1st February 2018
This article was originally published in the LinkedIn. Read the full version here.
Recently, I attended a lively and insightful seminar on Income Distribution organized by Khazanah Research Institute. Lots of tough questions were being deliberated and answered on the distinguished panel. What caught my attention was statistics now that we have to prove that we must now rethink the way we address our budgets, as in public sector budgets.
In Malaysia, we have the well documented challenges on income distribution relating to the Gini coefficient which has dropped since 25 years ago. But maybe not sufficiently enough. However, the B40 group has seen a higher growth rate on household income from 2009 till 2016 compared to the T20 or M40. Concerns were more focused on the M40 group.
The presentations also fortified the concerns on foreign labour (DDD jobs) sucking out RM40 billion annually from the economy and captured nearly 50% of all lower income jobs in the market. Lower technology adoption and lower rate of commercialisation of new products has our value add rising but not fast to compete in all sectors. Services sector also has seen challenges as high value add services has not captured a larger share as intended.
So let us focus on the concerns we have here which all ASEAN countries would be facing at some point in time. How do we create the design of our new economy and more importantly is what interventions should we implement from a change on policies, programmes and catalyst projects ?
Before addressing this, here are some of the solutions that the panel suggested which caught my eye:
- Increasing knowledge assets of the poor; Focus on completion rate of secondary school graduates
- Minimum wage instruments
- De-commodification of publicly provide goods eg healthcare education
- Preschool investments and allowing earlier school entry age; Early learning wellbeing for children
- Social protection floor social pension for ageing
- More localized spatial planning approaches, district rather than State of Federal
- Focus also on intra ethnicity income challenges
- Need for more non banking, risk capital for growth of SMEs
- Improving further the share of labour income
- Bringing back wealth taxation with international agreements; Capital gains on inheritance
- New tax reforms to share tax burden between skilled professionals and entrepreneur business owners
Moving forward, we have to address the elephant sitting in the room. What we did in the past is not going to work in the future. Times are changing and evolving into new uncharted territory with disruptions from technology and values. I will not focus on the former as a lot can be seen being done in that space on Industry 4.0 and the entrepreneur development space. However, we are placing little or no emphasis on our Values which is fundamental in this transformation. How we measure our success on spending public taxes will be in the future determined by the KPIs on Values as importantly as the others.
What do I mean by Values ? As defined “Lasting beliefs or ideals shared by the members of a culture about what is good or bad and desirable or undesirable.” These Values will have a major influence on a person’s behavior and attitude and serve as broad templates. As quoted are “Some common business values are fairness, innovation and community involvement.” This formulae will need to be adopted into our country plans and vision led sustainable country, city, district programmes.
In our own households, the Values that are derived from our grandparents and handed to our parents and now onto our own children or grandchildren essentially make majority of what we are today. This is cannot be clearly drawn up into a manual nor taught in schools or college degree curriculum. How do we capture lessons from this and embed these learnings to change our transformative plans ?
Now for the Government, the difficulty in this is setting the vision for the whole exercise as you have millions of children and grandchildren. You cannot leave out anyone and in that exact concern is our problem, Trying to keep every single one happy is not physically possible. Running Governments are not only complex but virtually an impossible task to achieve what the public expects.
To set a fresh perspective on this piece, maybe we should start with incorporating a fresh set of indicators that should be measured in our plans and programmes. Not to measure success but to measure what really matters, delivers sustainable outcomes and impacts the People. At Arcadis, our 2016 Sustainable Cities Index used 3 pillars: People, Planet and Profit. The key learning from the extensive analysis that nearly all Cities and Countries scored worse off on the People category compared to the Profit and Planet.
The research shows that cities around the world are not effectively balancing these three pillars of sustainability. In order to improve their sustainability, Government and City leaders are encouraged to put People at the heart of their sustainability plans and use the Index to help them to compare and learn from similar cities across the world.
We have spent considerable amount of research and data analytics on People indicators to redefine them. Some countries are now are using GNH (Gross National Happiness) as supporting their planning indicators. Below is a start of a few “Value” Indicators focusing on People which could be incorporated into your planning:
- Quality of relationships amongst citizens
- Household cohesiveness and happiness
- Learning through experiences and travel
- Trust indicators on society, businesses and government
- Change on expenditure on material items and non-necessities
- Random acts of kindness
- Civic engagement perception surveys
