Inequality and Affirmative Action in Malaysia and South Africa Paper presented at the New School – UMass Graduate Student Workshop, October 25-26, 2008. Hwok-Aun Lee Department of Economics University of Massachusetts, Amherst Introduction Malaysia and post-apartheid South Africa are almost inevitably paired in studies of affirmative action (AA), sharing a rare trait as upper-middle income countries that implement preferential policies in favor of a politically dominant and economically disadvantaged majority racial group (See Table 1)1. In both countries, historical circumstance – the legacies of colonialism and apartheid – and socio-political constitution – largely race-defined economic fragmentation, social stratification and political organization – have compelled affirmative action policies of extensive scope and scale to remedy systemic inequalities. Income disparities between race groups reflect differences in educational attainment, occupational mobility, and asset ownership, in which the Bumiputera2 and black populations of Malaysia and South Africa are faced with systemic disadvantages3. Aggregate trends in inter-racial and intra-racial income inequality in recent years warrant a deeper probe into underlying distribution patterns and implications on affirmative action policies. This paper’s motivation is threefold. First, it aims to fill a research gap on inequality in Malaysia since 1990, and especially the post-1997 crisis period. Second, it presents Malaysia and South Africa in comparative perspective, which in spite of being frequently cited as mutually informative, have scarcely been subject to enquiry, especially in the past decade. Third, I will focus on the distribution of earnings, given the crucial relationship between earnings and two mainstays of affirmative action – education and employment. Our 1 Income levels are also remarkably close: Gross national income per capita in 2005 was US$4,970 for Malaysia, US$4,820 for South Africa (World Development Indicators, available at: http://devdata.worldbank.org/data-query/). 2 Bumiputera – meaning ‘sons of the soil’ – encompasses the Malay and indigenous populations of Malaysia, i.e. non-Malay Bumiputera. 3 Following convention, the term ‘black’ is used in this paper to refer to African, Colored and Indian. 1 empirical work will roughly span 1995-2005, owing to data accessibility in Malaysia and our interest in the post-apartheid period in South Africa. The vast bulk of research on South Africa and on Malaysia has used household income as the income variable, which does not directly analyze earnings outcomes associated with policies in education and employment. We will, however, consider the implications of affirmative action policies in the realm of asset ownership and control in their relationship to the cultivation a managerial class, an important – and elusive – policy objective in both countries. Table 1. Malaysia and South Africa: Racial composition (percent of total population) Malaysia (2000) South Africa (2001) Bumiputera 65.5 African 79.0 Chinese 25.8 White 9.5 Indian 7.6 Colored 9.0 Other 1.2 Indian 2.5 Note: Bumiputera is further comprised of Malay (53.9 percent) and non-Malay Bumiputera (11.6 percent) This paper is structured as follows. First, I provide an overview of the political economic context of Malaysia and South Africa, with specific attention to aspects relevant to inequality and redistribution. Next, I outline affirmative action policies, discussing similarities and differences between both countries. Following that, I present some aggregate inequality trends, from official documents and available research, that our analysis aims to inform. Then we proceed to a presentation of patterns of earnings distribution of from 1995 to 2005. Using income survey data spanning that period, I outline and explain Malaysia’s persistently high levels of inequality, both between and within race groups, and the problem of rising intra-racial inequality in South Africa, with focus on earnings differentials associated with educational attainment and occupation. This paper concludes with discussion on some implications of these findings on affirmative action in both countries. A note on terminology and concept of affirmative action I use the term affirmative action with some reluctance, because it means different things in different contexts to different people (Fryer and Loury 2005, Weisskopf 2006, ILO 2003). Nonetheless, affirmative action suffices to denote the amalgam of measures taken by the state to redress systemic disadvantages members of a particular group(s) face in terms of access to education and employment, and ownership and control over capital/land, which have resulted from historical neglect or unfair discrimination. State intervention in these 2 spheres have been necessary to redress sharp racial divisions that ultimately projected vastly unequal earnings, income and wealth levels. In most all cases, as in Malaysia and South Africa, affirmative action has sought to uplift race groups. However, in South Africa, historical disadvantage also applies in principle, but to lesser extent, to women and the disabled. Malaysia and South Africa both bear historical scars of racial conflict and ongoing strife, which are not solely determined by economic disparities but inextricably related. The process of increasing racial representation of the disadvantaged majority is conventionally termed ‘restructuring’ in Malaysia and ‘transformation’ in South Africa; these terms may be used accordingly. The correspondence of race with economic disparity and past inter-racial conflict and violence make redistribution across groups a political imperative. Socio-political stability is requisite for economic growth, but the grounds for AA I maintain are principally social and political. The disproportionalities of political and economic power between the major race groups in both countries are unambiguous, and will be touched on later. Political Economic Context The countries under consideration, at the inception of affirmative action, both bore legacies of racial separation and disparity under colonialism and apartheid. Importantly, however, each underwent distinct forms of political transformation in their respective transitions. In Malaysia, the New Economic Policy (NEP), initiated in 1971, expanded and intensified AA programs. However, prior to that the state had already practiced a lesser extent of AA in favor of the Malay population, through a shorter menu of programs in public sector employment, education provision and scholarships. However, the Malay-led coalition government maintained a largely non-interventionist stance towards inter-racial inequality. Under heavy pressure, it began intervening more actively from the mid-1960s in cultivating a Malay managerial class and in other programs to narrow disparities, but the extent of change was politically insufficient and became a contributing factor to the May 13th, 1969 racial riots. Underpinning the shift towards intensive affirmative action, in the wake of the riots, was a consolidation of the Malay dominant state, expansion of executive power, and re-assertion of Malay privilege. In addition, the domestic capitalist class at the time had not secured strong bargaining positions versus the state, and capital was relatively less mobile internationally4 4 In 1970, 1.9 percent of total equity was owned by Malay, 22.5 percent by Chinese, 1.0 percent by Indians, 60.7 percent was in foreign hands – and concentrated in the leading sectors, tin mining and rubber plantations. 