Poor Households Bear the Economic Brunt of Covid-19

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THE COVID-19 pandemic has plunged the world into unprecedented times of uncertainty and turmoil. As the global numbers of positive cases and deaths continue to increase – exponentially, for some countries such as Italy, Spain and the US – governments are recognising that an effective measure to contain the spread of the virus is to impose a temporary lockdown. In Malaysia the Movement Control Order (MCO) imposed by the government on March 18 and further extended until April 14 acts as such.

Expectedly, the MCO resulted in adverse effects for the livelihood of businesses and individuals. The operations of non-essential businesses and services were completely halted, and workers were requested to work from home. In cases where this was not possible, workers faced the very real risk of unemployment. For the economically vulnerable, i.e. the B40 households, the community is now facing tremendous challenges of sustenance. In Penang households that earn less than RM4,640 are classified as B40; and 44.9% of households earn a monthly gross income of less than RM5,000. Within this, 31.7% of households earn less than RM4,000.1

Life as we have known it will not be the same again, and the B40 households will face far greater challenges in reconstructing their “new normal”.

The people in the B40 community generally comprise low- and medium-skilled workers. Some earn a regular income and are involved in the formal sector, but a huge proportion are informal workers or self-employed, signifying that their income stream is inconsistent at best. With the MCO in place, these workers, who survive from hand to mouth on a daily basis, were the hardest hit and a majority of them were forced to confront the bleakness of having no income, for at least a month.

Not exempted from economic difficulties are the self-employed who are involved in essential services such as food hawkers – which make up a sizeable proportion of Penangites – and petty traders trading in essential items. These individuals saw their incomes reduced drastically. Roadside hawkers in certain areas were similarly forced to cease operations due to council regulations.2

Workers in non-essential services within the formal sector were not necessarily spared either. Furthermore, low-income jobs are not usually those that offer the ability to work remotely, therefore, it can be deduced that a large proportion of the B40 in the formal sector faced unemployment.

Taking It One Day at A Time

It is not unusual for B40 households to have a single-income earner, and if the sole income earner works as a daily wage earner in the informal or gig economy, or has their employment terminated, the economic crisis brought on by the MCO caused many such households to plummet into dire straits. Unfortunately, as B40 households spend most of their monthly income on housing and necessary consumables3, this generally leaves them with little to no savings. Additionally, they are not socially well-protected, and a significant percentage of them would not have access to EPF or SOSCO. Under these circumstances, the simple act of putting food on the table has become a struggle of great proportions. With the MCO in place, many households rushed to stockpile on groceries and staple items in preparation for possible quarantine and prolonged lockdown periods. For many B40 households, the reality was that they simply could not afford to stock up, not when securing food for the day had already been a problem that some may not have had the ability to solve.

Nurina Abdul Ahmad’s household was one of the fortunate ones. She held employment as a cashier at a supermarket – a job considered essential during the MCO. However, her husband, who was a self-employed plumber, found himself unable to generate any income during the MCO. “I feel like I should not be complaining, as I still have a job,” says Nurina. “But at the same time, we were struggling. We are a family of six, and we did depend on my husband’s earnings for necessities. We had to use our savings, and we did not have a lot to begin with.” She anticipates that her savings will be completely depleted by mid-May, even with financial aid in place, if the circumstances remain unchanged.

All the same, Nurina is aware that she is in a better position to care for her family during this difficult period compared to some of the people she knows. She cites the example of her immediate neighbour, who earns a daily wage as a painter. “His situation is like my husband’s; if he has no work, he has no money. And his wife does not work, as she is often ill. They have three children.” She pauses momentarily, her expression contemplative. “I want to help them,” Nurina adds quietly. “So I try to give them some food when I can. But there’s only so much that I can offer, I have to put my own family first.”

Necessary Luxuries

Adhering to strict guidelines on personal hygiene and social distancing may be an impediment for a proportion of the B40 community as well. For a household that was already struggling to put food on the table, items such as hand sanitisers and face masks were considered unaffordable luxuries. The cramped living conditions of the B40 households in PPR and low-income housings exacerbated the inability to practice social distancing, and thus the risk of transmission – of Covid-19 and any other communicable diseases – in densely populated housing areas have been undoubtedly higher.

Likewise, the low-income community is prone to suffer from poorer health and non-communicable diseases, due to lifestyle and lack of nutrition. Nurina worries about her elderly mother-in-law, who suffers from diabetes, and her three young children. She stresses that though she is grateful for her employment, she is also fearful of bringing the virus home to her family as she has to interact with different groups of people daily. But there is little Nurina can do to mitigate the situation, “What can I do? I cannot not work.”

Relief measures in the form of cash stimulus packages by the federal and state governments were introduced to help ease the financial burden of these households; at the very least, the cash handouts enabled them to buy food. The state government’s stimulus package was welcomed by food hawkers, small traders and other segments of the low-income community. A six-month moratorium on bank loans and the state government’s two-month rent exemption for government housing also helped to relieve these households. NGOs in Penang have been working together with the state government to provide food and necessities for the low-income community. These measures were very much needed to help the B40 community weather through the storm. “This is good, it helps us so much,” Nurina says.

But life as we have known it will not be the same again, and the B40 households will face far greater challenges in reconstructing their “new normal”. They are likely to face long periods of unemployment, which will be made much harder without the cushioning of savings. As for informal workers and daily wage earners such as Nurina’s husband and their neighbour, they will not see their income reverting to what it once was anytime soon. “We are optimistic, but we also know that very difficult times are ahead of us,” says Nurina realistically. The massive economic challenges caused by this pandemic will cascade negative effects to the physical, mental and social well-being of the B40 community. The implementation of stronger and broader social safety nets is vital. More concrete plans and policies are needed for the B40 community to survive the long-term effects of this, and future, pandemics.

Yeong Pey Jung is a senior analyst with the Socio-economics and Statistics Programme at Penang Institute. She is a reading enthusiast and is surgically attached to her Kindle.



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