Gig economy: Pitfalls and opportunities

The Foodpanda logo is seen on delivery bikes in Petaling Jaya October 1, 2019. — Picture by Ahmad Zamzahuri
The Foodpanda logo is seen on delivery bikes in Petaling Jaya October 1, 2019. — Picture by Ahmad Zamzahuri

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KUALA LUMPUR, Dec 8 — Gig economy: a phrase that has been bandied about when conversations turn to the current job landscape for young professionals, new graduates, getting a job and making ends meet.

But what exactly is gig economy and what are the pitfalls or advantages of being part of it? And what awaits those who rely on these part-time, transient or ad hoc work?

Simply defined, the gig economy is a labour market characterised by the prevalence of short-term contracts or freelance work done by individuals; driven by the digital environment and the prevalence of apps that instantly communicate information and opportunities for work.

The gig economy today is virtually synonymous with freelancing — which everyone knows have both positives and negatives aspects to it, one which offers both opportunities and uncertainties.

This growing segment of the economy is mostly populated by the younger generation more attuned to the digital environment.

A study conducted by PricewaterhouseCoopers (PwC) showed that the gig economy is forecast to be worth approximately US$63 billion (RM263.3 billion) globally by next year.

In its research note, it said that the rise of the segment, comprising wholly of impromptu jobs or “gigs”, or contract assignments, will be a challenge for human capital and resources management.

PWC said some 46 per cent of human resource professionals worldwide expects that by 2020, up to 20 per cent of the workforce will comprise contract workers on short-term or freelance assignments.

While these part-time jobs enable the workers — mostly new graduates and new entrants to the marketplace, or those trying to supplement their existing incomes or displaced due to downsizing — to meet their current financial obligations while awaiting more permanent positions, the situation nevertheless raises some key concerns for the future.

One of the key concerns is that the gig economy will place these workers into a skills and career trap.

Planetmahir Sdn Bhd co-founder and chief executive officer Datuk Dr Ahmad Ramzi Mohamad Zubir said in the next five years, gig economy participants will account for more than 40 per cent of the workforce.

“However, those in the gig economy will always be in temporary or part-time positions and they will not be able to develop solid skills or build in-depth expertise, which can offer a more positive career path.

“If they are unable to break the cycle of transient or temporary jobs, they would be unable to get into better paying, or more permanent jobs which offer stable benefits and compensation,” he said.

This, said Ahmad Ramzi, would leave them unable to build savings or a foundation for their future earnings to support them in time to come.

Additionally, employers would not be able to access real skills or have a truly competent employee base to strategically grow their business.

Ultimately it would widen the income gap between the haves and have-nots, and affect the country’s social support infrastructure to address the needs of an ageing population.

A Grab pick-up and drop-off station is seen at the entrance of Kuala Lumpur City Centre in Kuala Lumpur October 3, 2019. — Reuters pic
A Grab pick-up and drop-off station is seen at the entrance of Kuala Lumpur City Centre in Kuala Lumpur October 3, 2019. — Reuters pic

Based on data by the Employees Provident Fund (EPF), the growing gig economy and an ageing population are expected to cause a decline in the per centage of workers contributing to the fund.

This is as opposed to permanent jobs where private sector wage earners contribute to the EPF while civil servants have their pensions.

Why then are the younger generation participating in increasing numbers in the gig economy if the downside is somewhat discouraging?

A recent survey by Bernama involving e-hailing drivers, freelancers as well as contract workers, showed that the majority of gig economy participants are young, educated and struggling to find a stable job.

Many are struggling to pay debts such as student loans and only a small number of gig economy workers chose to be involved due to the time flexibility it offers.

Muhammad Idham Khairuddin, 24, who graduated last year and is now a full-time e-hailing driver said that it has been tough finding a job that fit the course he took in college.

“I studied communications and right now, everything is focused on digital. Unfortunately, that was not what we studied, so we have knowledge that employers are not looking for.

“What is more unfortunate is employees prefer to hire someone with experience than fresh graduates, citing that we do not have the experience needed to fit in the company. But how are we supposed to get any experience if they don’t want to hire us?” he asked.

The gig economy thus brings us back to a question that has been asked time and again: how well are local higher education institutions updating and adapting their areas of study or curriculum in line with market developments, and to enhance the employability of their graduates?

Another gig economy participant, freelance designer Andrew Liew Kim Leng, 31, said that he had always preferred to work as a freelancer — where every cent he earned was his, without being confined to specific ways of working, or being required to adhere to company regulations.

More importantly, he enjoyed the time flexibility.

“At times, I have several projects in a month but some months are dry. I do e-hailing when I have nothing else to do. I can manage, so far,” he said.

However, both Mohammad Idham and Liew, and possibly thousands of others share something in common — they do not have a back-up plan or savings for the twilight years.

Indeed, while the gig economy does provide a short-term solution for economic woes, it does not appear viable as a longer-term source of income.

Therefore, is there a need to regulate the gig economy to put in place some protection measure to ensure the well-being of gig workers, for now as well as for their future?

Recently, in Parliament, Prime Minister Tun Dr Mahathir Mohamad said that gig economy has been identified as a new source of economic growth and would be made part of the 12th Malaysia Plan.

Indeed, World Bank data puts Malaysia’s gig economy as rising to as much as 26 per cent of total economic growth — underscoring the seriousness of this segment, and thus its potential impact on society.

Dr Mahathir said the government has realised the implications of gig economic work as well as the need to safeguard worker rights.

“Therefore, the government has taken a few initiatives with the objective of leveraging on the gig economy. In our draft of the 12th Malaysia Plan 2021-2025, we will focus on the gig economy as a new source of economic growth, but at the same time, we need to make sure it is sustainable and inclusive.

“More importantly, we have to ensure that we safeguard the interests and welfare of the workers and employers to focus on the gig economy,” he said, adding that those in gig economy runs the risk of being mistreated, exploited or disadvantaged by employers.

Without a policy in place to address such issues, the expansion of the gig economy could create financial instability which then poses more serious socio-economic and political issues in the long run for the country. — Bernama

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