{"id":44343,"date":"2024-02-19T05:45:20","date_gmt":"2024-02-18T21:45:20","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=44343"},"modified":"2024-02-27T17:15:53","modified_gmt":"2024-02-27T09:15:53","slug":"b40-m40-t20-income-gap","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/b40-m40-t20-income-gap","title":{"rendered":"T20, M40, B40 Household Income Update 2024"},"content":{"rendered":"

In 2023 Economy Minister Rafizi Ramli had suggested<\/span> phasing out the T20, M40 and B40 income classifications<\/span><\/a> which did not accurately reflect the actual situation on the ground.<\/span><\/p>\n

While the current T20, M40 and B40 classification was based on fixed income, it does not accurately reflect the household disposable income capability of Malaysians. Using net household disposable income as a measurement will better reflect the financial realities of Malaysians in the low- and middle-income categories.<\/span><\/p>\n

TLDR<\/strong>
\nT20, M40 and B40 were used to describe the income groups in Malaysia. B40 represents the bottom 40% of income earners, M40 the middle 40% and T20 the top 20%. These groups are further broken down into tiers, such as B1, B2, B3, and so on.<\/span><\/div><\/div>\n

<\/span>How does DOSM arrive at these income bands?<\/span><\/h2>\n

Here\u2019s what you need to know about the government moving from T20, M40, B40 classification to household disposable income categories.<\/span><\/p>\n

The Department of Statistics Malaysia (DOSM) released its<\/span> Household Income & Basic Amenities Survey Report 2022<\/span><\/a> last year<\/span>, which provides updated figures for classifying these income groups. Note that these figures refer to household income (the average household size in 2022 was 3.8 persons), not individual income:<\/span><\/p>\n

According to DOSM,<\/span> in 2022<\/span><\/a>, the mean (average) income across the household groups are:<\/span><\/p>\n

B40 – RM3,401
\nM40 – RM7,971
\nT20 – RM19,752<\/p>\n

Previous fixed income band classifications are as follows:
\n\n\n\n\n\t\n\n\t\n\t
B40<\/th>
M40<\/th>
T20<\/th>\n<\/tr>\n<\/thead>\n
B1<\/td>
B2<\/td>
B3<\/td>
B4<\/td>
M1<\/td>
M2<\/td>
M3<\/td>
M4<\/td>
T1<\/td>
T2<\/td>\n<\/tr>\n
Less than RM2,499<\/td>RM2,500 - RM3,169<\/td>RM3,170 - RM3,969<\/td>RM3,970 - RM4,849<\/td>RM4,850 - RM5,879<\/td>RM5,880 - RM7,099<\/td>RM7,110 - RM8,699<\/td>RM8,700 - RM10,959<\/td>RM10,960 - RM15,039<\/td>More than RM15,039<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n

Updated household groups by income share are as follows:<\/p>\n

\"Two<\/a>

Source: DOSM Household Income Survey 2022<\/a><\/p><\/div>\n

The household income report also raised Malaysia\u2019s average poverty line income (PLI) in 2022 to RM2,589 from RM2,208 in 2019. DOSM also highlighted that Malaysia\u2019s absolute poverty rate is at 6.2% in 2022. This is a decrease from the 8.2% recorded in 2021. This means that almost 6 out of 100 households in Malaysia still could not afford to meet basic needs for food.<\/p>\n

These income classifications matter because they help the government determine how to allocate aid packages.<\/p>\n

<\/span>How much do T20, M40 and B40 households earn?<\/span><\/h2>\n

In line with the government’s aim to monitor net disposable income going forward instead of the T20, M40 and B40 classification, following are the breakdown by state and income class for this category.<\/p>\n

The <\/span>national mean (average) household disposable income in Malaysia in 2022 was RM7,111<\/b>. But this average also varies by state. As you can see, the differences in income between each state can be huge.<\/span><\/p>\n

\"t20<\/a><\/p>\n

Applying this to the household disposable income range,\u00a0 DOSM found there is no change compared to 2019 in the percentage whose household income is below RM5,000, while there was a slight increase in the percentage of households whose income range from RM5,000 to RM1o,000. There was also a slight increase in the percentage of households whose income range from RM10,000 to over RM15,000 monthly.<\/span><\/p>\n

\"t20<\/a><\/p>\n

<\/span>Is the income gap widening?<\/span><\/h2>\n

There\u2019s a big income gap between the lowest-earning and highest-earning income groups. Is this gap getting worse? Let\u2019s look at the facts:<\/p>\n

<\/span>1. Income inequality has declined since the 1970s<\/strong><\/span><\/h3>\n

The Khazanah Research Institute\u2019s (KRI) State Of Households 2018<\/a> report stated that household income in Malaysia has steadily increased from 1970 to 2018. Malaysia\u2019s Gini coefficient (a measurement used to represent income inequality \u2013 a higher number means that the income gap is larger) fell from 0.513 to 0.399.<\/p>\n

This means that in the past few decades, household income has risen, and income inequality has declined.<\/p>\n