3 (Hart 1994). This configuration meant that direct domestic conflict over existing resources was averted to a significant extent. In contrast, South Africa’s transition to apartheid involved multiple transformations: from apartheid to democracy, from minority to majority rule (with a formerly systematically disenfranchised group taking power), from a closed economy to an open economy, and from a system in which political establishment and business/administrative elites were on the same side to one in which they sat on opposite sides of the table. Under apartheid, the white minority had privileged access to state resources – education, employment, procurement, etc. – and command over every sector. The formal economy had been structured to generate employment for a minority of the population. South Africa’s capitalist class5, built on agglomerations of minerals and energy resources, had gained a foothold on policy discourse – and had taken the lead in the late apartheid period in advocating selective reforms. The transition happened in the context of democratization, with checks instituted on executive power. In short, the challenges facing South Africa in empowering its majority have been much greater than in Malaysia. As a result, we observe a distinctive contrast in the orientation and mode of redistributive policies. Malaysia has enforced measures in a more top-down manner, through the discretionary exercise of executive power. The NEP laid out a vision, and retains symbolic significance, while specific affirmative action programs have been introduced and amended in a semi-authoritarian manner, with the acquiescence (occasional resistance) of capital and labor. South Africa has undergone a much more negotiated and legislative process, with the black-dominant state and white-dominant capital grappling over terms and concessions. The result is the establishment of codified, contractual, and statutory institutions – e.g. the Employment Equity Act, and Black Economic Empowerment Act – that pursue affirmative action goals through compliance with stipulated conditions, with the executive branch of government having to exercise relative restraint. A few features of the macroeconomic context should be highlighted. Malaysia has enjoyed steady and high growth6, initially bolstered by commodity exports and massive public expenditure, then manufacturing exports and massive FDI and foreign portfolio inflows. The initial period of affirmative action – the 1970s until the mid-1980s – was rather 5 As a reflection of concentration of wealth and economic power, in the early 1990s, the four largest conglomerates controlled 83 percent of the Johannesburg Stock Exchange. 6 Average annual real GDP growth registered 5.8 percent (1957-70), 6.3 percent (1971-87), 8.8 percent (1987-97), and 3.9 percent (1997-2006). 4 accommodative toward expansionary macroeconomic policies. Public expenditure per GDP registered 29.0 percent in 1970, 39.9 percent in 1979 and 58.4 percent in 1981, on the back of deficit spending and an OPEC-boosted oil bonanza (Ismail and Meyanathan 1993). The fiscal debt burden caught up with government in the mid-1980s recession, forcing cutbacks, accelerating the privatization agenda and shifting towards an FDI-dependent regime. This shift was aided by fortuitous international circumstances: appreciation of the Yen, Won and Taiwan dollar from 1985 induced massive relocation of production, of which Malaysia was a major recipient. The 1997-98 financial crisis was a major disruption; economic and employment growth rates have settled at lower levels than in preceding decades. South Africa, in transition to the post-apartheid era, was emerging from international economic isolation facing pressures to assimilate and threat of capital flight, as well as civil unrest and a mandate for distributive justice. The initial priorities necessarily focused on constructing a democratic constitution and basic economic institutions such as the Labor Relations Act (1995) and Basic Conditions of Employment Act (1996). Affirmative action remained on the agenda, but was not formally incorporated into the legislative framework until a few years later. The international macroeconomic environment (neoliberal agenda), and the government’s policy choices (exceeding international demands for deregulation), we should note, compounded the already immense socio-political challenges mentioned above. South African economy has seen sluggish growth and relatively low investment, with real GDP growth of 2.6 percent (1994-99), 3.4 percent (1999-2003), 5.1 percent (2003-06), and commitment to a neoliberal macroeconomic regime and an austere adherence to inflation targeting. In the early years of democracy the economy suffered huge employment losses; jobs were shed in the public sector as well as agriculture and manufacturing, while FDI did not flow in as hoped, and privatization initiatives fell apart. Steadier economic growth from around 2000 – and improved fiscal balances – have provided for expanded public expenditure, especially social grants and public procurement. Public enterprises have been issued a reinvigorated mandate to carry a significant share of the AA agenda. Another area of contrast is the urban-rural balance of population and worker absorption into formal labor markets (Emsley 1996). The urbanization rate in 1970 in Malaysia was 30 percent, compared with 50 percent in South Africa in 1990. Urbanization rates in 2005 are closer, at 64 percent in Malaysia and 58 percent in South Africa. At the onset of intensive AA in 1971, Malaysia was faced with large numbers of unemployed or under-employed rural Bumiputera, predominantly in traditional agriculture, who could be 5 transitioned to urban wage employment, thus alleviating conditions both in cities and villages. South Africa’s transition has been fraught with high urban unemployment and persistent rural poverty – another aspect in which South Africa faces greater redistributive challenges. The depth of labor market institutions differ across the two countries. The union movement in Malaysia has been systematically demobilized and steadily depleted of influence and membership, by legislation, policy and labor market trends. Union density touched 12.0 percent in 1980, and dropped to 9.4 percent in 1990 and 7.5 percent in 2000. Organized labor has never had significant influence over government policy, reflected in the absence of minimum wage legislation. The weak bargaining position of labor is compounded by influxes of migrant, largely extra-legal, labor since 1990. South Africa’s union density (membership per ‘narrow’ labor force) was an estimated 23.4 percent in 1995 and 22.7 percent in 2002. The role of COSATU in the liberation movement forged its place in the governing alliance which has been sustained, albeit with diminished influence in recent times (with perhaps a present resurgence). Workers’ interest, especially in formal employment, thus finds much stronger representation in South Africa, both in wage bargaining and policy input. Affirmative Action policies Constitutional underpinnings The Constitution forms the bedrock on which a nation’s institutions are built. This rudiment tends to be under-appreciated in comparative study of Malaysia and South Africa on the matter of discrimination or preferential treatment, perhaps because the matter is a fait accompli in Malaysia and is superseded in South Africa by the myriad laws and policies that have fleshed out the national objectives laid out in the Constitution. The Constitution of both countries provide for government measures consistent with affirmative action, but on fundamentally different grounds. Within the 1957 Federal Constitution of Malaysia resides both the principle of equality and provisions for