November 7, 2018
Updated: 7 November 2018
Malaysians are categorised into three different income groups: Top 20% (T20), Middle 40% (M40), and Bottom 40% (B40). Over the years, the bar for each group’s income level has increased and this is one of the indicators of economic growth. Here’s the latest definition for T20, M40 and B40 based on the findings from the Department of Statistics Malaysia (DoSM) in October 2017.
The T20 group is defined with the median household income of at least RM13,148 while the M40 and B40 groups’ median household income have moved their bars up to RM6,275 and RM3,000 respectively, according to the Household Income And Basic Amenities Survey 2019 research findings from DoSM. In the report, it stated that the median household income for T20, M40 and B40 has shown a compound annual growth rate (CAGR) of more than 6%.
On top of that, Malaysia’s household median monthly income crossed the RM5,000 mark for the first time in 2016, with M40 households registering the highest growth in median income, according to the Department.
Keep in mind that the income group definitions are not fixed. The names, B40, M40, and T20, represent percentages of the countries’ population of Bottom 40%, Middle 40%, and Top 20% respectively. The values may increase or decrease year-to-year, depending on the country’s GDP, which is why the median household income is used as the determinant instead.
A median household income is the middle income number within a range of income from low to high. For example, in Taman Bintang, there are five household incomes of RM5,000, RM10,000, RM15,000, RM20,000, and RM25,000; the median household income will be RM15,000. The median is used because it represents a more accurate representation of the area than a mean number (the average).
|Median Monthly Income By Household Group|
|Household Group||Median Income 2016 (RM)||Median Income 2014 (RM)||CAGR (%)|
Though the income levels for each group has improved over the past three years, we should not ignore the escalating costs of living resulting from inflation and slower wage growth. To be exact, if we include inflation into the picture (3.15%, 2.1%, 2.09%, and 4.1% respectively in 2014, 2015, 2016, and first half of 2017), the ringgit’s value is diminishing.
It was reported that the average monthly income of employees, based on the 2016 Salaries and Wages Survey Report by the Department of Statistics, increased 6.5% to RM2,463. In 2015, it rose 5.4% to RM2,312.
Despite so, this optimistic income growth seems to be only applicable to those who are working in the Kuala Lumpur or at least nearby whereas other states are still struggling to stay on track to achieve similar income levels.
To explain this situation better, here’s the median income level for each state and you can see if you and your family are above or below the median standard.
|Median income for a household in different states in Malaysia|
|State||Median Income 2016 (RM)||Median Income 2014 (RM)|
|W.P. Kuala Lumpur||9,073||7,620|
Interestingly, you can see that Pulau Pinang’s median income level is placed in the middle among its peers despite being the second highest performing state in the country with GDP per capita of RM47,322 after Kuala Lumpur at RM101,420.
It was reported that factories have been closing down in this particular state and employment opportunities are still relatively lower compared with Selangor and Putrajaya, given the latter’s closer proximity to the city filled with better job opportunities.
Apart from Kuala Lumpur, Selangor, and Putrajaya; Pulau Pinang and the remaining 12 states’ median income level did not exceed the median income level for the M40 group in Malaysia. This means the rest still have a gap to close in order to improve the income gap between urban and rural areas.
Nonetheless, it is satisfying to see the huge jump in both Terengganu and Perak state’s median income level from 2014, most likely thanks to a boost in the tourism sector.
To give you a clearer picture, we also found out the top 20 districts in the country with the highest median household income in 2016. However, this does not mean you can get the same for moving into any of these areas. You might if you work hard and be smart about it!
|Top 20 Districts With The Highest Median Household Income|
|District||Median Income 2016 (RM)|
|Timur Laut (Pulau Pinang)||5,964|
|Barat Daya (Pulau Pinang)||5,844|
|Sungai Petani Tengah||5,172|
Now that you know about the median income in different states and some districts, you should find out if your financial position is better or worse than the average Malaysians here. Making financial decisions are not easy, so remember to check out our blog for the latest insights and make your life better!
See also: Budget 2019: Summary Infographics to See