A Material Election: Will Malaysians Vote with Their Wallets?

In the run-up to Peninsular Malaysia’s six state elections, sentiments will run high but the voters’ economic experiences of recent years are settled. Anecdotal reports and opinion surveys consistently find that rice bowl issues such as cost of living and economic opportunity are foremost on Malaysian voters’ minds. The chief contenders, which are the Pakatan Harapan-Barisan Nasional (PH–BN) and Perikatan Nasional (PN) coalitions, have rolled out manifestos loaded with pledges to boost income, create jobs, and offer social assistance, especially for low-income households.

Campaigns by political parties on both sides of the aisle are spinning stories to tug at heartstrings. Government candidates extol their economic track record and emphasise positive changes or how they have helped the common folk through adversity. Their challengers lament the state of affairs and highlight failures, then offer a better deal.

Some of the campaign messaging may stick but the electorate will surely reference their lived experience as they cast ballots. They will reflect on whether their economic conditions have progressed or regressed and what form and extent of assistance they have received.

How have the households of PH–BN-governed Selangor, Penang and Negeri Sembilan and PN-governed Kedah, Kelantan and Terengganu, fared in the past year? All six states will hold their state elections this Saturday (12 August 2023).

We can glean some insights on the signature issues of cost of living, jobs and wages, and inequality from data disseminated through the Department of Statistics’ OpenDOSM data catalogue and the recently published Household Income and Expenditure Survey 2022 Report. Statistical analysis using similar data has found that Malaysians voted with their wallets in previous general elections; they do tend to reward the government when their lot improves. The lower the unemployment rate, the higher the share of votes received by incumbent candidates. Lower income inequality, resulting from poorer households enjoying relatively faster income growth, corresponds with increased support for the government.

Inflation rates are supposed to capture overall changes in living costs, specifically in consumption prices. Official inflation has declined across Malaysia in the two 12-month periods of June 2021-June 2022 and June 2022-June 2023 but remains higher in Penang, Negeri Sembilan and Selangor. Food inflation, the most consequential category, follows a similar pattern but at higher levels for the same three states (see Figure 1).  

Statistical analysis using similar data has found that Malaysians voted with their wallets in previous general elections; they do tend to reward the government when their lot improves.

Even if voters recognise that inflation is considerably driven by global factors beyond Malaysia’s control, their loss of purchasing power remains a source of discontent. The PH-BN incumbent state governments are clearly mindful of these realities and are counting on reminders of the aid they have extended together with federal government programmes, such as the Rahmah subsidised goods and restaurant meals, to shore up their people-friendly credentials. Selangor’s Jualan Ehsan initiative, which sells essential groceries at sub-market prices, has joined forces with Rahmah. In a bid to wrestle the state government from PH-BN, PN has offered a whopping 112 items on its Selangor Baharu (New Selangor) manifesto, most of which address cost of living woes.  

Fighting Inflation

Jobs loom large in peoples’ lives and in any election. On this front, the PH-BN states of Negeri Sembilan, Penang, and Selangor have done better compared to other Peninsular states (including PN-run Kedah, Kelantan and Terengganu), with substantial declines in unemployment in the past two years and lower unemployment rates, ranging from 2.1 to 2.6 per cent in the first quarter of 2023 (Figure 2). The three states also enjoyed robust job growth. In contrast, unemployment is higher in Kedah, Kelantan and Terengganu — between 2.8 to 4.2 per cent — although they have seen fairly buoyant increases in employment.  

Back in the Saddle Again

Of course, what matters most is the incomes that households receive, whether from employment or other sources, on which they sustain their livelihoods and cope with living expenses. Figures 3 and 4 show computations of growth rates among low-, middle- and high-income households from the Household Income and Expenditure Surveys of 2019 and 2022. The 10^th percentile represents a very low-income household, whose income is higher than the poorest 10 per cent of the population; the 50^th percentile is equivalent to the median. Household income includes all sources, encompassing wages and earnings, investment income, and transfer payments from family members or government programmes.    

Household income has grown sluggishly or has even diminished, in layers of the PN-held states, especially the lowest-income households of Kedah and Kelantan (Figure 3). Given PN’s solidified power in Kelantan, sealed by the gravitational pull of Islamist party Parti Islam SeMalaysia (PAS), shortfalls in delivery of material goods hold less purchase. Strong income growth in Terengganu, however, may matter more for at least the win margin in PN’s defence of Terengganu, which has a storied history of changing governments.  

Patterns of household income growth differ markedly in the PH-UMNO-held states (Figure 4). Negeri Sembilan households have seen faster growth in the middle while, somewhat surprisingly, lower-income households have fared relatively poorly in Penang. PH-UMNO’s hold looks quite secure due to the peculiar ethnic and coalition dynamics in these two states, although winning margins might be attenuated by these income growth patterns.  

Selangor stands out for recording higher gains for low-income households. We must be circumspect and not deterministic about vote outcomes based on these findings but the observed rapid income growth of the bottom half can provide some encouragement to PH-UMNO as it faces a tough fight against PN, especially if the incumbent government’s social assistance programmes have played a role in this outcome.  

Mixed Fortunes

Selangor Makes Strides

Amid the cacophony of sloganeering and spin, Malaysia’s voters might seek clarity by dwelling on the material conditions they have experienced. Economic trends indicate mild tailwinds for PH in the states that it controls while PN might face mild headwinds in the polities it runs. But we will have to wait for 12 August to see where their fortunes land.  

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