the special position of particular groups. The individual equality and prohibition of discrimination set out in Article 8 is qualified by Article 153, which makes provision for the Yang Di-Pertuan Agong (the national king) so “safeguard the special position of the Malays and natives of any of the States of Sabah and Sarawak [i.e. non-Malay Bumiputera] and the legitimate interests of other communities”, through preserving licenses, scholarships, etc. The NEP provided a vision for intensifying preferential programs for the Malays stipulated in the Constitution, fuelled at that time by dissatisfaction at the slow progress made 6 in economically empowering the community. The NEP declared a hope that AA programs would aim to develop Malay self-sufficiency and independence from state support by the conclusion of the NEP in 1990. The 1971-1990 timeline was rather arbitrarily chosen7, but over time, the state and bureaucracy scarcely engaged in discourse on scaling back or dismantling race-based AA, and have recently emphasized the perpetuation of the system. Over the years, rhetoric has shifted from special position to special privileges to special rights of the Malays. The Constitution and especially the NEP retain symbolic power as grounds for race-based affirmative, even though their meaning of the Constitutional clauses has become misappropriated and the timeline for the NEP has long passed. Article 9 of the Constitution of the Republic of South Africa, 1996, establishes equality of everyone before the law and prohibition of unfair discrimination, and provides for measures “designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination”. This articulation of disadvantage and discrimination is substantively distinct from the enshrinement of special position in the Malaysian Constitution. While the racial dimension of past discrimination predominates in political discourse and policy design, the conception of grounds for affirmative action is broader in South Africa, and opens up debate over the terms for being considered disadvantaged as well as other dilemmas, e.g. whether non-racialism – an express objective of development policy – can be achieved through policies structured according to racial identity. Education Malaysia Malaysia created new school-level institutions for Bumiputera and a quota and scholarship system for university enrollment. The Ministry of Education established exclusively Bumiputera residential science colleges. MARA (Majlis Amanah Rakyat, or the Council of Trust for the People), an organization mandated to uplift the Bumiputera, also set up junior residential colleges primarily for pupils in rural and underprivileged areas. These institutes, which youth entered after six or nine years schooling, enjoyed higher standards of teaching and facilities, especially in science classes (Leete 2007: 189). At the tertiary level, new public universities were founded and a centralized unit was formed to process applications and implement enrolment quotas. Quotas remain the predominant mode of 7 Interviews with former Economic Planning Unit officials. 7 operation, with alterations at the margins8. In recent years, matriculation programs have been set up for Bumiputera students to gain entry to university, with academic standards widely believed to be less difficult than the national exam. On the whole, affirmative action in education has been characterized by a general lack of clarity on the place of Bumiputera privilege, and the roles of merit, need or class, in selection processes. Much less emphasis has been placed on balancing the pro-Bumiputera thrust against probable inhibitive effects on education quality and employability of graduates, especially from local universities who are found in surveys to be generally less competent in technical and professional occupations (World Bank 2005: 89). Malaysia has attained notable achievements in raising the quantity of education, and increasing access to Bumiputera, while also providing relief to nonBumiputera whose entry to public universities is restricted by quota. Private tertiary institutions proliferated in the wake of the 1996 Private Higher Education Act. However, serious questions loom on the quality of education, especially at the tertiary level. South Africa To the Malaysian observer, coverage of the education sector is conspicuously sparse in the literature on inequality, income distribution and economic policy in South Africa. From what I have gathered so far, however, affirmative action operates through two main mechanisms: enforcing transformation of previously white schools, institutes and universities; and providing scholarships for disadvantaged persons. Employment Malaysia The restructuring of employment in Malaysia abided by a mandate that “employment patterns at all levels and in all sectors, particularly modern rural and modern urban, must reflect the racial composition of the population” (Malaysia 1971: 42). The main affirmative action interventions in this regard comprised of public sector employment and minor regulations on the private sector. Although the general objective is to have a racially representative workforce in all sectors, there was no specified timeline for incrementally achieving that target, nor a systematic approach to increasing Malay penetration at the higher 8 A quota of 10 percent non-Bumiputera enrollment in the 40 MARA junior science colleges was introduced in 2000. The proportion of non-Bumiputera in these colleges was 10.5 percent in 2008 (The Star, May 15, 2008). 8 occupational levels. Indeed, employment practices in government and requirements imposed on the private sector operated very much in a non-codified manner. Government and statutory bodies served to absorb Malay urbanization and entry into formal wage employment. Public sector employment also served as an extension of the university scholarship program. As noted above, prior to the NEP, measures were already in place to maintain a high Malay presence in the public sector9. Under the NEP, the government augmented the public sector, especially in the 1970s until the mid-1980s. The share of Bumiputera was raised further from 62.5 percent in 1970, stabilizing around 85.0 percent by 2005 (MCA 2006: 4). The Industrial Coordination Act, passed in 1975, was predominantly a measure to enforce equity redistribution, but it also required manufacturing establishments to align their workforce in accordance with the proportionality principle. Workers’ ranks, it turns out, were easily filled, especially with young Malay women from villages who flocked to electronics and textile and clothing factories. Compliance at managerial levels was harder to effect, and no substantive research has been conducted on the outcomes, although it is likely that the effect of the ICA in terms of increasing Malay representation was limited and concentrated in non-technical responsibilities such as personnel management. The employment aspects of the ICA were more strictly enforced before the late 1980s10. In the past two decades, little emphasis has been placed on the racial composition of Malaysians within firms. There is no general legislation of employment practices in non-manufacturing sectors, although some strive for racial diversity in a selective manner, whether for reasons of strategy or licensing requirements. For example, tellers and service workers of most banks are mixed, although management tends to identify racially with the banks’ ownership11. South Africa The Employment Equity Act (1998) sets out the legislative framework for prohibiting unfair discrimination and for redressing imbalances in employment, for medium to large firms. The EEA requires government departments and private firms above a certain size, in consultation with workers, to submit reports of their workforce profile, with disaggregation into race, gender and disability categories (the disadvantaged groups), and devise own targets 9 In the elite Diplomatic and Administrative Service corps, a 4 to 1 ratio of Malay to non-Malay quota was introduced in 1953 (CPPS 2006a: 5). Malays comprised 62.5% of civil servants in 1970 (Malaysia 1971: 38). 