Benefits of a gig economy
Enables the freelancer to select temporary jobs and projects with high flexibility, freedom, and lucrative pay.
- It enables individuals to work in various markets, to be able to better meet the demands of the industry.
- It gives the advantage of having the upper hand in quoting prices for their work.
- It also enables an individual to change jobs several times as their working lives permit, thereby allowing a work-life balance.
- It provides the consumer with a variety of options and services to choose from.
- Employers can select the best individuals for specific projects from a wide range of geography.
- Employers are also in possession of a flexible workforce.
- It has encouraged employers to improve the diversity of the workforce in their strategic plans.
- Businesses and organizations can save resources in terms of training, benefits, and office space.
- It is quickly being adopted as a new source of economic growth in Malaysia, and it is considered as being part of the 12th Malaysian plan and economic development plan.
If you want to take advantage of the flexibility that being a freelancer allows, you will need to be able to secure visas and work permits in different countries. Applying for visas overseas can be troublesome. Fortunately, Paul Hype Page has over 12 years of experience in assisting with visa needs for four different countries.
Cons of a gig economy
Some large companies have replaced their permanent employees with professional contractors to tap into the large pool of talents and remain competitive.
- The younger generation of gig workers may not be fully aware of the benefits of having the Employees Provident Fund (EPF), which provides retirement funds and benefits. They are also not part of SOCSO.
- There are no consistent pay and health benefits due to irregular workloads and late payments.
- Little room to move from low-skill level to highly skilled hence little room for career growth.
- Gig economy workers are the first to face the axe in case of financial issues in a company.
- The gig economy is not favorable for unskilled workers because they can often be exploited. For example, they have low bargaining power. Some are also conned into doing the work for free in the name of gaining experience. They also are prone to experience burn out because of unlimited earning.
As a freelancer, it can be difficult to secure contracts with larger companies, who prefer to deal with corporate entities over individuals. This can be solved only by incorporating your own company and securing the required regulatory compliance.
Incorporation allows you to take your career to a higher level of professionalism and maintain complete control over your company as the single owner. Paul Hype Page is an experienced advisor in incorporation and annual filings, and we are ready to assist your needs as per your specific requirements.
Additionally, incorporation allows you to take advantage of corporate tax deductions. Understanding proper tax avoidance and how to ensure you are not overpaying your taxes is a difficult process. Paul Hype Page is ready to assist you. We will help you form your own company and assist in helping you acquire the required licenses for your business. We are able to guide you throughout your incorporation process, to ensure a smooth transition.
Need to regulate the gig economy
Gig economy brings a lot of economic benefits to the Malaysian government in terms of scaling businesses and contributing to national development. Thus, the government needs to step in to look at the plight of the gig workers. Because of the nature of the gig economy, gig workers are not recognized as employees and are cut off from benefits like medical insurance and paid sick days.
This may be because they are usually registered by businesses as vendors when hiring them for their services. A study by the Department of Statistics Malaysia (DOSM) and Khazanah Research Institute in 2017 shows that 66% of freelancers did not have a retirement plan, 33% did not have a personal financial plan, and 55% had less than three months financial buffer.
Gig economy workers will have a problem securing loans; their options get reduced as the old credit models don’t treat them the same way as full-time employees.
Again, the best way to circumvent the issue is to incorporate your own company, in order to be able to qualify for a corporate loan. Paul Hype Page is able to assist in incorporation and in securing loans when required.
Malaysia needs to have regulations in place to protect the gig economy: businesses and freelancers. An example is to protect gig workers like Foodpanda in the Labour or Industrial Court in case of any dispute. Some other suggestions which could be emulated from economies like California and Gojek that have made significant milestones in making the gig economy sustainable include:
i. To improve the situations of gig workers is to enact laws that treat gig workers as employees instead of contractors.
ii. Launch an earnings protection insurance scheme for dryers that ensure drivers get 21 days of medical leave and 84 days of hospitalization leave.
Malaysia also needs to put in place some form of business transaction structures, proper gig booking platforms to give some security, ensure appropriate payment, and manage expectations in terms of quality of work.
Companies, too, need to step up and enable schemes to ensure the welfare of the workers is protected while at the same time maintaining fair working standards.
The future of a gig economy
The Malaysian gig economy is set to bring in US$2.7 trillion by 2025. This is because the industry is rapidly growing with the fastest-growing jobs online involving writing, programming, and blockchain technology. Generally, the gig economy has helped improved Malaysia’s GDP as it has in a way or another helped some individuals to secure additional income or act as an employment opportunity to some who could have been entirely jobless.