The Important Reasons for Regulating the Gig Economy in Malaysia
20 years ago, being successful in life meant getting a 9-5 job in an office setting, and climbing a corporate ladder on your way to success. Fast forward to 2019, and this is no longer the case. The gig economy is taking over the world, offering flexible schedules and a global platform for work.
Malaysia in particular is seeing a huge increase in their gig economy, with as much as 26% of Malaysia participating according to the World Bank. This number is only expected to grow. If growth continues at its current pace, Malaysia could see as much as 40% of its workforce in the gig economy in just 5 years.
While the gig economy has many benefits, it also has drawbacks as well. The Malaysian government is concerned that the rights of freelancers may not be as well protected as those in permanent positions.
The Gig Economy a Skill Trap?
Freelancers currently do not have the same protection that people in permanent positions have. Those who participate in the gig economy experience lower pay than their peers, and do not receive health care or other benefits. They are also more likely to be abused by their employers, since their work is by its own nature short term.
With the gig economy projected to grow, a special committee is being created by the Cabinet to suggest changes. Their end goal is to create a fair marketplace, so that freelancers can receive many of the same benefits as long term employees.
The Future of the Gig Economy
With so many jobs being made redundant by automation, young people are turning more and more to creative jobs. Jobs that require an artistic touch, such as architecture design, writing, CAD, and programming, cannot be automated. They require a human touch. These jobs have a certain amount of job security.
Most of these jobs are also the ones made popular by the gig economy. These jobs can all be done online, and with a global market, there is no fear of flooding the market in one area. The Malaysian government needs to provide guidance during this change, so that the people who take these jobs do not suffer.
If they can find a proper balance, it will mean freelancers will have more protection, especially in regards to their retirement futures. Right now, many freelancers will find themselves having a hard time when they retire, because they do not receive company-sponsored retirement savings.
In 2017, the government made an effort to help freelancers out through the Malaysia Retirement Savings Scheme (SSP1M). Under this scheme, the government contributes an added 10% to any retirement savings done by the freelancer, offering a much needed bridge.
There are still other areas that need to be worked on, such as more competitive pay and better worker protections. If the changes made to retirement savings is any sign however, the future of Malaysia’s gig economy is looking good. Regulation of the gig economy will help freelancers, and bring wealth and prosperity to everyone.