10 Interview with senior industry source, September 5, 2007. 11 Interview with National Union of Banking Employees (NUBE) officials, September 19, 2007. 9 for increasing the number of members of disadvantaged groups who benefit from training, hiring or promotion, with reference to the population composition of the province where firms are located. Employers also have to report on the progress made in meeting previous targets, and revise their plan at specified intervals. The EEA has a broader scope and more formalized mechanisms than Malaysia’s employment policies, since it encompasses public and private sectors and integrates skills development as a component to enable disadvantaged employees continue to progress within firms. Participation is mandatory, with stipulated penalties for non-compliance; however, the content of EE reports are firm-specific, and the extent this legislation has real impact on preferential hiring and skills development is contingent on a variety of factors, such as firm structure, employers’ initiative, and the consultative process between employers and shop stewards. Emphatically, employment equity outcomes hinge on the efficacy of local union leaders in representing workers’ stake in EE and in monitoring progress. For the most part, it seems, employment equity has been an operational cost to which firms comply minimally, especially for medium-scale firms (smallscale firms are exempted)12. As in Malaysia, the public sector has expectedly undertaken EE more vigorously than the private sector. The Black Economic Empowerment mandate and legislation provide an incentive scheme for employment equity and skills development in favor of historically disadvantaged persons. The concept of BEE was formalized through the BEE Commission’s report of 2001, and institutionalized in the BEE Act (2003). Beyond compliance with employment equity legislation, BEE institutes a metering system – the BEE Scorecard – in which firms earn a composite score for performance across seven weighted elements. The weightage of ownership, skills development and employment equity are relatively high. Managerial and enterprise development Public enterprises Malaysia Throughout most of the NEP, the Malaysian government has adopted a state-centric approach to enterprise development. Various agencies were created or reinvigorated to 12 Interviews with officer of Confederation of Employers of South Africa (COFESA), November 26, 2007, Deputy Secretary-General of Solidarity, December 3, 2007, and Employment Equity Commission chairman, December 7, 2007. 10 support Malay business, particularly in the 1970s and 1980s13. The government’s five-year plan expenditure on non-financial public enterprises flowed in accordance with funding needs in these enterprises14. State Economic Development Corporations (SEDCs) were entrusted a salient role in spearheading Malay business from the early 1970s, bolstered with seed funds or guarantees from government. However, ventures largely turned out unsuccessful or unsustainable, undermined by poor governance, inexperience, or corruption15. The Malaysian government also secured ownership of hitherto British-owned companies through its investment arms from the late 1970s, and facilitated entry of Malay managers and professionals into these sectors. Such takeovers of foreign-owned companies contributed to promotion of Malay management, although the numbers are small fraction of the employed population. Cadres of public administrators, who had acquired some experience by this stage, were positioned to assume places of leadership in private enterprise. The 1980s witnessed major shifts in the state-sponsored Bumiputera capitalist and entrepreneurial development agenda. In the early 1980s, the heavy industries program commenced with the establishment of the Heavy Industries Corporation of Malaysia (HICOM), venturing into various sectors, prominently automobile, steel, and cement. These large firms were to be government-owned and Bumiputera-managed, with financial and operational support from the Japan. The global recession of the mid-1980s hampered the launch of heavy industries, but their pre-maturity also showed up in the emergence of excess capacity, lack of competency and gross under-performance. The focus shifted again from the late 1980s to procurement contracts and privatization of state entities, which facilitated the development of individuals in the Bumiputera Commercial and Industrial Community (BCIC), beyond agencies or institutions such as trust funds. This policy watershed had two crucial implications. First, it positioned the private sector and the BCIC as the main target of state priorities and largesse – while affirmative action programs in education and employment continued without substantive revision. 13 State-owned enterprises, comprising public services departments, statutory bodies, and government owned private or public companies, numbered 22 in 1960, 109 in 1970; 656 in 1980, 1149 in 1992, with the largest numbers in manufacturing, services, agriculture, finance and construction. To put the increases in perspective, the growth of new public enterprises averaged 9 per year in 1960s, 55 in 1970s, and 41 from 1980 to 1992 (Gomez and Jomo 1999: 29-31). 14 Specifically, such expenditures ballooned from RM3.9 billion (1971-75) to RM12.0 billion (197680) to RM27.7 billion (1981-95), then contracted to RM17.7 billion (1986-90) (Ismail and Meyanathan 1993: 19). 15 In 1981, available information on 260 companies under the purview of the Ministry of Public Enterprises showed that 94 were making losses and 21 had yet to operate (Jesudason 1989: 98-100). 11 Second, it ushered in and elevated private capital accumulation. The objective of entrepreneurial development was raised to a further level with the handpicking and handover of previously state-owned enterprises to individuals, a transformative process that has been more strongly equated with wealth accumulation and state patronage. However, in 1997, the financial crisis resulted in many individual, state-sponsored Malay capitalists foundering, and the largest privatized corporations were effectively re-nationalized. The public enterprise regime has been broadly reconfigured and injected with a more corporate ethos and mandate. Government-linked corporations – both in financial and productive sectors – continue to be major players in developing Bumiputera enterprise as well as in generating employment opportunities. South Africa The position of public enterprises in within South Africa’s process of transformation was unclear in the mid- and late-1990s, as the privatization agenda drifted in a tentative state. Subsequent to the collapse of a privatization program, an ideologically driven project that would have transferred public monopolies into private hands, however, public enterprises have been issued a mandate to play a demonstrative role in black executive and managerial advancement, prominently in energy, utilities, and transportation. Public procurement Malaysia The NEP gave impetus to utilizing the public procurement system to stimulate and finance Bumiputera commerce. A tiered procurement framework, in place since 1974, reserves 100 percent of small projects and 30 percent of the total value of other projects for Bumiputera contractors. The remaining 70 percent is open for bidding among all companies, Bumiputera and non-Bumiputera. Bumiputera contractors also receive price handicaps, on a sliding scale, that place Bumiputera bids on par with lower priced non-Bumiputera competitors – except for the largest category of contracts16. The terms for receiving preferential treatment mentioned in the Malaysian Treasury’s circulars on procurement policy emphasize Bumiputera majority ownership, occupation of executive and managerial positions and financial management. While it is stipulated that tenders must meet timeline, local content and quality standards, the formal procedures for selecting contractors do not specify 16 Treasury Circular Letter No. 7, 1974. 