How our economy is tilted in favor of the upper classes and biased against the working class

While the working class is hammered with policies like the use of exploited foreign labour that systemically undervalue their skills, experience and talents, the upper and professional classes enjoy a protected status which  hyper inflates the value of their skills, experience and talent.

Nehru Sathiamoorthy

Some people are calling the unity government a robin hood government for taxing the rich to aid the poor. Others are saying that such initiatives like the targeted subsidy that is powered by the PADU system  is only going to encourage the “lazy” poor while discouraging the “hardworking” rich.

These views, in my opinion, lack insight.

They are unable to see that those who are the most hardworking in the country – i.e the exploited foreign labour – actually form the lowest earning group in the country. If hard work is what generates wealth in our economy, these exploited foreign labourers in our country should certainly be amongst the most highly paid group in the country. But this is not only obviously not the case, it is diametrically opposed to the reality.

They are also unable to see that the problem with our economy is that it is very obviously tilted against the working class in favor of the upper classes. This tilt is causing the talent, experience and skills of the working class to be extremely undervalued, while over inflating the talent, experience and skills of the upper classes.

The clearest evidence that our economy is tilted in favor of the upper class and is against the working class is the overabundance of exploited foreign workers in the country. The presence of such a huge number of exploited foreign workforces in the country is amongst the primary reasons why the rich in our country can become richer even if they do not possess that much talent, skills or experience, while the poor find it hard to come out of poverty even if they have the merits.

Let me further elucidate my points with examples.

Imagine you come from a working-class background in a Malaysia that has not exploited foreign labour.

What will happen in this scenario is that you will likely start working when you complete your SPM. What you will do after you are done with your schooling is probably become an apprentice, say as a barber, for a few years, to accumulate some savings, skills and experience before you go to a bank and get a loan to open your own barbershop. Because you will be investing your own savings into your business, and because you have the skills and experience that you have accumulated through your years as an apprentice, you will most likely get a loan from a bank, because the bank will know that there is a market for your services, which you can translate into an income that will be able to use to service your loan.

In this way, you will be able to foresee a future for yourself where you can live a life of dignity, comfort and status, by becoming an independent business owner who can depend on your own labour to provide you with a decent living. As the years pass by, instead of focusing your attention on expanding your business, by opening an ever-increasing number of outlets, which is not easy to do without access to cheap exploited foreign labour, you will likely just focus on raising your income by enhancing the quality of your services. In this way, you will be a part of a move to enhance the quality of life in Malaysia, by pushing up the level of service from the ground.

Currently however, this is how our economic landscape is structured.

Currently, if you come from a working-class background, the option of being a barber might not even be open to you. This is because, in the current economic structure that we are in, you likely can’t even apprentice at a barbershop, because all our barbershops are run by exploited foreign labour, who are paid a wage that would be too undignified for you to accept. Even if perchance, you were to bite your teeth and apprentice as a barber for a few years nonetheless, the skills and experience you accumulate will lead you to a dead end. After your stint as an apprentice, owing to your extremely low wage, you will almost certainly have no savings to start your own business. If you go to the bank to ask for a loan to start your own business, the bank will almost certainly reject your loan application, because the bank will calculate that you will probably need to charge RM20 a haircut to make business sense, but this will make your business model unviable, because you will need to compete with the barbershop next door who will be able to offer a haircut for only RM15 by using exploited foreign labour.

These barbershops that use exploited labour to run their business, will also likely use their profit to expand their business by opening more outlets instead of raising the quality of their services. The more barber shops they open using exploited foreign labour, the more they will stifle the chances of a person who comes from a working-class background to make a decent living through honest work. Not only that, these businesses that rely on exploited labour will also cause the quality of life in Malaysia to remain stagnant. None of these exploited barbers would care to enhance the quality of their services – they are all probably just focusing their time, attention and energy to bear with their stressful and  difficult working conditions to care much about improving their services – while the owners of these business will also likely be more interested to increase their profit through expansion rather than innovation or quality improvement.

This scenario is not limited to just the barbershop. If you use your imagination, you will be able to see that this scenario will arise in all the sectors where exploited foreign workforce is rife.

