almost at all points of purchase.

"If someone inherits assets in the form of houses or shares from his parents, he will not be taxed for it, even when the value of the asset can multi-fold faster than the value of our salary at this current rate.

"Due to this, the gap between the classes will continue to widen," he said.

Domestic economy is forecast to continue its gloomy cycle for the rest of the year as it is much depended on the state of global economy.

"All statistics from this year show that retail spending and loan applications have dropped significantly. This means people are not spending and when consumers don't spend, companies won't, and domestic economy will suffer," he said.

The cost of food continues to bite its way into every Malaysian households' spending at the rate of 30 per cent.

The increase of food price, too, has been predicted to continue its aggressive stride for the next few years, amplified by the weakening value of Ringgit Malaysia.

Such setback proves to be gruesome in a market that relies on import for about 40 per cent of its supplies.

What's worse, the cost is transferred directly to consumers who are getting lesser value with the same ringgit they spend on food.

Bank Negara's report this year also revealed that less than eight per cent of Malaysians would have enough savings to withstand the first six months of unemployment.

As the rate of unemployment increased by 10 per cent just in the first half of this year alone, Muhammed said, these staggering statistics should not be ignored.

"In this instance, government intervention is definitely needed to ensure that we can protect the current workforce from sinking even deeper into financial woes and uncertainties.

There is a suggestion to introduce an unemployment insurance scheme that would help medium to low-income individuals to have enough savings for at least the first six month of unemployment.

"In Khazanah, we have actually done some calculation on this matter and found that an unemployment insurance, that works much like the employees provident fund (EPF), would not cost the employer and employee much at all.

"At RM0.20 cent per day, the accumulated savings would be able to help individuals with financial commitments to pay for the necessary while they look for employment elsewhere. This is essential to protect the workers," he said.