12 rules or incentives structured towards broadening entrepreneurial capacity, or promoting greenfield investment, technological and skills development. Malaysia’s public procurement regime is understood to function considerably as a political patronage network, where deals are made on the basis of connection and positioning of powerful figures on company boards. South Africa The strongest arm of managerial and enterprise development is the preferential procurement program, which was initially codified in the Preferential Public Procurement Framework (2001) and given greater impetus and structure in under the aegis of Black Economic Empowerment. BEE scores are factored into open tenders for government projects, injecting a competitive dimension and giving bidders a fillip to pursue the various elements of the BEE scoring system. Large companies earn also points in accordance with the BEE score of subsidiaries and suppliers, of for providing assistance in the development of smaller enterprises. BEE and preferential procurement is a recently institutionalized centerpiece of government policy pursuing affirmative action objectives; hence, its material effect is yet to be realized. Table 4-5. Summary of Affirmative Action Programs Malaysia Education Employment South Africa Exclusively Bumiputera residential and matriculation colleges Transformation of formerly segregated schools and universities (historically white institutes) Enrollment quotas in tertiary institutions Improvement of historically black institutes University scholarships, predominantly or exclusively Bumiputera Scholarship programs Public sector employment Employment Equity Act 1998: Components: 1. anti-discrimination 2. affirmative action Applies to public and private sectors Industrial Coordination Act 1975 Skills Development Act 1999 13 Enterprise and managerial development Public enterprises Black Economic Empowerment Act 2003: Encompassing ownership, management, employment equity, skills development, enterprise development BEE codes formalized 2007 Takeover of foreign companies Privatization Licensing Licensing Public procurement Preferential public procurement Income and Earnings Inequality: Aggregate Trends in Existing Literature Malaysia registered declining inter-racial, intra-racial and total household income inequality from 1970 to the late 1980s, but since then high inequality levels have persisted (Figures 1 and 2). The country achieved substantial income redistribution and social restructuring under the New Economic Policy (NEP), which bore an official timeframe of 1971-90. These outcomes have been the subject of various studies, largely or partly crediting affirmative action for the reduction in inequalities (e.g. Leete 2007, Faridah 2003). The Bumiputera population experienced changes on various fronts, making massive advances in education, particularly in secondary schooling but also in tertiary institutions, while undergoing steady urbanization and transition into wage employment in manufacturing and service sectors. In sum, rural under-employment was reduced and urban labor force participation increased, thereby raising incomes in both areas. Bumiputera entry into professional occupations also proceeded rapidly, largely facilitated by public sector employment. However, various attempts at cultivating a Bumiputera managerial class, predominantly through public enterprises, met with limited success. The redistribution program, effective for the first two decades of intensive affirmative action, apparently lost momentum over following two decades. The late-1980s marks a period of shifts in policy orientation, with the pursuit of more growth-oriented policies and a massive privatization program, involving sale of public enterprises and appointment of corporate executives, and with priority accorded to the Bumiputera Commercial and Industrial Community (BCIC), i.e. a Malay capitalist class. Affirmative action programs in education and employment, however, remained basically intact. Very little is known about income distribution in the 1990s, although various studies have offers deductions and conjectures on the increase in inequality, focusing on privatization and deregulation measures 14 (Ragayah 2003, Ishak 2000, Zainal 2001). Statistics on Bumiputera presence in the upper occupational categories outline developments that are plausibly consistent with the break in racial income gap-closing from the late 1980s. Further down this paper, we will observe shifting patterns of inequality beneath the trend of fairly constant aggregate inequality. Figure 1. Malaysia: Ratio of Mean Household Income, 1970-2004 2.4 2.2 2.0 Chinese: Bumiputera 1.8 1.6 Indian: Bumiputera 1.4 1.2 1.0 1970 1976 1979 1984 1987 1990 1993 1995 1997 1999 2002 2004 Sources: Ragayah 2003, Malaysia Plans, various years, Ishak 2000. Figure 2. Malaysia: Gini Coefficient of Household Income, 1970-2004 0.55 0.50 Bumiputera 0.45 Chinese 0.40 Indian Malaysia 0.35 0.30 1970 1976 1979 1984 1987 1990 1993 1995 1997 1999 2004 Sources: Ragayah 2003, Ninth Malaysia Plan, Ishak 2000. Note: Bumiputera, Chinese and Indian Gini not available for 1993 and 1995. 15 There is widespread agreement that income inequality in South Africa has increased since the mid-1990s, most markedly within the African community in the first half-decade of the democratic regime (Figure 3) (Hoogeveen and Özler 2005, Leibbrandt et al. 2005, Van der Berg and Louw 2004). Research on income or earnings in the 2000s, and on inequality between race groups, however, is sparse, perhaps due to data controversies (although sampling and income reporting issues should apply to both inter-racial and intra-racial inequality computations). One available calculation, from OHS and LFS data, finds an increase in the White: African earnings ratio over 1995-2000 then a decline over 2000-04. This apparent breakpoint around 2000 is noteworthy, and relevant in light of macroeconomic and policy shifts. First, South Africa experienced net employment losses from 1995 through 2000/01, and recovery thereafter (Seekings et al. 2004: 14). Second, affirmative action in labor markets intensified from 1999, particularly with the enactment of employment equity legislation. Figure 3. South Africa: Gini Coefficient of Household Income, 1991-2001 0.80 0.70 African White 0.60 Colored Asian 0.50 All SA 0.40 1991 1996 2001 Source: Human Sciences Research Council. 