Have you ever used ride hailing services like Grab or booked an accommodation online on platforms like Hotel Trivago/ Airbnb? That’s what we now call the ‘Gig Economy’.
The gig economy is the exchange of labor for money between individuals or companies via digital platforms. Let’s dive deeper into the landscape of the gig economy in Malaysia.
The Gig Economy Landscape in Malaysia
About 30% of the labor force in Malaysia (5 million people) works in the gig economy and the numbers have been growing. With the blooming industry of technology, online platforms have been readily and easily accessible anywhere and anytime by anyone, giving rise to the number of workers in the gig economy.
Accompanied by the flexibility in terms of working hours and working location, they are free to choose what type of work as well as the remuneration.
Working from home is now the ‘new norm’ in Malaysia as the Covid-19 cases rise, driving the demand for the gig economy. The future of work is also shifting towards remote or hybrid working models, which will continue to strengthen the gig economy.
FUN FACT: Did you know that ever since the pandemic, the shares of gig workers have rose to more than 26%!
Factors Driving the Gig Economy in Malaysia
Some of the factors that encourage locals to turn to gig economy include:
The blooming industry of technology
The rise popularity of working remotely
Mushrooming co-working spaces
Lack of high-skilled workers
Increasingly high cost of living
The constant change in market demands
Work from anywhere culture
Pros & Cons of Working in the Gig Economy
With every job, there are pros and cons. It is important to carefully consider these benefits and drawbacks of working in the gig economy before you make a decision.
Benefits of gig economy
Drawbacks of gig economy
Individuals to work in various markets, to better meet the demands of the industry
Unaware of Employees Provident Fund (EPF) and they may lose out on benefits
Having the upper hand during negotiations
No consistent pay and health benefits
Higher work-life balance as they are free to change jobs when they feel the need to
May not experience as much career growth as compared to working in a company
Provides consumer with a variety of options and services
First to be retrenched in case of financial issues in a company
Saves resources in terms of training, benefits, and office space
Not favorable for unskilled workers because they can often be exploited. Such as low bargaining power.
Employers to improve the diversity of the workforce in their strategic plans
Lower opportunities from larger MNCs who are more inclined to hire companies over freelancers
The gig economy is beneficial for the Malaysian authorities, but, for gig workers, it may not be as beneficial as it seems. Here’s why:
Gig workers are not recognised as employees so they are restricted to various grants and benefits such as medical insurance and paid sick leaves
They will also face problems securing loans from bank or any financial authorities as their opinions are automatically reduced due to them not being recognised as a full-time employee
With more than 50% of freelances not having a retirement plan, and 55% with less than three months financial buffer, the financial situation for gig workers is not as ideal as they would like to be.
Till date, there is still no specific regulations, law, or guideline to protect the welfare of the gig workers except for the provisions under the Self-Employment Social Security Act 2017 [Act 789], which require self-employed individuals to register and contribute under this scheme.
Future of the Gig Economy
With the gig economy expected to bring in approximately US$2.7 Trillion by 2025, the future of the gig economy in Malaysia is still going strong. The fastest growing jobs online include writing, programming as well as blockchain technology.
The Malaysia’s Gross Domestic Product has improved tremendously as the gig economy has helped individuals to secure additional income or presented them with employment to those that were jobless.
Looking to set up your own company in Malaysia? Let us assist you in forming your own company and acquire the required licenses for your business!
When being a freelance worker, even though you are able to have the flexibility to choose how you want to work, you do not have an option when it comes to paying tax. The type of returns is determined by the frequency of jobs when declaring income to the Inland Revenue Board of Malaysia (IRBM).
Are gig workers satisfied with their jobs?Tommy2021-09-13T17:26:31+08:00
Generally, 79% of the full timers said that they are happier working on their own rather than bring in a white-collar job. However, they are generally more anxious about their financial status up to 45% of gig workers have high Economic Anxiety compared to 24% of traditional full-time employees as they do not have access to employer-based benefits.
How big is the gig economy on a global scale?Tommy2021-09-13T17:26:05+08:00
It is estimated that the Global Gig Economy will be worth $347 Billion USD in 2021. Globally, designing and technology jobs are the most popular job scopes among gig workers with 59% of them in this industry.