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By Mihar Dias October 2024
Budget 2025 is shaping up to be a battleground, with the middle class caught squarely in the crossfire. Syed Saddiq Syed Abdul Rahman, MP for Muar, recently raised the alarm over the government’s decision to withdraw subsidies from households in the top 15% income bracket. (Middle class to suffer in class warfare, Syed Saddiq claims)
On paper, this looks like a sensible redistribution policy—ensuring that those with greater means bear more of the costs. But like many policies that appear fair on the surface, this one risks deepening the socioeconomic divide by further squeezing the already pressured middle class.
The crux of Syed Saddiq’s warning lies in the definition of the "top 15%." This category includes families earning a combined RM12,000 per month, an income level that is hardly lavish in today’s economic reality.
For many Malaysian households, RM12,000 is a figure that barely covers the rising costs of living, let alone luxuries. Petrol, education, and healthcare subsidies—essential buffers against inflation and stagnant wages—are now being stripped away from these families, leaving them more vulnerable than ever.
Middle-income earners, often seen as the backbone of the nation, have long shouldered the economic burden, paying taxes while seeing fewer benefits compared to both the upper and lower strata of society.
The withdrawal of subsidies under Budget 2025 only exacerbates this pressure. As Syed Saddiq points out, a family earning RM7,000 a month will now face the same fate as wealthier households in the top 15%, losing subsidies that their livelihoods depend on. https://focusmalaysia.my/middle-class-to-suffer-in-class-warfare-syed-saddiq-claims/
What’s really at stake?
For a family with two working members and a combined income of RM12,000, daily expenses already loom large.
Between childcare, tuition fees, housing loans, and transportation, there’s little left to save or invest for the future. Losing government support for healthcare and education is not just an inconvenience—it’s a significant financial blow. These families are not swimming in disposable income; they are treading water, and any cut to subsidies threatens to pull them under.
The government’s reasoning seems to be based on the idea that those in the top 15% are well-off enough to manage without assistance. But what this fails to account for is the rising cost of living and the unequal distribution of wealth even within this bracket.
Not all households earning RM12,000 are living the same lifestyle, and in many cases, this income barely covers the basics, especially in urban areas where housing and transportation costs continue to climb.
Creating a Divide
What Syed Saddiq's comments underscore is the risk of creating a new class divide—one where the middle class feels more aligned with the lower-income group, not in terms of wealth but in shared financial hardship.
Stripped of their subsidies, these families may find themselves facing the same struggles for access to healthcare and education as those on the lower end of the income spectrum, despite technically being part of the “top 15%.”
This shift could have profound implications for Malaysia’s economic and social fabric. When the middle class begins to erode, the entire economy suffers. They are the engine of consumer spending, the aspirational class that drives both growth and stability.
Undermining their financial security through a blunt subsidy removal risks curbing demand, slowing growth, and potentially widening the very inequality gap that the government claims to address.
Unintended Consequences
The middle class has long been regarded as a key pillar of economic resilience. Removing subsidies that help them cope with everyday expenses could weaken this pillar. If the government isn’t careful, this policy might end up forcing more middle-class families into debt, making them less likely to spend and invest, which in turn could stifle the economy. Worse, the withdrawal of subsidies could make education and healthcare less accessible for these households, threatening long-term economic mobility.
This is not a case of the rich being asked to pay their fair share—it’s the middle class being treated as though they’re part of the elite, when in reality, they’re far closer to the financial struggles of the lower class. As Syed Saddiq rightly warns, this approach could backfire, leaving a whole segment of society feeling abandoned and unfairly targeted by policies that should be aimed at truly wealthy Malaysians.
Conclusion
While the government's desire to ensure subsidies are targeted at those who need them most is commendable, Budget 2025 risks throwing the middle class under the bus. Removing subsidies for households earning RM12,000 or less is not only premature but could have long-lasting consequences on the country’s social cohesion and economic stability. If the middle class continues to suffer, we could see rising discontent, greater inequality, and a widening rift between the haves and have-nots. And in this version of class warfare, it’s the middle class who may end up paying the highest price.
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