16 Figure 4. South Africa: Ratio of Individual Earnings, 1995-2004 5.0 4.0 White: African 3.0 White: Colored 2.0 White: Indian 1.0 0.0 1995 2000 2004 Source: Author’s calculations from Leite et al. 2006. Data This study requires earnings data representative of the employed population. Government conducted income / labor force surveys are the only resources that meet this criterion. The Malaysian Household Income Survey (HIS) is conducted twice every five years, using a questionnaire and methodology that has been consistent since the inaugural survey in 1984. On the flip side, methodological and questionnaire design flaws inherited from the early surveys have not been addressed. I was granted access to the HIS of 1995, 1997, 1999, 2002, and 2004, all of which have a substantial number of observations of income earners – roughly 60,000. Critically, however, the race variable was purged from the datasets. We are therefore unable to directly analyze the dynamics of race in income and earnings inequality. To fill the gap in a very limited way, we make inferences with supplementary sources that provide information on racial composition. South Africa’s income data is fully accessible, although fraught with controversies over questionnaire design and sampling. The relevant datasets are the October Household Surveys (1995-1999) and the September Labor Force Surveys (2000-2006), of which we refer to at intervals: 1995, 1998, 2001, 2004, and 2006. The debate over data quality primarily surrounds the fact that a sizable proportion of respondents in the OHS (except 1995) and LFS that indicate their income by selecting a bracket instead of stating a point value. The incidence of reporting in brackets is also found to be nonrandom, with disproportionate 17 numbers of blacks selecting zero or low income brackets and highly educated whites selecting high income brackets (Posel and Casale 2005). The sample sizes also vary quite widely, from 20,000 to 30,000, and thus pose some concern about representativeness. The data thus has to be handled circumspectly, but the above concerns aside, it is worth noting that data quality and reliability problems are endemic to surveys. The problems that arise in South African data are faced in national survey data in any setting (Leibbrandt et al. 2006). These sources remain, the repository with widest spatial and temporal coverage income and earners’ characteristics, and reasonably consistent format, and thus will be used as crosssectional snapshots of patterns of distribution over intervals. Aggregate Inequality I first compute aggregate inequality figures. The source of data in all tables that follow, unless indicated otherwise, are the HIS for Malaysia, and the OHS and LFS in South Africa. In Malaysia, possible differences between Gini levels and trends for individual earnings and household income are of particular interest, since official figures are only available for household income. We find that inequality as captured in the Gini barely changes over 1995-2004, and the figures hardly vary between earnings and income (except in 1997), hence it seems not unreasonable to maintain that earnings inequality followed the same trends over the 1970s and 1980s as outlined for household income in Figures 1 and 2. While the Gini indicators in aggregate show no significant trend between 1995 and 2004, ratios of earnings at the extreme percentiles indicate widening disparity between the top and bottom ends of the distribution (Table 2). These findings suggest that disparities between the richest and poorest strata have increased, but income growth in the middle has moderated the effect on overall inequality as captured in the Gini coefficient. Table 1. Malaysia: Gini coefficient Gini coefficient Individual Household Year earnings income 1995 0.459 0.468 1997 0.445 0.483 1999 0.457 0.462 2002 0.472 0.475 2004 0.474 0.468 18 Table 2. Malaysia: Ratio of earnings at percentiles Ratio of 1995 1997 1999 percentile earnings 50th : 10th 2.84 3.13 2.97 50th : 25th 1.64 1.67 1.66 th th 75 : 25 2.68 2.65 2.69 th th 75 : 50 1.63 1.59 1.62 90th : 50th 2.71 2.50 2.66 th th 90 : 10 7.68 7.82 7.90 95th : 10th 10.82 10.88 11.24 95th : 5th 17.06 18.41 17.53 2004 3.07 1.73 3.05 1.76 2.81 8.61 12.35 18.45 For South Africa overall, we find no clear trend in the Gini over our intervals (Table 3). This finding, however, is at odds with most available estimates, including Leite et al. (2006), who find an increase in inequality over the late 1990s. The figures for 1998 warrant further attention. Disaggregating by race, we find a broad pattern of increasing earnings inequality among blacks, and decreasing inequality among whites. Thus, results so far are consistent with developments in South Africa’s policy and macroeconomy, which respectively intensified affirmative action and shifted to a more robust phase in 1999-2000. Table 3. South Africa: Gini Coefficient of earnings, by race 1995 2001 2004 2006 Overall (own) 0.585 0.594 0.586 0.599 Overall (Leite et al. 2006) 0.566 0.594 0.598 Black 0.504 0.536 0.534 0.558 White 0.520 0.474 0.448 0.468 Table 4. South Africa: Ratio of earnings at percentiles Percentile ratio 1995 1998 2001 2006 50th : 10th 4.02 15.00 5.00 4.00 50th : 25th 2.22 5.00 2.50 2.22 75th : 25th 4.41 14.33 5.47 4.67 75th : 50th 1.98 2.87 2.19 2.10 90th : 50th 3.50 7.00 4.00 4.75 90th : 10th 14.07 105.00 20.00 19.00 19 Table 5. South Africa: Ratio of earnings at percentiles, by race Black White ratio 1995 1998 2001 2006 1995 1998 2001 50th : 10th 3.7 9.4 4.8 3.5 2.9 10.3 2.6 50th : 25th 2.2 3.3 2.4 1.9 1.7 2.4 1.7 75th : 25th 3.8 14.4 4.4 3.9 2.8 4.6 3.2 75th : 50th 1.7 4.3 1.8 2.0 1.6 1.9 1.8 90th : 50th 3.0 7.7 3.3 4.5 2.8 4.5 5.3 90th : 10th 10.8 72.0 16.0 15.8 8.1 46.3 14.7 2006 3.5 1.8 3.4 1.9 4.0 14.0 Table 6. South Africa: Ratio of earnings between race 1998 1995 2001 2006 White: overall 2.45 2.77 2.58 2.59 Black: overall 0.65 0.59 0.65 0.72 White: Black 3.77 4.70 3.94 3.62 White: African 4.04 5.46 4.40 3.96 White: Colored 4.08 3.71 3.25 3.11 White: Indian 1.57 1.76 1.79 1.56 Inequality by educational attainment The effect of educational attainment on earnings shows some interesting trends. Between 1995 and 2004, the earnings of degree holders relative to those who complete secondary schooling declines noticeably, while other ratios remain stable (Table 7a). This trend has crucial implications on affirmative action, since higher education is one of its pillars. These findings suggest some problems in the transition between obtaining a degree and entering the labor market. Indeed, we find that the decline in earnings premium of degree holders is much sharper among young workers. Advances in tertiary education, especially for Malays, are quantitatively immense. As displayed in Table 7b, the proportion of employed with tertiary education is highest among Malays. Effects of the Private Higher Education of 1996 – partly a political concession to non-Bumiputera excluded by quotas from public institutions – were immediately seen in a spike in average annual growth in public postsecondary enrolment from 8.8 percent over 1990-95 to 16.2 percent over 1995-2000. However, declining quality of diploma and degree programs, in both public and private institutions, continually pervades public discourse, and is embodied in a persisting incidence of unemployed graduates. A 2004 survey found an estimated 60,000 unemployed graduates, who are mostly female graduates from public universities. While such surveys do not touch 20 on race, it is probable that graduate unemployment affects Bumiputera disproportionately, which suggests that the education channel to affirmative action is become less effective17. Table 7a. Malaysia: Earnings by highest education attained. Ratio to complete secondary Highest certificate (no. years) schooling 1995 1999 2004 No school / primary school 0.61 0.63 0.59 Incomplete sec. school 0.82 0.84 0.82 Complete sec. school 1.00 1.00 1.00 Upper sec. school (pre-univ.) 1.31 1.31 1.30 Diploma 1.65 1.64 1.59 Degree 3.45 3.30 2.91 Table 7b. Percent of employed with tertiary education, by race group 1995 1999 2004 Malay 18.2 21.7 26.8 Non-Malay Bumiputera 8.7 10.5 13.9 Chinese 13.6 16.5 23.4 Indian 12.4 15.4 19.2 Malaysia 15.1 18.1 23.8 Source: Labor Force Survey Reports. In South Africa we observe an opposing trend: holding a degree is associated with increasingly higher earnings relative to lesser formal education qualifications (Table 8). These gains are most starkly showing among blacks, while no trend appears among whites (Table 9). In addition, it is also among degree-holders that white: black earnings differentials are declining at the fastest rate, with diploma-holders also showing a parallel pattern, though of smaller magnitude (Table 10). The effects of labor market dynamics – higher employment growth post-2001 – and policy – specifically, employment equity – will have to be discussed with reference to other data. However, results here strongly suggest a dual contribution of tertiary education: the earnings of highly educated blacks are closing the gap against commensurately educated whites, but are widening their gap against less educated blacks. 