PETALING JAYA: A new study by Khazanah Research Institute (KRI) has revealed that a division of income groups based on the categories of bottom 20% (B20), middle 50% (M50), and top 30% (T30) is a better reflection of economic realities.
KRI, in a working paper released yesterday titled “Searching for the ‘Poor’ and ‘Middle Class’ in Malaysia”, said the longstanding categorisation of B40, M40, and T20 no longer reflected the actual economic situation of the people.
Advertisement“Many households in the M40 group, often assumed to represent the middle class, lack the aspirational spending patterns that characterise the middle class,” it said.
KRI said its updated expenditure-space model proposed the B20-M50-T30 division instead, based on an integrated income-consumption analysis.
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M50 refers to economically unstable households navigating trade-offs between essential and aspirational goods.
Advertisement (adsbygoogle = window.adsbygoogle || []).push({});T30 meanwhile consists of households that show aspirational spending patterns indicative of the middle class, but which are not necessarily wealthy according to global standards.
KRI said the M50 nevertheless remained a vulnerable group, limited by constrained consumption patterns, persistent challenges, and restricted access to aspirational goods and services.
Advertisement (adsbygoogle = window.adsbygoogle || []).push({});“Addressing the needs of this group is crucial for fostering social mobility and reducing inequality,” it said.
It also suggested interventions such as targeted subsidies for education and healthcare, and job creation initiatives which it said would be critical to improving the economic stability of the group.
“These measures will enable them to transition to aspirational consumption, fostering upward mobility.”
KRI also urged policymakers to move beyond outdated classifications and adopt an integrated expenditure to better target interventions.
It said more precise classifications would ensure that resources go where they are most needed.
It also said that providing better social safety nets for the B20 remained vital to alleviating poverty.
“Policies ensuring access to affordable housing, food, healthcare, and other basic necessities are key to safeguarding their well-being,” it said.
Putrajaya is in the midst of refining the definition and classification of the “T15” income group for the provision of government aid and subsidies. A decision is expected in the first quarter of next year.
