Gig economy: Plodding on for a legal framework

THE gig economy in Malaysia was valued at RM1.33bil in the third quarter of financial year 2023 and RM1.63bil in 2022, up from RM371.4mil in 2021.

With the rise of gig workers, the market size is likely over RM2bil now.

The Gig Workers Bill, originally set for tabling last month after a February townhall, has been delayed multiple times since 2024.

Industry players want further refinements before presenting it to Parliament, while gig workers and their representatives are pushing for immediate tabling with refinements later.

The delay indicates that the government must strike a balance between protecting gig workers and nurturing economic growth involving technology and digitalisation.

This includes platform economy companies that connect businesses, consumers, entrepreneurs and workers for transactions and collaborations.

The bill seeks to define a legal framework for gig workers and the gig economy.

Its key provisions are: protecting gig workers’ rights, obligations of contracting entities (individuals, groups, or businesses like platform providers contracting with gig workers), regulating contract terms and conditions, a dispute resolution mechanism, establishing a consultative council and a gig workers tribunal, ensuring gig worker safety and health, and providing social security protection.

Industry players are generally receptive to the bill but remain wary of the potential impact on their businesses. They have proposed a feasibility and impact study as well as a regulatory sandbox.

In the study, players in the industry and gig workers will provide feedback through questionnaires and integrated data points.

With the sandbox, key provisions can be tested in a controlled environment to gather feedback, collect valuable data, and refine solutions in order to better understand the impact when the bill becomes law.

The industry players who made the proposals in February include Bolt, FastGig, foodpanda, GoGet, Grab, Halo Delivery, Kiddocare, Lalamove and ShopeeFood.

These companies employ over a million Malaysians, mostly part-time, with an increasing number on full-time due to factors like technology, automation, skills mismatch and employer demands for relevant work experience.

Gig workers want the bill to be tabled quickly, with key provisions refined through further discussions. They see industry proposals as delays, as shared with StarBiz 7 by ride-hailing drivers over a week.

They align with gig worker groups like Gabungan E-hailing Malaysia’s chief activist, Jose Rizal, who criticises platform providers on issues like social security and health insurance.

One full-time ride-hailing driver explains his predicament of inconsistent income: “Compensation depends on the destination, with the rate per km varying based on factors like public holidays or weather. The number of trips doesn’t affect normal compensation.

“Drivers receive incentives for completing a set number of drives within a timeframe, which act as bonuses.

“Incentive goals are updated through the app and vary over time. For full-time drivers, this is their sole income source, while part-time drivers face challenges like other commitments and difficulty meeting incentive targets,” he explains.

Persatuan Penulis Berbilang Bahasa or PEN Malaysia, the local chapter of a global association representing writers, is cautious but remains hopeful.

Its chairperson Dr Ann Lee hopes that the wider definition of gig worker encompassing those not otherwise engaged in work through platform providers gets included in the law finally passed.

“That means writers as well as artists, performers and other freelancers. This due inclusion must make it into the Act, especially because it doesn’t equate gig work as full employment like some jurisdictions have done,” she says.

Lee sees the protection proposals and the gig workers tribunal as a positive start. She says the tribunal is a positive step, but implementation is crucial.

However, she views the lack of explicit provisions for collective bargaining as a missed opportunity. She also questions the limited scope of the consultative council, saying it may not represent all current interests. Still, she concludes, “it’s a good start.”

Balanced approach

or free-for-all

Industry players naturally prefer a balanced approach but gig workers see it differently, with the pressures of high cost of living and not getting what they claim is their due share of the revenue.

Platform providers, in turn, feel that the bill “needs to reflect the realities of gig work, address feasibility challenges and close loopholes or double jeopardies”.

Taylor’s University senior lecturer Dr Paul Anthony Maria Das advocates for a balanced approach. This includes gradual implementation, tax incentives, and portable benefits across platforms.

These measures can mitigate risks. The risks include increased business costs passed on to consumers and decreased competition due to market consolidation.

He also warns about workers shifting to informal or cash-based alternatives to avoid paying contributions. This could undermine the law’s effectiveness.

He believes the proposed top-down approach stifles innovation and competition. Ultimately, consumers will face higher costs.

“A balanced market-driven model with targeted interventions would be more effective.

“For instance, the Social Security Organisation’s (Socso) Self-Employment Social Security (SESS) scheme provides gig workers with injury protection without imposing strict fare controls,” Das says.

The SESS scheme is voluntary, with about a quarter of the 1.16 million gig workers enrolled.

The Gig Workers Bill seeks to make it mandatory, with platform providers assisting Socso in managing contributions.

“Singapore regulates gig work through Central Provident Fund (CPF) contributions but allows platforms like Grab and Gojek to use dynamic pricing models, ensuring flexibility while offering social protection.

“A consultative council can mediate among workers, platforms and the government to ensure fair treatment with minimal state intervention.

“Policies like Indonesia’s incentives for platforms offering worker benefits can promote growth while protecting gig workers’ earnings and welfare,” says Das, noting that Indonesia requires ride-hailing companies to contribute to social security, while Singapore is considering mandatory CPF contributions for gig workers.

He suggests a phased or tiered contribution system for social protection to reduce costs. Startups and smaller platforms could receive incentives or subsidies to gradually implement worker protection, avoiding market concentration in favour of large players.

“Additionally, a portable benefits system, where workers’ contributions move with them across platforms, could address the issue of multiple-platform work. This would ensure fair protection while allowing platforms to remain competitive,” Das points out.

Dr Carmelo Ferlito, CEO of the Centre for Market Education, believes gig workers should think of themselves as entrepreneurs offering flexible services.

“Flexibility, like anything else, has benefits and costs, and instability is closely tied to entrepreneurship,” he says, questioning if committees or councils can solve gig-economy issues.

“I worry this path may shift gig workers’ relationship with platforms toward typical employment, radically changing the gig economy. This could lower wages and cut opportunities as platforms avoid fixed costs with ‘standard employees,’” he says.

“It’s always about balance. Turning gig workers into employees might discourage innovation and shrink platform operations that benefit consumers.” Ferlito recalls arriving in Malaysia in 2011, bargaining with taxi drivers, and prefers the fixed rates platforms now offer.