17 The unemployment rate for all working age persons vary across race groups quite consistently across time. In 2005, the rates were 5.3 percent among Bumiputera, 2.4 percent among Chinese, 3.1 percent among Indians, and 4.2 for all Malaysia. 21 Table 8. South Africa: Earnings by highest education attained Ratio of earnings to complete secondary schooling 1995 2001 2006 No school / primary school 0.26 0.27 0.33 Incomplete sec. school 0.54 0.49 0.49 Complete sec. school 1.00 1.00 1.00 Diploma 1.32 1.43 1.80 Degree 2.38 2.66 3.51 Table 9. South Africa: Earnings within race group. 1995 Black No sch / primary sch 0.40 Incomplete secondary sch 0.66 Complete secondary sch 1.00 Diploma 1.46 Degree 2.24 White No sch / primary sch 0.38 Incomplete secondary sch 0.85 Complete secondary sch 1.00 Diploma 1.30 Degree 2.05 2001 0.39 0.62 1.00 1.60 2.65 0.56 0.73 1.00 1.19 2.08 2006 0.43 0.58 1.00 1.89 3.84 0.44 0.74 1.00 1.37 2.23 Table 10. South Africa: White : Black earnings ratio within education category. 1995 2001 2006 White : Black No school / primary school 2.23 3.50 2.47 Incomplete sec. school 2.95 2.91 3.12 Complete sec. school 2.30 2.44 2.41 Diploma 2.05 1.82 1.75 Degree 2.11 1.92 1.40 Inter-occupational earnings differentials Inter-occupational patterns in Malaysia demonstrate major shifts in the relative earnings position of different groups (Table 11a). In particular, officials and managers enjoy exceptionally high average growth over 1995-2004 interval, and even higher gains if we mark 1997 as a starting point. At the bottom end, the earnings of agricultural workers demonstrate a gradual pattern of decline relative to other occupational groups. These two groups are highly relevant to inter-racial inequality and AA, owing to the under-representation of Bumiputera in managerial occupations and over representation among agricultural workers (Table 11b). Official data indicates a slowdown in momentum of Bumiputera entry to 22 managerial and professional positions from 1995 to 200518. In sum, then, these patterns are consistent with Figure 1, i.e. no narrowing of inter-racial income disparities. Other sources also supplement these findings, particularly data on public sector employment. Government departments accounted for 19.5 percent of the increase in employment in Malaysia from 2000 to 2005, with the bulk of hiring happening among degree holders absorbed into teaching (classified as professional) and nursing (associate professional) positions, which show earnings levels close to or below the median (Table 11b)19. Table 11a. Malaysia: Earnings ratios by occupation group Ratio to service and sales workers Occupation 1995 1997 1999 2004 Managers 3.14 2.51 3.37 3.89 Professionals 2.93 2.50 2.88 2.80 Technicians, assoc pro 1.88 1.67 1.83 1.70 Clerks 1.26 1.29 1.35 1.23 Machine operators 1.01 0.98 1.03 0.93 Craft 1.03 1.04 1.10 0.97 Agricultural workers 0.65 0.67 0.62 0.49 Elementary 0.65 0.68 0.73 0.73 Table 11b. Malaysia: Distribution of workers within occupation group, by race, 2005. Bumiputera Chinese Indians Others Managers and officials 37.1 55.1 7.1 0.7 Professionals 58.5 31.9 8.2 1.3 Excl. lecturers and secondary sch teachers 47.2 42.0 9.6 1.2 Lecturers and sch teachers 74.9 17.4 6.2 1.5 Technicians and assoc. professionals 59.5 29.7 10.0 0.8 Excl. primary sch. teachers and nurses 55.2 32.9 11.2 0.7 Primary sch. teachers and nurses 70.6 21.5 6.9 1.1 Clerks 56.7 34.3 8.5 0.5 Service and sales workers 51.5 39.6 8.0 0.9 Agricultural workers 80.8 11.3 4.3 3.7 Craft workers 46.0 44.6 8.2 1.2 Machine operators 60.4 24.8 12.9 1.9 Elementary workers 54.4 25.2 14.7 5.6 Overall employed 56.5 32.4 9.3 1.8 Source: Ninth Malaysia Plan 18 The proportion of Bumiputera in total registered professionals, burgeoned from 4.9 percent in 1970 to 29.0 percent in 1990, but grew at a significant slower pace thereafter, reaching 33.1 percent in 1995 and 38.8 percent in 2005. In administrative and managerial occupations (public and private sector), Bumiputera representation grew relatively slower in the first two decades, from 22.4 percent in 1970 to 30.3 percent in 1990, before accelerating to 39.1 percent in 1995, then tapering off to 37.3 percent in 2005 (An occupational reclassification exercise in 2000 may affect these figures). 19 Author’s calculations from Labor Force Survey Reports and the Government Employment List. 23 Our findings on relative earnings by occupation in South Africa mirror the results obtained for educational attainment. No clear pattern of inequality between occupational groups is discernible on the whole (Table 12). However, we find some indication that interracial earnings disparities are narrowing at the top, at managerial and professional levels. These findings will have to be checked for possibility of questionnaire design or sampling discrepancies, e.g. whites in the professional and manager categories show a relatively high incidence of reporting income in brackets, which may understate the white to black earnings ratio. As with the earnings ratios between persons of varying educational attainment, we also find the clearest patterns of inequality within the black population. As shown in Table 14, we find earnings of managers and professionals pulling away, while technical and clerical workers also enjoy relative gains. These preliminary findings are consistent with a combination of skill scarcity and employment equity legislation that raises the bargaining power of highly qualified blacks, as companies compete to increase the number of black managers and professionals. Table 12. South Africa. Earnings ratio by occupational group, per service workers. 