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JUNE 8, 2020

Conceptualizing the Gig Economy in Malaysia


Executive summary

The gig economy in Malaysia is currently treated as a separate silo of the economy with its workers facing many social and economic adversaries and often being exploited by platform providers. This can be shown with workers in the gig economy: 

  • unable to earn a living wage due to the gig economy’s ecosystem that was structured by platform providers.
  • not entitled to any social security benefits, such as the Employees Provident Fund (EPF), social security and insurance benefits such as the Employment Insurance System (EIS) and medical insurance provided by the Social Security Organization (SOCSO).
  • excluded from regulation protecting fundamental principles and rights at work.
  • unable to form labour unions and to collective bargaining. 
  • not being identified and recognized by the government, resulting in lacking critical data on them, consequently in possible ineffective policymaking being implemented. 

At present, legal, government and public discourse on the gig economy has been inconsistent particularly in the use of terminology, which contribute to widespread confusion in the categorization of different platform types, as well as non-platform types.

  • Legal discourse – as things stand, the Employment Act 1955 considers workers in the gig economy as independent contractors and not employees. This means independent contractors are hired under the Contract for Service and are only told “what” to do, and not “how” to do a specific project or task, while employees are hired under the Contract of Service and are told “what” and “how” to do a specific project or task by his or her employer.
  • Government & Public Discourse – workers in the gig economy are often taken to include freelancers, own-account workers and self-employed. This is largely due to the fact that the government and media, in particular, use the terms ‘gig workers’ and ‘freelancers/self-employed’ interchangeably, completely disregarding the clear differences between the two groups.

With this in mind, there is a need for the categorization of the gig economy into two task-oriented platforms:

  • ‘Cloud work’ – is web-based and purely digital form of on-demand labour where tasks are tasks completed behind a computer anywhere. 
  • ‘Gig work’ – is location-based and tasks are mediated to selected individuals and crowd through a platform or work-on-demand apps and the task is completed offline. 

Short and Long Term Measures

Needless to say, gig economy workers are badly affected by the pandemic, thus, we recommend two short-term measures:

  • Establish an Income Support Scheme (ISS) for workers in the gig economy, with its database shared with SOCSO’s Self-Employed Social Security Scheme (SESSS) to aid workers to stay financially afloat. 
  • Ramping up programs that facilitate workers in the gig economy to match with diverse platform providers in line with their respective skills, as well as upskilling, to provide alternative gig-job options to workers that have been opted out due to the nature of their work. 

We also propose a long-term measure that reclassifies gig economy workers as “independent employees” instead of “independent contractors” and introduces a regulatory framework that governs the gig economy. This framework: 

  • establishes a “Contract of Agreement” between workers in the gig economy and platform providers, which workers would consequently be recognized by the government. 
  • establishes an automatic enrollment of social security programs such as SOCSO’s Self Employed Social Security Scheme and EPF’s i-Saraan for workers in the gig economy via a Platform-to-Government (P2G) data sharing system. 
  • introduces a tax system via a Platform-to-Government (P2G) data sharing system. 
  • requires platform providers to provide a notice of termination for workers and severance pay for constructive discharge.
  • allows the government to take legal action against platform providers if there is evidence of exploitation or discrimination of workers. 
  • encourages market competition among platform providers by attracting workers with lucrative benefits, perks and procurement of various types of insurance. 
  • grants workers the right to form labour unions and collectively bargain against platform providers. 

Download full report here