If you look at franchises like McDonalds, you will be able to see that they are capable of providing services that are fully operated by locals by focusing on innovating their services. Three quarters of the workforce in a mamak, for example, is used just to take your order, bring your order to your table and clean up after you are done. In McDonalds, most of these services have been made redundant by innovative services. In McDonalds today, you order your own food using a touch screen panel, pick up your own food at the counter and clean it up yourself after you are done.

If we have a policy that will do away with exploited foreign labour, businesses that rely on exploited foreign labour, like the restaurant businesses, will almost certainly upgrade their services to become more akin to the practices in McDonalds. Like McDonalds, they too will likely be hiring locals as their employees, provide a working experience to our people in a way that will enable them to look forward to becoming a manager or franchise owners in the future and run a business that will be constantly improving and innovating its services, which will in turn create an economy that will be able to raise the quality of life in the country.

What is more, by not relying on exploited foreign labour, our restaurant businesses might actually create a business model that will allow them to expand overseas. A big part of the reason why many of our businesses are not able to spread their wings to other markets, is because they are unable to compete outside of the country, where they will have to operate without having the advantage of using exploited labour.

The over reliance of foreign labour is just one aspect that makes our businesses uncompetitive. The other is the use of subsidies. I will bet that many of our businesses are also taking advantage of subsidised electricity, flour, sugar, rice or petrol to run their businesses. The use of these subsidies gives a skewed idea of how to run a business. It is because they have such a skewed business idea, that they are unable to expand overseas, where they will have to run their businesses without the aid of such subsidies.

While the working class is hammered with policies like the use of exploited foreign labour that systemically undervalue their skills, experience and talents, the upper and professional classes enjoy a protected status which  hyper inflates the value of their skills, experience and talent.

It is this hyperinflation of the value of the skills, talents and experience that is the source of their wealth rather than genuine merit.

If you buy a house for example, a lawyer can earn thousands of ringgit by just providing you with a standard legal document that is more or less the same piece of document that is used to buy every other house.

The reason why the skills and talent of a person from a professional, managerial or upper class background is so inflated vis-à-vis the working class, is because their profession is granted a protected status.

There is no reason why we cannot have a lawyer from Bangladesh or Nepal that can probably prepare a standard legal documents to buy a house at a fraction of the prices that is being charged by our lawyers, other than because our economic policies over protects the skills, talents and experience of our professional, managerial and upper classes to the extent of hyper inflating their value, while at the same time over liberalizing the sectors where the working class is involved, to the point that they severely undervalue the skills, talent and experience  of the working class.

These points that I have mentioned here are but some of the reasons why I am saying our economic structure is biased against the working class in favor of the upper classes. It is because of these biases in the economic structure that you cannot claim that the upper classes are well-to-do by merit or that the working classes are poor because they are “lazy” or “spoilt”.

It is likely because of these biases that our economy seems to be permanently stuck in the middle-income trap too.

To fix these imbalances, and ensure that our upper classes are composed of people who have exceptional merit, and allow those who are in the working class to not be deprived of a decent life despite possessing the proper merits, our economic structure needs to be rebalanced.

This will not only allow us to possess a just and fair economy, it is perhaps what we need to do to lift our country out of the middle-income trap that we are in and rise up to the status of a developed country.

The PADU initiative is perhaps the most significant step to fix the imbalances in our economy that I have come across in my lifetime.

When PMX Anwar took power in 2022 and exclaimed that his administration will be focused on reforms, I confess, I thought it was all just a farce.

But seeing PADU, I am becoming persuaded to change my mind.  Now, I am beginning to believe that PADU might be a game changer, and that PMX Anwar’s administration has taken the initiative to launch it, is making me feel that Anwar’s administration is indeed genuine in its desire for reformation.

As expected, we can see that all those who stand to lose by the economic reforms in our country, are already starting to undermine the initiatives of the unity government.

But despite the challenges, I genuinely hope that  PMX Anwar and his administration will continue with initiatives like PADU to rebalance our economy. If they succeed, I will readily admit that they have lived up to their promise of reformasi, and PMX Anwar is deserving of  the title Bapa Reformasi Malaysia.