1995 1998 2001 2006 Officials and managers 5.31 5.03 4.50 5.58 Professionals 3.60 4.28 4.67 4.45 Technicians and assoc. pro. 2.06 2.12 2.30 2.57 Skilled agriculture 1.18 1.18 1.67 1.75 Clerks 1.00 1.00 1.00 1.00 Sales and service workers 4.82 1.15 1.21 1.90 Craft 1.35 1.07 1.12 1.17 Machine operators and assemblers 0.84 0.86 0.92 1.19 Elementary workers 0.39 0.45 0.50 0.61 Table 13. South Africa. White : Black earnings ratio within occupational group 1995 1998 2001 2006 Managers 1.95 3.01 1.67 1.60 Professionals 1.97 1.97 1.88 1.40 Technicians 1.87 2.24 1.81 1.74 Clerks 1.42 1.85 1.68 1.65 Service and sales 2.07 2.20 2.44 2.30 Craft 3.07 3.15 3.54 3.13 Production workers 3.52 4.13 3.47 3.76 24 Table 14. South Africa: Ratio of earnings to service and sales workers, within race 1995 1998 2001 2006 Black 4.26 Managers 2.95 3.85 4.73 Professionals 2.92 3.33 3.87 4.25 1.92 Technicians 1.76 2.17 2.34 Clerks 1.21 1.05 1.61 1.62 Service and sales 1.00 1.00 1.00 1.00 Craft 1.08 0.95 0.99 1.08 Production workers 0.58 0.64 0.72 0.79 White Managers 4.00 4.04 2.64 3.30 Professionals 2.78 2.98 2.98 2.58 Technicians 1.74 1.80 1.61 1.77 Clerks 0.84 0.88 1.11 1.16 Service and sales 1.00 1.00 1.00 1.00 Craft 1.60 1.36 1.43 1.47 Production workers 0.98 1.20 1.02 1.29 Concluding thoughts We find different patterns of inequality in Malaysia and South Africa over the 19952005 period. In Malaysia, we observe declining earnings premium on tertiary education and increasing gap between managers and the rest. These are two areas in which Bumiputera share is notable – significantly high in tertiary education attainment, and significantly low in managerial occupations. Therefore, these patterns plausibly fill in gaps in the aggregate inequality picture we set out to inform. On South Africa, we find less clear patterns of inequality between race groups, but evidence that disparities associated with education and occupation are important dimensions in the problem of increasing inequality within the black population. Not surprisingly, highly educated and upwardly mobile blacks have benefited most in the post-apartheid period; a black middle class has arrived. This paper has discussed inequality and affirmative action in Malaysia and South Africa, situating these policies in their respective political economic contexts. Our focus on education and employment addresses two pillars of AA, but other earnings determinants must of course be controlled for in this study. Nonetheless, a few thoughts arise at this juncture on implications for affirmative action. Given time and space constraints, I will focus on two issues. One implication of our findings concerns the interaction between inter-racial and intra-racial inequality, in view of the different experience of Malaysia and South Africa in their respective first decades of intensive affirmative action. Malaysia managed to reduce 25 both inter-racial and intra-racial inequality from 1970 to the late 1980s, but under domestic and global conditions that are substantially different from those presented to South Africa in the 1990s. It is difficult to discern how South Africa could have avoided increases in inequality within the black population. However, the extent of growing disparity, and growing sense of marginalization are ramifications of policy decisions or failures of implementation, especially in the decline of schools and historically black tertiary institutions. South Africa’s developed legal institutions – employment equity, skills development, BEE – are arguably ahead of their time, which is no surprise given advisory sources (employment equity legislation was largely modeled after Canada). However, they operate within the constraints of a population where the majority live in deep-seated poverty. An urgent and vital challenge, after passage of a complex of AA institutions, is to spread the gains within the black population more broadly. At present, AA regimes in both countries are under as much, if not more, societal pressure to reduce intra-racial inequality. In plotting progress and anticipating change, both countries may heed from shortcomings of Malaysia’s AA experience the need to temper ambition with patience and opt for more gradualist approaches, avoiding entrenchment of programs that fail to monitor qualitative change (e.g. in education) and that perpetuate government patronage, the sum of which is higher concentration of earnings and income at the top. Another implication of our findings surrounds the two contrasting models of state intervention. South Africa’s constitution and the evolving legal framework for affirmative action are more formalized, codified, and contractual than Malaysia’s. The scope of employment equity and skills development exceeds that of programs Malaysia implemented for redressing imbalances in the workplace. On the other hand, the South African state is more constrained and inflexible in responding pragmatically changes in economic conditions. Malaysia may take pointers from the South African experience, particularly in government procurement, while South Africa may gain from adopting a less ideological, more pragmatic, disposition. 26 References Centre for Public Policy Analysis (CPPS). 2006a. Towards a more representative and world class civil service. CPPS, Kuala Lumpur. Emsley, Ian. 1996. The Malaysian Experience of Affirmative Action: Lessons for South Africa. Cape Town: Human & Rousseau and Tafelberg. Faridah Jamaludin. 2003. Malaysia's New Economic Policy: Has it Been a Success? In Darity, William and Ashwin Deshpande (eds.), Boundaries of Clan and Color: Transnational Comparisons of Inter-Group Disparity. Routledge. Fryer, Richard G. Jr. and Glenn Loury. 2005. Affirmative Action and Its Mythology. Journal of Economic Perspectives 19(3): 147-162. Gomez, Edmund Terence and Jomo K.S. 1999. Malaysia’s Political Economy: Power, Profits, Patronage. Cambridge University Press. Hart, Gillian. 1994. The New Economic Policy and Redistribution in Malaysia: A Model for Post-Apartheid South Africa? Transformation 23: 44-58. Hoogeveen, Johannes G. and Berk Özler. 2005. Not Separate, Not Equal: Poverty and Inequality in Post-Apartheid South Africa. William Davidson Institute Working Paper No. 739. International Labour Organization (ILO). 2003. Time for Equality at Work. ILO Conference 91st Session, Report I(B). Geneva: ILO. Ishak Shari. 2000. Economic growth and income inequality in Malaysia, 1971-95. Journal of the Asia-Pacific Economy, 5(1/2): 112-124. Ismail Muhamad Salleh and Saha Dhevan Meyanathan. 1993. The Lesson of East Asia – Malaysia: Growth, Equity and Structural Transformation. Washington, D. C.: World Bank. Jesudason, James V. 1989. Ethnicity and the Economy. Singapore: Oxford University Press. Leete, Richard. 2007. From Kampung to Twin Towers: 50 Years of Economic and Social Development. Petaling Jaya: Oxford Fajar. Leibbrandt, Murray, James Levinsohn and Justin McCrary. 2005. Incomes in South Africa Since the Fall of Apartheid. NBER Working Paper 11384. Leite, Phillipe G., Terry McKinley and Rafael Guerreiro Osorio. 2006. The Post-Apartheid Evolution of Earnings Inequality in South Africa, 1995-2004. UNDP International Poverty Centre, Working Paper No. 32. Malaysia. 1971. The Second Malaysia Plan, 1971-75. Kuala Lumpur: Government Printer. 27 Maznah Mohamad. 2005. Ethnicity and Inequality in Malaysia: A Retrospect and a Rethinking. Centre for Research on Inequality, Human Security and Ethnicity (CRISE) Working Paper 9, University of Oxford. Posel, Dorit and Daniela Casale. 2005. Who answers in brackets and what are the implications for earnings estimates? An analysis of earnings data from South Africa. Paper prepared for the Economic Society of South Africa (ESSA) conference, September 2005. Ragayah Haji Mat Zin. 2003. Explaining the Trend in Malaysian Income Inequality. Paper presented at the Annual Meeting of the East Asian Development Network (EADN), October 11-13, Singapore. http://www.eadn.org/reports/iwebfiles/i06.pdf Seekings, Jeremy, Murray Leibbrandt and Nicoli Nattrass. 2004. Income Inequality After Apartheid. CSSR Working Paper No. 75, University of Cape Town. Shireen Mardziah Hashim. 1998. Income Inequality and Poverty in Malaysia. Lanham, Md.: Rowman and Littlefield. Van der Berg, Servaas and Megan Louw. 2004. Changing Patterns of South African Income Distribution: Towards Time Series Estimates of Distribution and Poverty. The South African Journal of Economics 72(3): 546-572. Zainal Aznam Yusof. 2001. Income Distribution in Malaysia. Barlow, Colin (ed.) Modern Malaysia in the Global Economy: Political and Social Change into the 21st Century. Cheltenham and Northampton: Edward Elgar, 74-93. 28